THE SENATE is hoping to start by May plenary debate on a measure seeking to simplify and amend the fiscal regime for the mining industry, a senator said on Thursday.
“We want to sponsor it when we come back in May,” Senator Juan Edgardo M. Angara, who heads a ways and means subcommittee tackling House Bill No. 8937, which seeks to simplify the tax regime for the industry, told reporters after a hearing on the measure.
The Chamber of Mines is looking into the Department of Finance’s (DoF) proposal of reduced windfall profit tax tiers, and plans on seeking a middle ground that simplifies the fiscal regime without increasing taxes by too much, Michael T. Toledo, the chamber’s chairman, told BusinessWorld.
“We are 100% for the House proposal,” he said. “There are just differences in tiers as stated in our position paper, we made an analysis; the lowering of the tiers would increase the average effective tax rate by about 1%.”
He said that the mining industry is overtaxed, adding that measures to amend the fiscal regime should consider local and national taxes that mining companies have to deal with.
The House of Representatives approved the bill in September. Its version proposes margin-based royalties and a windfall profit tax on large-scale miners. There is no Senate counterpart bill.
The DoF is proposing a simpler mining regime with just four windfall profit tax tiers from 10 tiers under the House bill.
The current regime requires mining companies to pay corporate income tax, excise tax, royalty, local business tax, real property tax, and fees to indigenous communities.
The Mines Geosciences Bureau (MGB) backs the House proposal retaining royalties for metallic and non-metallic operations within mineral reservation at 5% of the market value of the gross output, MGB Assistant Director Marcial Mateo said at the hearing.
The MGB also supports the DoF’s proposal of a royalty of 3% for metallic mining operations outside reservations, and 1% for non-metallic operations.
Philex Mining Corp. Senior Vice-President and Chief Financial Officer Romeo B. Bachoco said a simpler mining tax regime would spur processing and production of copper and gold, noting that foreign investors are reluctant to fund mining projects here due to lack of “certainty in the tax regime.”
“We are banking on the passage (of this House measure),” (which is) “very timely for us and will address the concerns of our investors alike.”
The DoF is expecting its proposals for the tax regime to generate an average of P10.23 billion a year from 2025 and 2028.
The government also expects to generate P5.5 billion from royalties from miners operating within mineral reservations, P1.31 billion from royalties on miners outside reservations and P3.37 billion from windfall profit taxes.
“This is only the first step in developing the mining industry, we need to establish (mineral) processing first and proper valuation of ores is needed,” Finance Assistant Secretary Karlo Fermin S. Adriano said at the hearing. — John Victor D. Ordoñez
