Philippines: mining tax will be tough test for Aquino Just a day or two after mid-term elections that tightened Philippine president Benigno “Noynoy” Aquino’s hold on Congress, his economic managers unveiled a package of potentially contentious proposals to raise mining taxes that will test the president’s grip on the law-making body when it convenes in July. The government then began a series of meetings with mining industry representatives on a draft mining tax law that aims to simplify more than 20 taxes and fees on mining activities by the national and local governments into just a few payments, while raising the government’s total revenue take that officials say is pitifully low. Jun 5, 2013 by Roel Landingin Ramon Paje, the environment secretary, said the government wanted to impose a single excise tax rate of 10 per cent on gross sales of mineral products in lieu of the existing 2 per cent excise tax, 5 per cent royalty tax on minerals in so-called state reservations, an indigenous people’s share and local business taxes. He estimated that the proposal would increase several-fold the government’s excise tax collection on mineral products. “If we are getting 1bn pesos now, we will be getting about 10bn pesos later on,” he said. The government will also insist on applying the tax on the gross value of each mining company’s output, which will be computed using monthly trading averages for gold, copper and other precious metals at the London Metals Exchange. “The formula will be based on prevailing prices rather than actual transaction value to avoid the complications caused by hedging and other factors,” Paje said. In addition to the excise tax, the government also wants a share of earnings before income tax above a threshold level to capture windfall profits when metal prices surge. Local governments will also continue to collect real property taxes on mining companies but subject to a cap on annual increases in tax assessments. The government began considering higher mining taxes last year when Aquino (pictured above) issued an executive order overhauling mining policies in a climate of rising resource nationalism around the world. He froze the processing of applications for new mining permits, causing mining investments to fall from a peak of $966m in 2010 to $625m in 2011 and just $160m in the first half of 2012, according to the latest government data. The Philippines is not among the world’s major mineral producing countries but it has caught the attention of a few global mining companies such as Xstrata, which plans to invest $5.9bn to develop one of the world’s largest untapped copper deposits on the southern island of Mindanao, and Sumitomo Metals Mining which operates a nickel refinery on Palawan island and plans to build a second $1bn plant on Mindanao. Mining industry chiefs who have seen the proposed mining tax package find the proposed tax rate too high and are preparing to lobby lawmakers to temper the government’s proposals. Aquino’s influence in Congress will be sorely tested. blogs.ft/beyond-brics/2013/06/05/philippines-mining-tax-will-be-tough-test-for-aquino/?#axzz2VZF1s8st
Posted on: Sat, 08 Jun 2013 12:24:38 +0000
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