New taxation scheme eyed for mining sector

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Category: Economy

Published on Thursday, 20 December 2012 20:01

Written by Jonathan L. Mayuga / Reporter

THE government is considering a simplified taxation system for the minerals development sector that will increase government share, higher than the current 2-percent excise tax, in the profit of mining companies.

The idea, according to Environment Secretary Ramon J.P. Paje, is to impose tax on both the gross and net profits of mining companies, and generate revenues enough to contribute 4 percent to the gross domestic product.

On top of the government share that will be deducted is tax on the net profit.

He said the Mining Industry Coordinating Council is inclined to propose the integration of the windfall tax, which allows mining company to pay based on profit, often at a later date, when the business is growing.

 Currently, the minerals sector contributes less than 1 percent to the gross domestic product.

“We are still talking about the tax rate,” he said.

Paje said a draft tax measure for mining is being finalized by the Mining Industry Coordinating Council.

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The enactment of a new tax measure for mining is one of the requisites in the lifting of the moratorium on the issuance of new mining permits following the issuance of Executive Order 79 by President Aquino and its implementing rules and regulation by the Department of Environmental and Natural Resources (DENR).

“The strategy is to go for world-class mine only.  Those who cannot meet the standard need not operate. This will eliminate marginal mines,” he said.

Besides, he said marginal mines cannot pay for environmental damages in case of mining disasters.

The DENR chief said with Mr. Aquino’s approval of the draft tax measure for mining, it will then be submitted to Congress for consideration.