PHL better off enforcing current mining law — ANZCHAM

Categories: Policy News and Updates

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Date Posted: 06 Mar 2015

The government should focus on better enforcement of the current Philippine mining law instead of changing the mining revenue regime if it wants to further maximize the benefits from natural resources, an official of the Australian-New Zealand Chamber of Commerce (ANZCham) said.

“We think the Mining Act has got the reputation as one of the best pieces of legislation, we should stick by it and enforce it,” ANZCham President Ian W. Porter said in an interview at the sidelines of the “Arangkada Philippines” forum last Tuesday.
ANZCham, along with other business groups of the Joint Foreign Chambers of the Philippines on Tuesday, said the mining sector remained frozen with no new exploration permits being granted.

Both local and foreign business groups have registered apprehensions over the new revenue-sharing bill being proposed by the Malacañang’s Mining Industry Coordinating Council and submitted to Congress last month for deliberation and possible enactment as House Bill 5367.

If passed, the new measure will lift the government’s moratorium on the grant of large-scale mining permits, which has been in place since 2011 and extended indefinitely through Executive Order 79 signed July 6, 2012.

As “owner of the minerals,” the government gets a 55% share in adjusted net mining revenue, or 10% of a company’s gross revenue, whichever is higher; and 60% of any windfall profit above the net revenue threshold.

This is higher than the sharing scheme provided by the Philippine Mining Act of 1995 currently in place, in which the government gets a 50% share in profits of foreign miners operating in the Philippines under Financial or Technical Assistance Agreements, and a 2% excise tax on actual market value of output under Mineral Production Sharing Agreements with local companies.

The new measure also provides, however, that the government’s share comes in lieu of corporate income tax, royalty to indigenous cultural communities, duties on imported specialized capital mining equipment, mayor’s fee and/or business permits “and other fees and charges imposed by host local government units.”

However, mining companies will still have to pay value-added tax, capital gains tax, stock transaction tax, documentary stamp tax, withholding tax on passive income, donor’s tax, environmental fees, real property tax, Securities and Exchange Commission fee, water usage fees, as well as administrative and judicial penalties when incurred.

Business groups earlier said that changing mining policies and further raising duties to be paid by investors would further turn away potential investments, and would run counter to government’s goal of cornering a bigger share of mining output.

“Mining is not moving at all,” Mr. Porter said. “If a good piece of legislation is not being enforced or acted upon, why go to another piece of legislation?”

In a keynote speech during Tuesday’s forum, Senate President Franklin M. Drilon said the Senate will “review and possibly enact” the proposed mining revenue sharing scheme, but only after “taking into consideration the role of the government as the owner of the minerals and the impacts of mining activities on environment and community.”

The Malacañang said it wants the new bill to be approved by June, a timetable which Congress leaders could not assure, citing the need for more consultations with stakeholders.



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