Mining fiscal regime up for inclusion in 5th Train package
The government plans to recommend a new, equitable mining fiscal regime independent from the related measures of the comprehensive tax reform program, Department of Finance (DOF) officials said.
Finance Undersecretary Bayani H. Agabin recently told reporters that the interagency Mining Industry Coordinating Council was studying the sector’s fiscal regime even as the DOF was supposed to include mining taxes in the fifth tax reform package.
While package 1A of the Tax Reform for Acceleration and Inclusion Act (Train) already doubled the excise tax rates on non-metallic minerals and quarry resources, and metallic minerals (including chromite, copper and gold) to 4 percent from 2 percent previously, Finance Assistant Secretary Maria Teresa S. Habitan said that it “does not preclude us from continuing with the study and recommending a different fiscal regime, considering all the other things.”
“The fiscal regime will have to address other issues, especially revenue sharing between the government and private contractors. Considering that the state is really the owner of the resources, are we sufficiently paid or compensated for that? Those were the issues that are under consideration in the ongoing study,” Habitan said.
Habitan noted that “not all contracts pay royalties to the government—only those covered by MPSAs [mineral production sharing agreements] do, but in other jurisdictions the royalty is over and above the excise taxes because the royalty is what you pay to the sovereign state as the owner of the mineral resources.”
“We want to have that also in the country,” Habitan added.
Agabin said that in the mining sector, some companies were paying royalties on top of excise taxes, while some were also paying local governments and are obliged to come up with social development and management programs equivalent to 1 percent of their operating costs.
“So when you talk of the fiscal regime, it’s not only the taxes you look at,” Agabin stressed.
“They also pay the local government. They also pay fees and charges to the DENR (Department of Environment and Natural Resources), so that’s also part of the entire fiscal regime. So the question is, are what they are paying the government enough and are we sharing enough? And is the sharing now enough for us to cover that in the future?” Habitan added.
Agabin said the higher excise taxes slapped under the Train’s package 1A would unlikely be touched by the mining fiscal regime proposal, changes in which “need not necessarily be” included in the comprehensive tax reform program.
