Bantay kita MINING TAX BILLS Compared · of RA 7942 Case in Point: The Philippines’ effective tax...

Bantay kita MINING TAX BILLS Compared 17th Congress

2

MatrixofMiningTaxBillsProvisions

PROVISIONSONGOVERNMENTSHARE 3

PROVISIONSONSHAREOFLGUS 4

PROVISIONSONROYALTYTOIP 6

PROVISIONSONCORPORATEINCOMETAX 7

PROVISIONSONINCENTIVES 8

PROVISIONSONEXPORTTAX 9

PROVISIONSONDOWNSTREAMINDUSTRY 10

PROVISIONSONEXCISETAX 11

PROVISIONSONNATURALRESOURCETRUSTFUND 12

PROVISIONSONRINGFENCING 13

PROVISIONSONZONING 13

PROVISIONSONSCOPEANDAPPLICATION 15

PROVISIONSONCOLLECTINGAGENCY 16


3

ProvisionsonGovernmentShareCurrentPolicy:Governmentcollects2%excisetaxonmineralsasgovernmentshare.Onlycompaniesoperatinginmineralreservationspayanadditional5%royalty.Miningcompaniesalsopayregulartaxesincludingcorporateincometax,localbusinesstax,withholdingtax,customsduties,VATamongothers.(RelevantLaws:IRRofRA7942CaseinPoint:ThePhilippines’effectivetaxrateinminingisatsecondlowestquartileamongselectminingcountries.Thecountry’s2%excisetaxpalesincomparisonwithIndonesia3.75-5%,andVietnam’s10-15%.In2013,paymentstotaledP5.7billionpesoswhichis7.65%ofestimatedtotalrevenuesthatyear.BK’sStand:Asurchargewhenpricesofmineralsareontheupswingisnecessaryforthecountrytobenefitfromwindfallprofits.BK’sproposaloflevyingthe5%royaltyonmineralreservationsonALLminingoperationsandcombiningitwiththecurrent2%excisetaxineffectincreasestheshareofnationalgovernmentfromminingoperationsto7%ofgrossvalueofproductionontopofotherregulartaxesthatanygivenbusinessestablishmentpaystogovernment.

AlternativeMineralManagementBill(SB1069and

SB1191)

MiningIndustryCoordinatingCouncil(withversionsfiledunder

SB225andSB927)BantayKitaBill(withversionsfiledinSenateunderSB1125)

Section98:Thecontractorshallpaytaxesandfeesasrequiredbylawincludingbutnotlimitedto:

a. Contractor’sincometax;b. Customs,dutiesandfees

onimportedcapitalequipment;

c. Valueaddedtaxonimportedgoodsandservices;

d. Withholdingtaxoninterestpaymentsonforeignloans;

e. Withholdingtaxondividendstoforeignstockholders;

f. Documentarystamptaxes;

g. Capitalgainstax;h. Excisetaxonminerals;i. Localbusinesstax;j. Realpropertytax;k. Communitytax;l. Occupationfees;m. Registration,

accreditation,andpermitfees;and

n. WaterusagefeesSection99.Asidefromthetaxesandfeesreferredtointheprecedingsection,Governmentshallhaveatleastashareequivalenttotenpercent(10%)ofthegrossrevenuesfromthedevelopmentandutilizationof

Section7:Foreveryfinalminingarea,theGovernmentsharethatshallbepaidbythecontractorshallbewhicheverishigherofthefollowing:

a) 10%ofgrossrevenueorb) 55%ofAdjustedNetMining

Revenue;provided,thatintheeventthattheANMRMarginexceeds50%duetoincreaseinmetalpricesorotherfactors,theGovernment,asownerofthemineral,shallget55%oftheofthethresholdANMR,asdefinedinthisAct,plus60%oftheexcessANMR

Thepaymentofgovernmentshareshallbeinlieuofallnationalandlocaltaxesincludingcorporateincometax,royaltyfortheICCs,dutiesonimportedspecializedminingequipment,feesformayor’sand/orbusinesspermits,andotherfeesandchargesimposedbythehostLGUspursuanttotheLocalGovernmentCodeof1991,asamended.Section13:ThegovernmentshareshallberecordedbytheBIRasfollows:

a. 50%ascorporateincometax

b. 50%asroyaltytax

Section7.MiningRoyalty.Thereshallbeleviedassessedandcollectedonminerals,mineralproductsandquarryresourcesamineralroyaltyof5%basedonthemarketvalueofthegrossoutputatthetimeofsale;orthevalueusedbytheBureauofCustomsindeterminingtariffandcustomduties.Section8.CashFlowSurcharge.Asurchargeoftenpercent(10%)shallbeimposedonthecashflowsofeachminingareaforeverytaxablefiscalyear.Forpurposesofthecashflowsurcharge(CFS),eachminingareashallbeconsideredaseparatetaxableentity.ThetaxbaseoftheCFSisdeterminedbyaddingbackthedepreciationandinterestexpenseandotherfinancingchargestotheregulartaxableincomeusedforthepurposesofthecorporateincometax,beforethelosscarryover,andbeforedeductinganycapitalexpenditureandtheregularcorporateincometax.AnysurchargelossiscarriedforwardtosubsequentyearssoastoavoidchargingtheCFSuntiltheminingareahasapositivecashflow.SECTION10.LimitationsontheInterestExpenseDeductions.Thefollowingarelimitationonminingcontractorsforanyinterestexpensedeductions:

