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BIR ON THE SPOT

BSP backs clamor for review of gold tax

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POT OF GOLD A small-scale miner takes a break after taking out sacks of gold ore from a tunnel at the Acupan mines in Itogon, Benguet province. But there is still no light at the end of the tunnel for cutting taxes on gold sales. RICHARD BALONGLONG / INQUIRER NORTHERN LUZON

The Bangko Sentral ng Pilipinas (BSP) has joined the clamor for a review of the 7-percent tax on gold sales, believing that the smuggling of the precious metal out of the country could become even more rampant if the tax issue remained unresolved.

Asked to comment on criticisms of the taxes on gold sales, BSP Deputy Governor Diwa Guinigundo said there was indeed merit to the proposal for the Bureau of Internal Revenue (BIR) to soften its stance on the gold tax.

But while legislators are calling for the removal of the gold tax, the BSP’s proposal is to adjust the method of computing the taxes on gold sales.

The BSP is the one authorized to buy gold mined within the country. Proceeds of gold sold to the BSP are charged a 5-percent creditable withholding tax and a 2-percent excise tax. Said taxes are computed based on the gross amount of gold sales.

But under the current tax system, only those who directly sell gold to the BSP are taxed.

From mining sites, gold is sold from one trader to another. The last trader—the nearest to one of the BSP’s gold-buying sites and the final seller of the gold to the BSP—is the one charged by the BIR with the taxes totaling 7 percent.

To ensure the immediate collection of the taxes, the BIR has set up desks in all of the five gold-buying sites of the BSP—Baguio City, Quezon City, Naga City, Davao City and Zamboanga City.

“Congress and BIR would have to work out a practical, acceptable, realistic base [rather than the gross amount of gold] on which to apply the tax rates,” Guinigundo said.

“It would appear, therefore, to be more practical to do the adjustment before the tax rates are applied. Otherwise, we might be seeing more black-market disposition of local gold in the global markets. Tax revenues would also be reduced in the process,” the BSP official added.

Because of the controversial tax, significant amounts of gold are believed to be smuggled out of the country.

The BSP admitted that the volume of gold it bought had shrunk significantly since last year, when the BIR strictly enforced the collection of taxes on gold sales by setting up desks in the BSP’s gold-buying sites.

To address the issue, Congress plans to revise the controversial gold tax together with other precious metals under the proposed reforms in revenue-sharing in the new executive order (EO) signed by President Aquino last July.

“We cannot stop the BIR from collecting the gold tax because it is the law. Congress can only change this if we enact new mining taxes under EO 79. Until then, we just hope the Bangko Sentral can replenish its gold reserves from other sources,” said Davao City Rep. Isidro T. Ungab, chair of the House ways and means committee.

Ungab said his district had a “firsthand” knowledge of the harsh effect of the gold tax on small miners at the Mount Diwalwal gold find in Compostela Valley and the Davao region, which accounts for the bulk of gold sold by small miners in the country.

“It’s a very serious issue especially in my province where the small miners prefer to sell their gold find in the black market rather than pay the 7 percent tax to the Bangko Sentral,” Ungab said.

With BIR Commissioner Kim Henares refusing to give in to calls from lawmakers to suspend the gold tax, Ungab said the government should at least ensure that it would implement it more efficiently and plug the loopholes for smuggling.

“It’s a good issue to look into. We need to control the industry. We have to check what is doable. But personally, I feel this will not be finished within this Congress,” Ungab said.

But for the Mining and Geosciences Bureau (MGB), all the government had to do was to give a little encouragement to small-scale miners and tighten up against the illegal mining of the precious metal.

“We just have to convince them that it pays to pay taxes,” MGB director Leo Jasareno told the Inquirer, adding the BSP had started meeting with small-scale miners to urge them to sell their gold to the government.

He agreed that the drop in sales of gold to the BSP was alarming. In previous years, an average of 30 tons of gold was sold annually to the BSP.

