Small-scale miners start selling back gold to BSP — DOF

Small-scale miners from the Cordillera region have started to sell back their gold to the Bangko Sentral ng Pilipinas (BSP) after their more than five-year hiatus, the Department of Finance (DOF) said yesterday.

Citing a report from the Bureau of Internal Revenue (BIR) district office in Baguio City, Finance Secretary Carlos G. Dominguez III said yesterday that an initial R1.5 million worth of gold was sold to the central bank in January this year.

Dominguez believes miners decided to sell to the BSP following the DOF’s decision in November last year to reduce the creditable withholding tax (CWT) on gold sales from five percent to one percent.

“This is a direct result of the reduction of the creditable withholding tax from five percent to one percent in late 2017,” Dominguez said in a mobile text message sent to reporters.

Small-scale miners stopped selling gold to the BSP since 2012, the BIR report submitted to Dominguez indicated.

“The advantages to the seller are lower transportation costs and accurate assays. The advantage to the BSP is the use of pesos to buy gold which is used as our international reserves,” Dominguez said.

“The advantage to the government is the collection of one percent withholding tax versus zero in the past,” he added.

Last November, Dominguez III has signed a new set of Revenue Regulations (RR) reducing the CWT on gold sales, a move seen to encourage smallscale miners to sell back their gold produce to the BSP.

The RR, however, kept the excise tax on gold sales at two percent.

“With this new tax rate and the possible reduction both in the assay fee and in the processing of gold payments in the Security Plant Complex (SPC), small-scale gold miners have committed to sell back their gold produce to the BSP,” Dominguez said in November.

He said the new CWT rate will help gold miners in the cities of Davao, Zamboanga, Naga, and Baguio to get a fair market price for their gold produce instead of being shortchanged when they sell to the black market.

“We will also be working with the Congress to institutionalize this Revenue Regulation through an appropriate amendment to the National Internal Revenue Code,” Dominguez said.

Besides helping smallscale miners, Dominguez said the RR will also allow the BSP to build its gross international reserves (GIR) without having to spend dollars as it would be able to buy gold directly using local currency.

“Unlike using pesos to buy foreign exchange to buy gold, which will affect the peso dollar rate, this flexibility will not have a direct impact on the movement of the peso against the dollar,” Dominguez said.

The BSP purchases gold from small-scale miners in accordance with Republic Act No. 7076 or the People’s Small-Scale Mining Act of 1991, and from other sources. It then refines the gold purchased into forms acceptable in the international bullion markets.

It has five gold-buying stations in Quezon City and the cities of Baguio, Davao, Zamboanga and Naga.