Mining body finalizes sharing scheme with govt

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The Mining Industry Coordinating Council (MICC) has submitted to the legislative liaison office the final draft of the new mining revenue sharing scheme for endorsement of President Benigno Aquino 3rd to Congress.

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Environment Secretary Ramon Paje said that the MICC, the interagency body tasked to draft the legislation for revenue sharing in the minerals industry, has agreed to adopt a single taxation system under which the government takes 10 percent of the gross revenue of mining projects.

“In effect, we made it very simple. Hopefully, it will be deliberated next year,” Paje told reporters.

He said that the proposed draft bill is already inclusive of all taxes and royalties, including regular corporate income tax, excise tax, business tax, royalty payments for indigenous cultural communities, and royalty of minerals/mineral products extracted from mineral reservations—except real property tax.

Ten percent of the gross revenue of mining projects will already include all taxes, including the additional 5 percent royalty, Paje added.

Of the total revenue collected, the Environment chief said that 40 percent will automatically be released or retained with the local government units, and a minimum 1 percent share will go to the affected indigenous peoples.

Meanwhile, Paje said they are also pushing for the removal of tax holidays for all mining companies, citing cases wherein miners “closed shop” after exhausting their tax perks.

“We want to correct our investment priority plans that is why we are passing this new bill,” he said.

“The problem is that the income tax is always waved so we are pushing that there should be no tax holidays. This kind of proposal is better because it is easier to compute,” he added.

Earlier, country’s big mining lobby said that it is amenable to a government proposal to retain the existing tax scheme for mining companies and additional royalty, but opposed the removal of fiscal incentives. The Chamber of Mines of the Philippines (COMP), citing a study by the International Monetary Fund, said that the abolition iof tax incentives granted to mining companies, whether in mineral and non-mineral reservation areas, might not work for the entire industry.

COMP also stressed that mining companies will not be competitive without tax holidays. Large-scale miners are entitled to register with the Board of Investments for a five-year income tax holiday once they start commercial operations, which includes excise taxes. Firms are also not liable for income taxes during their exploration periods.

According to the Mining Act of 1995, contractors in mineral agreements and financial or technical assistance agreements shall be entitled to the applicable fiscal incentives under Executive Order 226, or the Omnibus Investments Code of 1987.

Incentives provided for by the law includes, income tax holidays, incentives for pollution control devices, tax and duty exemptions on imported capital equipment and spare parts, among others. At present, the government is imposing two different sets of taxes for mining companies, depending on their contract with the government.

The Philippine Mining Act of 1995 imposes a 2-percent excise tax on mining companies operating under the MPSA, while those operating in mineral reservation areas are subject to an additional 5-percent royalty.

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