Tax-free status of small miners’ gold sales to BSP restored
Small-scale miners may now sell gold sourced from their mining operations to the central bank tax free after President Duterte enacted a new law meant to boost the dwindling supply of the precious metal held by the government.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the new law—“An Act to Strengthen the Country’s Gross International Reserves”—would cover the sale of gold by small-scale miners to accredited traders for the eventual transfer to the central bank.
“The tax regime under Republic Act No. 11256 would allow the BSP to increase its purchases of domestic gold to further build up the level of the Philippines’ gross international reserves, which serves as the country’s primary buffer against external economic shocks,” the central bank said.
The law, cleared Congress last March and signed recently by Mr. Duterte, exempts from excise and income tax the sale to the BSP of gold sourced from small-scale mining activities.
The central bank said the new law aimed to remedy the 99-percent drop in BSP’s domestic gold purchases from more than 900,000 fine troy ounces (FTO) in 2010 to around 10,000 FTO in 2019 as a result of the taxation of the sale of gold to the central bank beginning July 2011.
“An increase in BSP’s gold purchases using pesos leads to a net increase in the gross international reserves, thereby improving the country’s economic standing and lowering the cost of both funding for the republic as well as doing business for the private sector,” it added.
More importantly, the new law will also help prevent the smuggling of Philippine gold through the black market to other countries and allows small-scale miners and traders to sell gold at international market prices.
While the national government would forego only about P35 million annually from its income on BSP’s gold purchases, the Philippines as a whole is expected to benefit from keeping the gold right in the country for sale to the BSP, the central bank explained.
