The Chamber of Mines of the Philippines (COMP), reiterates its support for a two-pronged tax measure on mining featuring an income-based royalty and a windfall profits tax, both with graduated rates depending on margins, as passed by the House under HB8400. The two new tax provisions are on top of the excise tax that doubled to 4% of gross revenues under TRAIN 1 and other taxes and fees. This would also be in line with the tax regimes in major mining economies like Chile, Peru, and Canada, which have income-based mining tax provisions.<\/p>\n
The COMP position is in response to a Department of Finance (DOF) proposal to impose a flat 5% royalty tax on all mining operations, whether a mineral reservation or not, and a top-up provision to 50% of yearly income over and above all other current taxes and fees. COMP Chairman Gerard Brimo told the Senate Ways and Means Committee that the DoF proposal would jeopardize the continuing operations of the few remaining copper mines in the country that are currently marginal due to low prices and ore grades and would make the Philippine mining tax regime grossly uncompetitive.<\/p>\n
In discussion with the Senators, the COMP referred to a 2012 study on the Philippine mining and petroleum tax regimes by the Fiscal Affairs Dept. (FAD) of the IMF, which mentioned that tax impositions that would reach 10% of gross revenues is high by international standards. The proposal by the DOF to introduce a 5% royalty applicable to all mines on top of all other impositions on gross revenues would place the total beyond 10%.<\/p>\n
The FAD study also commented extensively on the tax structure of the FTAA mining permit, which contains a top-up provision to 50% of yearly income following a cost\u00a0recovery period of five years, within which period income tax is not paid. The study, which was made before the excise tax doubled to 4%, noted that such structure is not competitive internationally and is a tough regime for investors. The COMP noted that the desired DOF structure, apart from the introduction of a 5% royalty applicable to all mines, also contains a top-up provision to 50% of income similar to the FTAA but does not provide for a cost recovery period, making it even more expensive than the FTAA tax regime.<\/p>\n
\u201cIf we are to ensure that we can maximize the potential of our country\u2019s mineral resources as a contributor to economic prosperity, we need to establish a new tax regime that has to be progressive and competitive\u201d, Brimo added.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" The Chamber of Mines of the Philippines (COMP), reiterates its support for a two-pronged tax measure on mining featuring an income-based royalty and a windfall profits tax, both with graduated rates depending on margins, as passed by the House under HB8400. The two new tax provisions are on top of the excise tax that doubled […]<\/p>\n","protected":false},"author":1,"featured_media":1553,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[4],"tags":[],"class_list":["post-2395","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-press-release"],"yoast_head":"\n