Chamber of Mines urges rethink of 5% royalty plan

The Chamber of Mines of the Philippines has called on the government to re-evaluate its plan to collect a 5-percent royalty from mining operations.

COMP president Benjamin Philip G. Romualdez said in a statement that the competitiveness of the Philippine mining industry is already hampered by high tax rates on gross revenues.

The tax rates, he said, are even higher than in Africa and OECD [Organization for Economic Co-operation and Development] member-countries, most of which are developed economies.

Romualdez cited studies showing that while the Philippines ranks among the top 20 countries with the biggest potential for mining, it ranks 66th out of 79 countries in terms of government policy (this includes taxes) and this has affected the flow of foreign investments.

Romualdez said the Philippines also has the highest tax rate of 41 percent of operating profit (or net income before tax) compared with 33 percent in OECD, 34 percent in Africa and 40 percent in Latin America.

The Department of Environment and Natural Resources has proposed to increase mining revenues by declaring current mining operations and those in advanced stage of development and planning as mineral reservations, in order to collect an additional 5-percent royalty on top of the 2-percent excise tax presently imposed on gross sales.