Tax Alert No. 15 [Revenue Memorandum Circular (RMC) No. 46-2023 dated 19 April 2023]

Publishing the Full Text of Fiscal Incentives Review Board (FIRB) Advisory No. 006-2023 Regarding Clarifications on the Supplemental Guidelines on the Registration with the Board of Investments (BOI) of Registered Business Enterprises (RBEs) in the Information Technology - Business Process Management (IT-BPM) Sector

RMC No. 46-2023 has been issued to publish the full text of FIRB Advisory No. 006-2023 dated 05 April 2023 which provides clarifications on the supplemental guidelines on the registration with the BOI of RBEs in the IT BPM Sector. We highlight below some salient provisions:

Clarification on the assets covered by the FIRB Resolution Nos. 002-2023 and 003-2023 

• Only the capital equipment and other assets related to the IT-BPM project or activity registered with the BOI and are to be used to implement work-from-home (WFH) arrangements shall be covered by these regulations.

Clarification on the coverage of the tax exemption indorsement (TEI) to be secured from the Department of Finance -   Revenue Office (DOF-RO)

• Only assets intended to be moved out of or currently outside the economic zones and/or freeport zones for WFH arrangements shall be required to secure a TEI from the DOF-RO. The existing goods which were imported as of January 31, 2023 will be covered by a blanket TEI per project. For new importations starting February 1, 2023, the TEI shall be processed per project per shipment.

• TEI will no longer be required for foreign-supplied intangible asset/software that will not pass through the Bureau of Customs(BOC)/any port (e.g., purely internet-based). However, if the intangible asset/software is a component of a tangible/physical asset (e.g., part of equipment or machinery), the TEI must be secured. 
  

Clarifications on existing assets (or assets imported as of 31 January 2023)

• The bond-free transition period shall run from January 1, 2023 to June 30, 2023. Thereafter, the goods may still be allowed to be moved outside the economic zone or freeport zone provided that a provisional goods declaration (PGD) has been secured and the surety bond has been posted. 

• The request for the staging bill of lading (BL) or dummy BL shall be filed by the covered RBE to the BOC satellite offices for pre-assessment prior to indorsement to the BOC Deputy Collector for Operations and the BOC Deputy Collector for Assessment.

Clarifications on new assets (or assets imported starting 1 February 2023)

• New importations of IT-BPM RBEs starting February 1, 2023 shall undergo the existing/status quo clearance requirements of their concerned IPA for the release of goods from BOC custody. The additional step of securing a TEI from the DOF-RO will only arise when the IT-BPM RBE requests for the movement of goods from the economic zone or freeport zone.

• As an additional control measure, the related import permit/admission permit, or equivalent document to be issued by the concerned IPA for all new importations, must indicate an annotation that a TEI must be secured if the related assets will be moved out of the economic zone or freeport zone, for WFH purposes.

• New imported assets of IT-BPM RBEs still securing the TEI may still be allowed to be moved outside the economic or freeport zone provided that a PGD has been processed, the bond has been paid, and an application for TEI has already been filed with the DOF-RO at the time of lodgement. 

 The FIRB Advisory also clarified questions covering the following concerns: 

• Proof of entitlement to value-added tax incentives for local assets;
  
• Valuation methods of the BOC for the sale, transfer, donation, or disposal of the related assets of the covered RBE, whether local or imported;
  
• BOC procedures;
  
• Expansion projects under Philippine Economic Zone Authority; and 
  
• Updating of the BIR Registration of IT-BPM Transferees
  

You may access the full version of this issuance through the BIR website.