A. Ifacontractorhasadebt-to-equityratioinexcessof


4

mineralresourcesthatareownedbyittobesetasideforthegeneralfundofthegovernment."

1.5to1atanytimeduringataxablefiscalyear,adeductionoftheinterestpaidbythecontractorintheportionofthedebtwhichexceedsthe1.5to1rationforthatsamefiscalyearshallnotbeallowed.

B. Ifthedebt-to-equityratioofacontractorexceedsthe1.5to1ratioforataxablefiscalyear,subsectionAwillnotapply,provided,thatduringthesaidfiscalyear,theamountofthedebtofthecontractorshouldnotexceedthearm’slengthdebtamount.

ProvisionsonShareofLGUs

Current:TheLocalGovernmentCodeprovidesfora40-60sharingofnationallycollectedtaxesleviedonthenationalwealthinfavorofthenationalgovernmentanda70-30sharingoflocalbusinesstaxesinfavorofthehostLGUs.(RelevantLaws:Sections289-294ofLocalGovernmentCode)CaseinPoint:In2013,localgovernmentsareentitledtoanestimated23%oftotalminingcollectionsofP5.7billionwhilenationalgovernmentretains73%oftheremaining.Thebruntofthenegativeeffects,however,arefeltmostinthelocallevel.In2012,povertyincidencein10ofthe13miningprovincesishigherthanthenationalaverage.BK’sStand:Toensurethatminingcontributetosustainableandlong-termdevelopmentatthelocallevel,BKisproposingthattheshareofLGUsbeincreasedfrom40%to50%andthelocalbusinesstaxsharingbechangedto80-20%sharinginfavorofthehostLGU.TheMICCProposaltransferspowerofLGUstocollect2%localbusinesstaxandotherfees.

AlternativeMineralManagementBill(SB1069andSB1191)

MiningIndustryCoordinatingCouncil(withversionsfiledunderSB225andSB927)

BantayKitaBill(withversionsfiledinSenateunderSB1125)

Section103.LocalGovernmentUnitshare.LocalGovernmentUnitsshallbeentitledtoashareofthenetrevenuesfromminingoperationswhichshallbepaiddirectlytotheprovincial/independentcomponentcity/highlyurbanizedcitytreasurer/sfordistributiontootherlocalgovernmentunits.Todeterminethegovernmentshare,thefollowingvariablesshallbeconsidered:a)Classificationoflocalgovernment;b)Vulnerability;c)Humandevelopmentindex.Apercentageofthisamountshallbe

Section12:TheGovernmentShareshallbeallocatedasfollows:

a. NationalGovernment-60%

b. LGUshostingtheMiningIndustryZone:40%

Ifthecontractareaisinanancestralland/domain,theroyaltyfortheICCshallbetakenfromtheGovernmentShare.Thereafter,theNetGovernmentShareshallbeallocatedtotheNationalGovernmentandtheLGUsattheabovestatedratio.

SECTION14.ShareofLocalGovernmentUnits.Thelocalgovernmentunithostingtheminingareashallhaveanequitableshareintheproceedsderivedfromtheutilizationanddevelopmentofthenationalwealth,includingsharingthesamewithitsinhabitantsbywayofdirectbenefits.

A. Alocalgovernmentunitshall,inadditiontotheinternalrevenueallotment,haveashareoffiftypercent(50%)ofthegrosscollectionderivedby


5

setasidebytherespectivelocalgovernmentunitsforDisasterRiskManagement.ThisfundshalllikewisebenefitICCs/IPswithintheterritoryofthelocalgovernmentunit.Provided,ThattheadministrativeandoperationalexpensesoftheCouncilshallalsobetakenfromthisshare.

