DoF says perks for small miners may lead others to seek tax exemptions

THE Department of Finance (DoF) reiterated its concern that tax exemptions for small-scale miners may have the effect of “legislated tax evasion” and lead other segments of the economy to seek similar privileges.

The department outlined it position before the House ways and means committee chaired by Quirino Rep. Dakila Carlo E. Cua. The committee was tackling House bills ( HBs) 1664, 3297, 3304, 3470, 4057, and 7133, which all seek to amend Republic Act ( RA) 8424 or the National Internal Revenue Code ( NIRC) to exempt small- scale miners from paying taxes when selling gold to the Bangko Sentral ng Pilipinas ( BSP).

The DoF held fast to its position first stated in hearings during the 16th Congress.

“We would like the committee to actually please consider identifying each and every issue and address them properly rather than just looking at the tax treatment which may not be the answer to these issues,” DoF research and information office Director Juvy C. Danofrata said.

She also noted that passing the proposals “may be tantamount to putting or legislating tax evasion” and may lead other industries to request tax exemptions as well.

Ms. Danofrata said the decline in the sale of gold to the BSP is “an enforcement issue.”

“We ( DoF) recognize that there are certain administrative issues... we [should first] identify each and every issue such that we do not just zero in on the tax treatment,” Ms. Danofrata said.

Meanwhile, the Bangko Sentral ng Pilipinas (BSP) noted a drop in tax revenue from gold purchases to P55.7 million from P205 million in 2011 amid lower taxes.

In November, the BSP reduced the creditable withholding tax ( CWT) imposed on small-scale miners to 1%. The excise tax imposed, on the other hand, has remained constant at 2% since 2008. This makes for a total of 3% tax.

However, the excise tax increased to 4% since the Tax Reform for Acceleration and Inclusion ( TRAIN) Law took effect last month, bringing the total taxes imposed on miners to 5%.

Sought for comment, Mr. Cua said: “We’ll consider the input of the DoF and Bureau of Internal Revenue. However, we also see the point of the BSP that our international reserves are falling.”

The authors of the bills are Benguet Rep. Ronald M. Cosalan, Sorsogon Rep. Evelina G. Escudero, Abang Lingkod party-list Rep. Joseph Stephen S. Paduano, Masbate Rep. Elisa T. Kho, Pampanga Rep. Gloria Macapagal- Arroyo, Speaker Pantaleon D. Alvarez, Majority Leader Rodolfo C. Fariñas, and Mr. Cua. They cited the need to discourage smallscale miners from selling their gold on the black market and smuggling gold out of the country.

The bills note that underground sales and smuggling led to the drop in the value of gold purchased by the BSP to P984 million (20,354 troy ounces) in 2014 from P49.5 billion ( 918,110 troy ounces) in 2010. —