MANILA, Philippines - Miners are opposing the new revenue sharing policy proposed by the Mining Industry Coordinating Council (MICC), warn it would make the local mining industry uncompetitive.
In a statement, the Chamber of Mines of the Philippines (COMP) said the higher taxes proposed by the MICC would discourage the inflow of mining investments in the country.
“The Philippine mining industry currently pays one of the highest tax rates in the world. The MICC proposal to impose more taxes will negatively impact one of the country’s strategic economic potentials, rendering Philippine mining projects uncompetitive and killing an industry that directly supports 250,000 families with a multiplier factor that has benefited millions of Filipinos,†said COMP.
The MICC last week approved the imposition of either a 10-percent tax on gross revenues or a tax of 55 percent on adjusted mining revenues, plus a percentage of windfall profit, whichever would give higher revenues to the government.
Adjusted mining revenues pertain to the difference between gross sales and direct cost (direct mining cost and administrative expenses).
The new revenue sharing scheme would apply to metallic mining projects holding a Mineral Production Sharing Agreement (MPSA) and Financial Technical Assistance Agreement. (FTAA).
The draft bill would be submitted to the Office of the President for approval.
The MICC is a joint committee of the Economic Development Cluster and the Climate Change Cluster created under Executive Order 79, tasked to formulate a new revenue sharing scheme between the government and mining companies.
Since the issuance of the new mining policy (Executive Order 79) in July 2012, the government has stopped granting new mining contracts while a new taxation regime is being finalized.
Under the present system, mining companies operating under an MPSA pay the regular corporate income tax, two percent excise tax, business tax, royalty payments for indigenous peoples directly affected by mining operations, and royalty for mineral products extracted from mineral reservations
Those firms that operate in mineral reservation areas also pay an additional five-percent royalty.
Those that operate under an FTAA must share 50 percent of their revenues with the government.
Today, only OceanaGold Philippines, the local arm of Australian miner OceanaGold Corp., operates under an FTAA. It runs the Didipino copper-gold mine in Nueva Vizcaya.
The COMP has been urging the government to implement industry reforms that would spur investments in the extractive industry and maximize the production stream instead of increasing taxes imposed on the industry.
Earlier, the group urged the development of supply linkages between Philippine mining firms and related industries as well as the revival of abandoned mines.
“To safely and equitably harness this potential the country needs to have a competitive and stable policy environment that will attract the right investors with the capacity to deploy the most efficient and environmentally safe technologies,†said the group.