Gov’t engages miners on proposed revenue sharing scheme

Categories: Business Updates

Date: 26 Aug 2014

The Mining Industry Coordinating Council (MICC) has reached out to the Chamber of Mines of the Philippines and other foreign chambers as it hopes to work out the issue raised by the local and foreign business community over the proposed mining revenue-sharing scheme.

Mines and Geosciences Bureau director Leo L. Jasareno however admitted that there would be little room left for further adjustments in the proposed bill which was already submitted to the Office of the President (OP).

“The [business groups] sent a formal letter to the MICC, raising some issues, such as the government’s share [under the new bill] being too high, and that the proposed scheme will not be competitive and will only discourage further investments,” Jasareno explained. “But the proposed bill is already completed and is with the Office of the President. We just want to meet with them to discuss the issues and explain to them our side. This is part of our protocol to continue engaging them.”

The MICC is also set to meet with members of Congress on Sept. 1 to push the proposed bill.

Under the MICC-proposed tax-sharing scheme, the government will take 55 percent of a mining operation’s adjusted net revenue or 10 percent of gross revenue, whichever is higher. There are also provisions on taking a certain percentage from windfall profits. This will be much higher than the current tax regime, which only takes 2 percent of the gross revenue in a mining operation, plus 5 percent if the mining site is classified a mineral reservation area.

“That’s the principle behind the new scheme, for the government to have a higher share or stake and to implement a more simplified computation,” Jasareno further said.

Business groups have earlier called for the retention of the existing Philippine Mining Act, considering it to be an effective piece of legislation if properly implemented.

The Canadian Chamber of Commerce of the Philippines also cautioned the government in further raising taxes on mining under the proposed reforms to the existing Mining Act because this would only serve as a disincentive to many prospective investors.

The Philippine government must also strictly regulate small-scale miners to ensure that they will pay their fair, rightful share of taxes to the government. The government must also make sure that these miners will be as socially and environmentally responsible as the large mining companies, CanCham president Julian H. Payne said in an earlier interview.

COMP, for its part, expressed dismay over the MICC’s proposed tax hikes, which the group said would not help in attracting investments needed to develop the country’s mineral resources in a responsible manner.
Written by: Amy R. Remo

Source: http://business.inquirer.net/177337/govt-engages-miners-on-proposed-revenue-sharing-scheme

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