The Department for Finance (DOF) said it is ramping up consultations on its revised tax reform measures to get stakeholders’ view on the proposals.
The DOF said the first briefing conducted was on the Rationalization of the Mining Fiscal Regime, which aims to simplify the tax system, ensure the government’s fair share in mining revenues, and establish good governance in the mining industry.
Under the current regime, mining obligations vary depending on the mining agreement, which can be undertaken via the mineral production sharing agreement and the financial or technical assistance agreement.
“These mining agreements can be undertaken in several ways, resulting in a complex tax system and investor uncertainty,” the DOF said.
The DOF said its version improves on House Bill (HB) 8937 and proposes to impose a four-tier margin-based royalty ranging from 1.5 percent to 5 percent on income from mining operations outside of mineral reservations to address constitutional issues.
“Compared to the 8-tier structure from HB 8937, 4-tier makes it simpler for investors and the Bureau of Internal Revenue to compute the corresponding tax rates. Furthermore, the simplified DOF version will lessen incentives for the private sector to pursue aggressive accounting to avoid taxes,” it said.
The current regime only taxes mines operating within a mineral reservation.
“Similarly, a 4-tier, compared to the 10-tier structure in HB 8937, margin-based windfall profits tax rate ranging from 1.5 percent to 10 percent on income from mining operations is proposed in light of the sudden increases in the world prices of metal,” the DOF said.
Fiscal Policy and Monitoring Group officer-in-charge, DOF undersecretary Karlo Fermin Adriano, briefed various mining and civil society stakeholders from the Chamber of Mines of the Philippines, Bantay Kita, Philippine Nickel Industry Association, Philippine Extractive Industries Transparency Initiative (PH-EITI), Bureau of Internal Revenue, and National Tax Research Center.
“We can be a major player in this global economy in terms of mineral production. We just have to realize it with the right policies,” Adriano said.
On transparency and accountability concerns, the PH-EITI will ensure that data is accessible to the public, fostering greater multi-stakeholder dialogue in the extractive sector.
“We began discussions to rationalize our country’s mining fiscal regime in 2012, yet the Philippines’ mining potential remains untapped. With this proposal, the nation will finally receive its rightful share of mining revenues to fund the country’s development goals,” said DOF Secretary Ralph Recto, adding the passage of this reform will establish a predictable and stable policy environment that is conducive to investments.
Other priority measures of the DOF are the Value-added Tax on Digital Service Providers, Imposition of Excise Tax on Single-use Plastics, Package 4 of the Comprehensive Tax Reform Program and the Reform on the Motor Vehicle Users’ Charge.
