The local gold trade is now almost completely in the hands of black market operators and the country’s central bank—the agency tasked with buying the precious metal from miners—is completely powerless to stop it.
This was disclosed by an official of the Bangko Sentral ng Pilipinas in a recent talk with reporters, who pointed out that the central monetary authority has neither the necessary resources nor the mandate to prevent gold smuggling.
“We can’t stop smuggling,” BSP Assistant Governor Manuel Torres said in a forum in Quezon City. “The BSP has no police powers to stop such illegal activities.”
The official, who oversees the operations of the central bank’s mint, refinery and printing operations in Quezon City, said that as much as 95 percent of gold trade in the Philippines is now made through the black market.
The amount corresponds to the drop in the volume of gold sold by traders and small-scale miners to the central bank after authorities started collecting a 7-percent tax on gold sales—consisting of a 2-percent excise tax and a 5-percent creditable withholding tax—since last year.
Under the law, the BSP is required to buy all the gold from local producers. Since the BIR imposed the tax at the point of sale, however, gold traders have shied away from the BSP, with most choosing to sell their precious metals to smugglers who do not impose excise taxes.