But last year, only 5 tons were sold to the BSP, mostly by large-scale mining firms, he said. “We could expect that the rest were sold by small-scale miners in the underground market.”

Environment Secretary Ramon Paje estimated the drop in gold sales to the BSP at 80 percent but would not say if it was due to the gold tax. With a report from Jeannette I. Andrade

Originally posted: 10:58 pm | Monday, November 12th, 2012


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Tags: Bangko Sentral ng Pilipinas , Business , Diwa Guinigundo , gold , gold smuggling , metals , Mining and quarrying , state budget and taxes

  • BenYaseo

    This drop in gold sales underscores the country’s inability to check the actual gold extraction from small-scale miners and “informal miners” (estimated to number about 200,000) aside from the fact that the Bangko Sentral and the  DENR/mines bureau already know that most of the gold produced by small and illegal miners are smuggled out to Hong Kong and China. This means that aside from being marauders of the environment, illegal and small scale miners are smugglers and tax dodgers. 
    In contrast, the big industry playerscannot smuggle and avoid paying taxes because theirgold output are strictly monitored by the government.
    Mining activities should really be confined in the hands ofreputable and responsible corporations since one, they are the ones who pay the right amount of taxes and two, they have the resourcesto take care of the environment even as they engage in mining activities. I understand that under the law, they are are mandated to set aside a portion of their operational expenses for social development programs that would benefit their host communities and its environs.

  • CyberPinoy

    Chinese ang nakikinabang sa ginto natin dahil sa murang halaga nila nabibili sa nga small scale miners at kadalasan wala pang tax.  Dapat kasi pasukin na ng gobyerno at gumawa ng government owned company para mag mina ng ginto at i-employ ang mga small scale miners para atleast maging legit sila magkakaron pa sila ng permanenting hanap-buhay.

  • mrbano

    PAGING DENR: ANG SARAP SARAP NMAN HO NG BUHAY NG MGA SMALL SCALE AT ILLEGAL MINERS, WLA MAN LANG HONG HUMAHABOL SA KANILA.

  • JaAb65

    ano yan? dhil ba hndi msugpo o mhabol man lang ang mga small-scale at illegal miners, papaboran pa natin sila? Hinayaan na nga cla ng DENR na lapastanganin ang kalikasan ntin, bkit prang bbigyan nyo pa sila ng reward? khit anong gwin nyo hndi magsisitigil yang mga yan dahil pera ang ginto!

  • http://profile.yahoo.com/MKUZ2VD7TCBBKERT4KYIRIDIHE Rex

    There are legitimate cooperatives which are once selling their gold output to the BSP. The BIR initially allowed them but forcefully disregarded their tax exemption thinking that they are the tax loopholes. Now that cooperatives are not selling to the BSP, why is it that the BSP’s gold purchases continue to shrink? I think they should open their eyes now. Nakakatulong na sana ang mga coop in solving this problem kesa naman  buong gold production ng Pilipinas mapunta sa Hong Kong (daw). Under the status quo where cooperatives are not respected their certificate of exemption, the government gets nothing (i.e. The BIR gets NO TAX, the BSP gets NO GOLD.) With cooperatives, the government gets NO TAX when BSP buys the gold but GETS 12% VAT when BSP sells the gold. It can still collect 12% even if it forgoes the 7%. What is important here is that the BSP GETS the gold.  Which one you prefer huh? 
    One thing, there have been numerous calls that there should be proper classification on the imposition of the 2% excise tax and 5% creditable withholding tax. This 7% tax can be levied to miners directly on the mines. Though costly, this is the only effective strategy if the BIR wants the tax. For gold traders; however, the base of the 5% CWT should be the mark-up. They should not be levied the 2% excise tax because they are not involved in actual gold extraction. This is a very BASIC tax principle that is UNQUESTIONABLE. Traders do not sell their gold collections to the BSP because they make P5-P10/gram but the 5% CWT which amounts to P110.50 base on gold buying price today would tie-up trader’s working capital in unrecoverable CWTs that takes years to return. Ang galing talaga ng tax regulations natin dito sa Pilipinas! Yung nagco-comply masasakal samantalang yung di nagko-comply magiging competitive ang business. Saan ka pa just to sustain your business?   Eh di sa black market na rin. These defects in the regulation encourages tax evasion. I am hoping the government (i.e. BIR) is now open for changes para masundan natin ang MATUWID NA DAAN na minumungkahi ng ating butihing Presidente Pinoy.

