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CREATE-ing the new office landscape: WFH extension for BPOs and other PEZA ecozone locators

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The Department of Trade and Industry (DTI) highlighted that the Implementing Rules and Regulations (IRR) of the CREATE Act allow for the extension of the work-from-home (WFH) arrangement for PEZA locators and other registered business enterprises as the IRR features a provision for the government to implement temporary measures during extraordinary circumstances such as a pandemic or epidemic.

In the normal course of business, registered business enterprises like Business Process Outsourcing (BPO) companies must conduct their registered activities within PEZA-proclaimed ecozones and IT parks in order to avail of the tax incentives provided by the law. However, the pandemic pushed many companies to adopt a WFH arrangement to ensure the safety of their employees. In response to the drastic health situation, PEZA issued a temporary authorization last year allowing registered locators to operate under a WFH arrangement for up to 90% of the total revenues of the registered enterprise. Since then, the temporary authorization has been extended to September 12, 2021.

Rule 23, Section 3 of the IRR of the CREATE Act allows the government to implement temporary measures such as the extension of the said 90% WFH arrangement under exceptional circumstances like a pandemic or epidemic upon the approval of the Fiscal Incentives Review Board (FIRB) to be effective from the time of the declaration of such exceptional circumstance by the President, the relevant government agency, or the World Health Organization until the same has ended or has ceased to exist. DTI will propose a resolution to approve the proposed extension of the WFH arrangement for PEZA locators beyond September 12, 2021, in the upcoming board meeting of the FIRB. Moreover, the DTI is also in discussion with the IT & Business Process Association of the Philippines (IBPAP) in coming up with an impact analysis of the WFH arrangement to serve as input for the said FIRB resolution.

Colliers Views

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Colliers believes that the above measures taken by the government will help various locators including BPO companies future-proof their operations from a business continuity standpoint. Meanwhile, Colliers has observed that an extensive WFH arrangement is effective to a large degree for certain occupiers. As vaccination ramps up in the country and more people return to their workplaces, many companies are also exploring a hybrid work setup where employees may split their time spent in the office and at home. These trends have in turn sparked curiosity on whether government agencies such as PEZA will institute increased WFH capacity as a long-term option for its locators. Colliers will continue to monitor and report on the extension of the temporary WFH authorization and similar measures that may be taken in the future.

For more information on the office real estate market, please feel free to reach out to our Colliers Tenant Representation team.


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