FINANCE Secretary Ralph Recto said the overhaul of the mining tax regime would safeguard the environment while turning the nation’s mineral wealth into a driver of sustainable growth.
Signed on Sept. 4, Republic Act (RA) 12253, or the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, simplifies the mining fiscal regime by removing complex tax distinctions among different mining agreements.
The new measure is expected to generate an estimated average annual incremental revenue of P6.26 billion for existing mines.
“The Department of Finance is committed to implementing this law swiftly, efficiently, and with full transparency. We will also continue to engage with all stakeholders to ensure that the law delivers on its promise,” Recto said.
Under the new system, all large-scale metallic mining operations are now subject to a unified tax regime aimed at encouraging investment in the sector and promoting tax compliance.
The new regime also includes a five-tier royalty rate, ranging from 1 percent to 5 percent for mines outside mineral reservations; a minimum royalty rate of 0.1 percent on gross output for mines below the margin threshold; and a five-tier windfall profits tax ranging from 1 to 10 percent.
The law likewise establishes safeguards by implementing a 2:1 debt-to-equity ratio or a thin capitalization rule to limit the amount of tax-deductible borrowing cost arising from related-party debt.
Moreover, the law adopts a ring-fencing rule on a project-by-project basis to prevent the consolidation of income and expenses of all mining projects by the same taxpayer. This prevents companies from offsetting losses from more profitable projects.
Additionally, RA 12253 ensures the enforcement of strict monitoring and auditing standards on mineral sales and exports. It also promotes transparency in the mining sector by mandating the public disclosure of data.
Finally, the law earmarks funds to support research, monitoring, and enforcement in the sector. In particular, 10percent of the royalty collected from mines within mineral reservations will be invested in mineral exploration and research. (Ian Nicolas P. Cigaral © Philippine Daily Inquirer)
