The Senate Committee on Ways and Means has issued a Notice of Public Hearing on January 29, 2019 to take into consideration the proposed legislative measures on Fiscal Regime and Revenue Sharing Arrangement for the Mining Industry.
Among those deliberated in the said hearing were House Bill No. 8400, which was approved by the House of Representatives on November 12, 2018, and Senate Bill Nos. 225, 927, and 1979, authored by Senate Minority Leader Franklin M. Drilon, Senate President Pro-Tempore Ralph G. Recto, and Senate President Vicente C. Sotto III, respectively.
House Bill No. 8400
House Bill No. 8400, introduced by Cong. Estrellita B. Suansing, seeks to rationalize and institute a single fiscal regime applicable to all mineral agreements. In particular, it aims to impose a margin-based royalty tax on all large-scale mining operations outside Mineral Reservations, as follows:
|
Margin |
Royalty |
|
1% up to 10% |
1.00% |
|
above 10% up to 20% |
1.50% |
|
above 20% up to 30% |
2.00% |
|
above 30% up to 40% |
1.50% |
|
above 40% up to 50% |
3.00% |
|
above 50% up to 60% |
3.50% |
|
above 60% up to 70% |
4.00% |
|
above 70% |
5.00% |
For large-scale mining operations within Mineral Reservations, a royalty equivalent to 3% of gross output of the minerals or mineral products extracted or produced by the mining operations, exclusive of all other taxes, shall be imposed, while for small-scale metallic and non-metallic mining operations, a royalty tax equivalent to 1% of the gross output.
If passed into law, this will amend the existing 5% royalty tax for mining operations within Mineral Reservations.
A margin-based tax on windfall profits gained from mining operations shall also be levied, ranging from 1 to 10%, as the case may be.
[Read: http://www.congress.gov.ph/legisdocs/first_17/CR00891.pdf]
Senate Bill Nos. 225, 927 and 1979
Senate Bill Nos. 225 and 927 prescribe that all mining areas shall be declared by the President as Mining Industry Zones (MIZs) through a Presidential Proclamation, prior to any mining operations that may be conducted in the said areas. The Philippine Mining Development Corporation is designated as the Administrator of the MIZs.
Both Bills also propose a fiscal regime and revenue sharing arrangement between the Government and the Mining Contractor for large-scale metallic mineral mining operations, wherein the Government Share shall be ten percent (10%) of Gross Revenue or fifty-five percent (55%) of the Adjusted Net Mining Revenue (ANMR), whichever is higher. In the event that the ANMR Margin exceeds fifty percent (50%) due to increase in metal prices or other factors, the Government, as owner of the minerals, shall get fifty-five percent (55%) of the threshold ANMR plus sixty percent (60%) on the excess ANMR. ANMR is arrived at after deducting from Gross Revenue the allowable deductible expenses.
[Read: https://www.senate.gov.ph/lisdata/2364620304!.pdf and
https://www.senate.gov.ph/lisdata/2448421068!.pdf]
Meanwhile, Senate Bill No. 1979 proposes to retain the royalty rate of 5% for all mining operations within Mineral Reservations, while for mining operations located outside Mineral Reservations, a phased-in rate is prescribed, as follows:
|
Royalty Rate |
|
|
On the first three years upon effectivity of the Act |
3% |
|
On the fourth year |
4% |
|
On the fifth year and thereafter |
5% |