Uniform 5% royalty on mining pushed

The Department of Finance (DOF) is asking the Senate to retain its proposed uniform 5-percent royalty rate for all mining operations under its proposed tax reform package “2 plus.”

In a statement Tuesday, Finance Assistant Secretary Maria Teresa S. Habitan said the DOF’s original proposal would generate an additional P7.2 billion in revenues, almost double the P3.7 billion to be collected from the bill approved by the Lower House last year.

The DOF proposal was contained in Senate Bill No. 1979 authored by Senate President Vicente Sotto III.

“The DOF prefers a rationalized and single fiscal regime for the mining industry to make this sector’s tax system simpler, more equitable and more efficient, in line with the overriding goal of the Duterte administration’s comprehensive tax reform program,” Habitan said.

On the other hand, the House version of the mining revenue reform bill would impose a lower royalty of 3 percent on large-scale mining inside mineral reservations; 1-5 percent of profit margins for large mines outside reservations, and 0.1 percent of gross output for small-scale mining whether inside or outside mineral reservations.

“In the House, there was a considerable discussion about how the royalty was going to be calculated and with different methodologies on that. What finally was approved by the House can be considered a compromise position. The DOF always wanted a simpler manner of computing the royalty,” Habitan said.

At present, large mining operations within reservations are being slapped 5-percent royalty.

Citing data from the Bureau of Internal Revenue and the Mines and Geosciences Bureau, Habitan said a total of P3 billion was collected from mining firms in 2017—P1.9 billion in excise taxes on top of P1.1 billion in royalties.

However, “most mines in the country operate outside mineral reservations and do not pay royalty,” Habitan noted. —BEN O. DE VERA