Business World
Globally recognized, the Philippines is one of the most mineral-rich countries, with an estimated $840 billion worth of untapped mineral wealth. But unknown to most, it is subject to doubled excise taxes when the Tax Reform for Inclusion and Acceleration (TRAIN) Law took effect.
Along with other local and national regulations and taxes from excise tax, royalty-mineral reservation, local business tax to registration fee, withholding tax and VAT, among others, it is a heavily taxed industry.
Mining industry statistics from the Mines and Geosciences Bureau (MGB) shows that total gross production value of mining is at P109.5 billion during the First Quarter of 2018. However, more recent data from the Philippine Statistics Authority notes that gross value added in mining and quarrying declined by 1.1% in the third quarter of 2018 from the same period in 2017 despite expansion of gold and copper subsectors by 9% and 7.7%, respectively.
Industry players and third-party observers blame the country’s unfriendly policy environment to its inability to tap the sector’s potentials. To add salt to injury, the House of Representatives recently passed on third reading House Bill (HB) 8400 which further increases mining taxes.
The final version (HB 8400) imposes a range of royalties applied to income from mining operations. This includes a 1-5% margin-based royalty tax on large-scale mines, depending on operation margins, a 1-10% windfall profits tax on income from mining operations, and thin capitalization and ring-fencing.
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