MANILA, Philippines – The Chamber of Mines of the Philippines (COMP) is urging Malacanang to review the mining tax scheme proposed by the Mining Industry Coordinating Council (MICC).
In a letter addressed to the Office of the President, the mining group said the proposed tax structure isn’t fair and will not attract investments into the Philippines as taxes will be “much higher” compared to large mineral producing countries such as Canada, Australia, Peru, South Africa, Chile and Papua New Guinea.
“The MICC-proposed tax structure cannot, by any measure, be considered as fair or equitable, much less competitive,” the group said.
“There are other countries with more reasonable tax structures and are equally well-endowed (if not better) than the Philippines,” it added.
The MICC, composed of economic and climate change officials, approved a proposed revenue sharing scheme where the government would take either a 10 percent tax on gross revenues or a 55 percent tax on adjusted net mining revenues, whichever is higher, plus a percentage of windfall profit.
The new scheme aims to replace the corporate income tax of 30 percent, a 2 percent excise tax, and 5 percent royalty tax if the company is located in the mineral reservation.
COMP expressed dismay that the proposal was submitted for the President’s approval “without taking into consideration comments and observations not only from the mining industry that will be directly affected by said policy but by authoritative third parties.”
The group also stressed that government’s perception that the mining industry is not paying enough taxes is “premised on a wrong interpretation of MGB statistics.”
“The total taxes of P13.4billion in 2010 over total gross production value of P145.3billion was 9.2%, giving the impression that the industry was paying only a minuscule amount to government. However, that analysis includes output from small scale gold miners (whose sales to BSP is on a “no names” basis), where there are no taxes paid, hence the wrong impression. By removing output from small scale gold, the ratio is 13.1%, but this may still be inaccurate as pointed out by the AIM study,” it said.
COMP, led by its chairman Artemio Disini and president Benjamin Romualdez, said it is open to meeting with Malacanang and the MICC to discuss the matter in detail.