Planned fiscal regime seen to ‘punish’ miners

The proposed new fiscal regime on mining is seen to “punish” the already struggling mining sector with Chamber of Mines of the Philippines (COMP) now seeking to have a dialogue with the government on what could be the ideal tax structure.

Representative Estrellita Suansing filed in the House of Representative the House Bill (HB) No. 7951 the proposed revenue measure from the Department of Finance, which aims to tax all mines located outside and inside a mineral reservation. As of now, only those within mineral reservations are being required to pay a royalty.

Based on the DOF’s proposed phased-in rate schedule, a three-percent royalty will be imposed during the first threeyears upon the effectivity of the law, four percent on the fourth year and five percent on the fifthyear and thereafter.

The DOF also proposed to retain the existing impositions such as corporate income tax, excise, indigenous people royalty and local business tax on all mines.

“We are concerned particularly about mining tax bill that has been filed recently and we’ve taken a look at it and we analyzed and what we’ve done is compared that mining tax structures with large mining countries like Chile, Peru, South Africa, Canada, and Australia. It makes us more expensive than the five large mining countries,” Chamber of Mines of the Philippines (COMP) chair Gerard Brimo said during Mining Philippines conference that is being held now in Manila.

“It is punishing and we are talking to legislators to see what we can do about it. You can’t expect investors to go here with that tax structures,” he added.

For his part, Mines and Geosciences Bureau (MGB) Director Wilfredo Moncano said on the sidelines of the same conference that imposing a unilateral tax increase will be detrimental to some commodities.

“We support the initiative to impose royalties to areas outside the declared mineral reservation but it should be on a mineral commodity basis. Why? Because what is applicable for nickel, for example, it isn’t applicable to other commodities. For gold and copper, a 5 percent royalty will be too big,” Moncano said.