  • http://twitter.com/Anton0613 anton

    the way i understand it, the central bank buying stations are in the cities like baguio, quezon, naga, davao and zamboanga and the bir has its offices there too. do you think the small scale miners are going to bring their golds to those places, never. why not the government set up its buying stations direct in mining sites if they are really sincere in their job and knowing that there are also other buyers without incurring any tax? kung hihintayin sila, baka sa maghapon wala ni isa. at saka, bakit sa quezon city or sa mga cities? .there is a greater probability sa pagpunta sa city na ma-hold-ups sila.

  • DGuardian

    Iisa lamang ang solusyon sa ginagawang pag-iismuggle ng gold out of the country imbes na ipagbili ito sa Central Bank. Ipatigil permanently at compltetely ang small-scale mining at tanging mga mining corporations na magbabayad ng tamang halaga ng buwis sa gobyerno at susunod sa batas ang pahintulutang magmina ng ginto. Nakasalalay dito ang finances na mag-susuporta sa ating bansa dahil pinaka-core ng pamahalaan ng Pilipinas  para maka-function nang maayos ang gold reserves natin sa Central Bank. Ang ginto ay national patrimony ng Pilipinas at hindi dapat hayaang nakawin lamang ng maraming small-scale miners at ipagbili sa black market. Isang  draconian measure o solusyon ang nararapat dito at dapat kumilos ang pamahalaan agad-agad para mahinto ang pagnanakaw at pagsasamantala ng mga gahamang small-scale miners na ito, mga gold traders at mga imbing dayuhan sa ginto ng Pilipinas.

    • http://profile.yahoo.com/MKUZ2VD7TCBBKERT4KYIRIDIHE Rex

      tsk! tsk! Hyprocrite! Para mo na rin lang sinabi na bawal ang farming o ikaw lang ang may karapatang kakain (mabuhay). How about those thousand families who are solely dependent on mining for subsistence? You’re too hasty to judge. Don’t you know it would be as hasty you will be perceived an idiot?

    • http://pulse.yahoo.com/_D3LDMMAKC6UDQLDVFP2DGSJBXY Jezzrel

      Foreign interest na naman ang isinusulong mo.. Filipino ka ba??? Hindi iyon ang sagot, ang sagot ay tulad ng mugkahi ng iba, set up gold buying station don sa mga mining area, like don sa itogon, benguet at iba pa para di mapunta sa black market ang mga extracted gold ng mga so called small-scale miners…

  • http://profile.yahoo.com/NEPID4X3RXJ4U7TU7JOPGRSQTM Ricardo

    Gold is rich man commodity so that less tax is a must. Cigarette is poor man commodity so that more tax shuold be. The Ph government officials at its best.

    • manuelcdiaz

      The Philippine Government is not really interested in your health when they proposed this “sin tax” The Philippine Government does not care about your healt.The government is more interested in your wallet. Regarding the Gold taxation that is a warning sign that once a commodity which can be sold to anybody is taxed the owner of that commodity will sell it to those buyers who do not tax the GOLD. Once this “sin tax” is passed expect the resurrection of the “Bocalan Operation”remember him? smuggling of “blue seal cigarettes from Borneo.BTW Congress tried to convict Bocalan on tax evasion and unexplained wealth Bocalan produced several sweeptstake winning tickets for first price. 

    • vinzerx

      Uh, no. You make a seriously wrong assumption that rich people don’t smoke, which is obviously false. The only difference is that the rich person can buy gold whereas the poor cannot. Cigarette is consumed by people from all sectors of society.



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