The Bureau of Internal Revenue (BIR) on Thursday (Feb. 20) issued guidelines for tax exemption of small scale miners selling their gold to the Bangko Sentral ng Pilipinas (BSP) that would start in March.
The BIR’s Revenue Regulation (RR) No. 4-2020 was signed by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay. It serves as the implementing rules and regulation of Republic Act No. 11256 signed by President Rodrigo Duterte in 2019.
The regulation listed these as tax exempt—sale of gold to the BSP by registered small-scale miners and accredited traders and the sale of gold by registered small-scale miners to accredited traders for eventual sale to the BSP.
The BIR regulation also listed those as exempt from excise.
If the small-scale miner or trader already paid excise prior to selling gold to the BSP, a claim for credit or refund may be filed at the BIR commissioner’s office.
To qualify for tax exemption, small-scale miners and traders should have tax identification numbers.
The BSP would require “valid and effective small-scale mining contract” among other documents before certifying any gold sale as tax exempt.
If any sale of gold to the BSP was found unqualified for tax exemption, the seller “shall be primarily and solely liable for any deficiency taxes.”
The BIR regulation mandated the BSP to submit to the BIR a monthly report on transactions with small-scale miners and traders. Small-scale miners and traders have up to three years to register for tax exemption.
During the three years, the BSP would issue “temporary certification” to small-scale miners and traders who would submit required documents.
The BIR, under then Commissioner Kim S. Jacinto-Henares, in 2011 slapped excise and withholding tax on all gold sales to the BSP, leading to decline in the BSP’s domestic gold purchases.
In 2019, the BSP said increasing gold purchases domestically would lead to “a net increase in gross international reserves.”
This, the BSP said, would improve the country’s economic standing and lower the cost of funding for the republic “as well as doing business for the private sector.”
The move, BSP said, will also “help prevent the smuggling of Philippine gold through the black market to other countries.”
It would also allow small-scale miners and traders to “sell gold at international market prices,” the BSP added.
Republic Act No. 7076, or People’s Small-Scale MIning Act of 1991, required the BSP to buy gold from artisanal miners, which BSP would refine to make them acceptable in gold bullion markets.
The BSP has five gold-buying stations in Baguio City, Davao City, Naga City, Quezon City, and Zamboanga City.