New fiscal regime for mining industry signed into law

PHILIPPINE President Ferdinand R. Marcos, Jr. on Thursday signed into law a measure that overhauls the tax regime for large-scale metallic mining, imposing royalties and profit-based levies to boost government revenue and share gains with host communities.

- Erika Mae P. Sinaking

"This reform mandates mining companies that operate within government-designated mining sites to pay a royalty of 5% of their gross output," the President said during signing ceremonies for Republic Act No. 12253 or the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act at the presidential palace.

"Those operating outside mineral reservations, on the other hand, will be subject to a margin-based royalty on income from metallic mining operations," he added.

The measure also introduces a windfall tax on companies whose profit margins exceed 30%. "This ensures that the government receives its fair share from the extra profit and that the benefits will ripple into the lives of ordinary Filipinos," Mr. Marcos said.

Each mining contractor will now be treated as a separate taxable entity, preventing companies from offsetting one project’s losses against another’s gains.

The law directs the Bureau of Internal Revenue and the Bureau of Customs, in coordination with the Mines and Geosciences Bureau (MGB), to audit past mineral sales and exports.

Local governments are set to benefit from the reform, with 40% of gross collections from excise taxes, royalties, and related charges allocated to them, Malacañang said in a statement.

In addition, 10% of royalties from mining sites will go to the MGB and Metals Industry Research and Development Center to fund exploration, research and environmental protection initiatives.