Senate subcommittee to review mining tax regime proposals

Senate subcommittee to review mining tax regime proposals

THE SENATE has formed a ways and means subcommittee to tackle proposals to simplify and amend the fiscal regime for the mining industry.

“Upon the instruction of the committee on ways and means chairperson Senator Sherwin T. Gatchalian, I manifest for the creation for the record of a subcommittee to deliberate on House Bill No. 8937… and other such bills which may be referred to the committee covering the same topic,” Senate Majority Leader Joel J. Villanueva said on the Senate floor late Wednesday.

Senator and Finance Committee Chairman Juan Edgardo M. Angara will head the subcommittee, he added.

The House of Representatives in September approved House Bill No. 8937 on final reading. It seeks to establish a new fiscal regime for the mining industry through margin-based royalties and a windfall profit tax on large-scale miners.

The Department of Finance (DoF) on Wednesday pushed for a simpler mining regime with fewer tax tiers and lower rates to boost compliance.

It is proposing that large-scale miners operating within mineral reservations pay the equivalent of 5% of gross output, up from the 4% proposed in the House bill.

The DoF is also pushing to simplify the windfall profit tax to four tiers from 10 proposed in the House.

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. A mining fiscal regime measure has yet to be filed before the Senate.

The DoF is expecting its proposals for the fiscal regime to generate an average of P10.23 billion a year between 2025 and 2028, it said in a statement.

The government also expects to generate P5.55 billion yearly from royalties from miners operating within mineral reservations, P1.31 billion from royalties on miners outside mineral reservations, and P3.37 billion from windfall profit taxes.

Michael T. Toledo, chairman of the Chamber of Mines in the Philippines, told BusinessWorld that the current mining fiscal regime is more burdensome than those of Indonesia, Chile, Peru and South Africa.

“The addition of income-based taxes being proposed in HB 8937 will help sustain existing mining operations and encourage quality investment in the hugely untapped Philippine minerals sector,” he said last month. — John Victor D. Ordoñez