Review of mining tax scheme sought

MANILA, Philippines - The Chamber of Mines of the Philippines (COMP) has asked Malacanang to review the proposed mining taxation scheme created by the Mining Industry Coordinating Council (MICC) saying the tax structure discourages investments in the extractive sector.

In a letter dated July 3, COMP said the MICC did not consider the suggestions of the industry in formulating the revenue-sharing scheme.

 “We are dismayed that the MICC had moved forward with a proposed increased tax policy without taking into consideration comments and observations not only from the mining industry that will be directly affected by said policy but by authoritative third parties,” COMP said in the letter sent to the Office of the President yesterday.

The MICC, in May, approved the imposition of either a 10-percent tax on gross revenues or a tax of 55 percent on adjusted net mining revenues (ANMR) plus a percentage of windfall profit, whichever would give higher revenues to the government.

ANMR pertains to the difference between gross sales and direct cost (direct mining cost and administrative expenses).

Contractors shall still be liable to pay real property tax, stock transaction tax, documentary stamp tax, withholding tax on passive income, as well as regulatory fees and charges.

Incentives to mining investments shall be limited to duty-free importation of specialized capital equipment and five-year amortization of pre-operating 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 had been submitted to the Office of the President for approval.

 “The MICC-proposed tax structure cannot, by any measure, be considered fair or equitable, much less competitive,” the COMP letter stated. “It will not attract quality investment that the country needs to be able to develop its mineral resources in a responsible manner.”

The COMP said the results of its financial modeling shows that the Philippine government’s share under such proposal would be “much higher” than the share of large mineral producing countries such as Canada, Australia, Peru, South Affrica, Chile, Papua New Guinea.

Miners, instead, are proposing a revenue-sharing scheme based on the actual profits made by mining firms.

“We are open to the idea of a sliding tax rate which is based on income,” said COMP vice president for legal and policy Ronald Recidoro.