Section13:TheGovernmentShareshallberemittedandpaidbytheContractortotheGovernment.TheICCshareshallbedirectlyremittedandpaidbythecontractortotheICCwithin5daysfromtheendofeachquarter.Within5daysfromtheendofeachquarter,theContractorshallpaythegovernmentshare,netoftheICCshare,ifapplicable,throughtheElectronicFilingandPaymentSystem(EFPS)facilityoftheBIRoritsaccreditedbankwhichshallcreditsuchpayment.TheBTr,within5bankingdaysfromthereceiptthereof,shalldepositthe40%LGUsharetotheaccountoftheLGUsthroughtheirrespectiveGFIsortheirauthorizedagentbank.ThedistributionoftheLGUsharesandtheroyaltiesallocatedtotheICCsshallbebasedonexistinglaws.TheutilizationofthesesharesshallbecoveredbySection18ofthisAct.TheGovernmentShareshallberecordedbytheBIRasfollows:

a. 50%-CorporateIncomeTax

b. 50%-RoyaltyTax

thenationalgovernmentfromtheprecedingfiscalyearfromexcisetaxes,royaltiesandsuchothertaxes,feesorcharges,includingrelatedsurcharges,interestsorfines,andfromitsshareinanyco-production,jointventureorproductionsharingagreementintheutilizationanddevelopmentofthenationalwealthwithintheirterritorialjurisdiction.The50%shareshallbedistributedamongLGUsaccordingtotheLocalGovernmentCodeof1991anditsimplementingrulesandregulations.Providedthatintheeventthattheoperationishostedbyseverallocalgovernmentunits,theshareshallbedividedequitablyamongthehostlocalgovernmentunitsbasedontheamountoforeextractedfromthelocalgovernmentunit.

B. TheBureauofInternalRevenue(BIR)isgiventheauthoritytoinspectminingsitesandmonitortheamountofmineralresourcesextractedbycompanies.TheBIR,theMinesandGeosciencesBureau(MGB)andthePhilippinePortAuthority(PPA)shallreconciletheirfiguresontheamountandvalueofmineralsthatwereactuallyextractedandexportedbycompanies.Thereconciledfigurewillbethebasisfortaxationandallocationofshareamongunitsofgovernment.

C. Withrespecttopaymentofbusinesstax,80%ofthepaymentshallgotothelocalgovernmentunithostingtheminingoperationandthe20%ofthepaymentshallgotothe


6

localgovernmentunitwherethemainofficeofthebusinessislocated.Iftheminingoperationishostedbyseverallocalgovernmentunits,the80%shallbesharedequallybythesaidLGUs.

ProvisionsonRoyaltytoIP

Current:Indigenouspeoples(IPs)hostingminingoperationsareentitledtoatleast1%ofgrossoutput.IPsaregivenrightsbylawtomanagethenaturalresourceswithintheirancestraldomain(AD).MiningcompanieswantingtooperateinanADmustsecureconcernedIPs’freepriorandinformedconsent(FPIC).(RelevantLaws:Section16,RA7942IRRAO210-21)CaseinPoint:In2013,indigenouspeoplesreceivedamere4%oftotalcollectionsderivedfromtheirroyaltycollections.BK’sStand:MICCproposalistoconsolidatetheIProyaltyandthetaxcollectedbyLGUsto10%.ThisprovisionwillremovetheIPs’powertobargainfortheirshareofroyalty.NotethattheminingactstatesthatIPscancollectminimumof1%ofgrosssalessuggestingthereisroomfornegotiationbetweentheIPcommunitiesandtheminingcompanies.

AlternativeMineral

ManagementBill(SB1069andSB1191)



Section100:Indigenousculturalcommunities’royalty.Incaseofmineraloperationswithinancestraldomains,thecontractorshallpayatleasttenpercent(10%)ofthegrossrevenuesasroyaltytotheICCs/IPs.Communitydevelopmentprogramsshallnotbeconsideredasroyaltypayment.ThepaymentoftheroyaltiesshalldirectlybegiventothecommunitiesinaprocessthatbuildontheICCs/IPs'traditionalandcustomarylaws;Provided,ThattheroyaltyestablishedinthisActshallbeaminimumroyaltypaymentandmaystillbesubjecttootherconditionstobeagreedbytheparties,freefromanyexternalmanipulation,interference,coercion,andotheranalogousacts,andobtainedafterfullydisclosingtheintentandscope,includingthepositiveandnegativeimpactsoftheactivity,inalanguageandprocessunderstandableandacceptableto

Section7:Thepaymentofgovernmentshareshallbelieuofallnationalandlocaltaxesincludingcorporateincometax,royaltyfortheICCs,dutiesonimportedspecializedminingequipment,feesformayor’sand/orbusinesspermits,andotherfeesandchargesimposedbythehostLGUspursuanttotheLocalGovernmentCodeof1991,asamended.Section13:TheICCshareshallbedirectlyremittedandpaidbythecontractortotheICCwithin5daysfromtheendofeachquarter.ThedistributionoftheLGUsharesandtheroyaltiesallocatedtotheICCsshallbebasedonexistinglaws.

SECTION15.ShareofIPs/ICCs.Aminimumonepercent(1%)royaltysharefromthegrossoutputofamineshallbeaccordedbyminingcompaniesoperatinginancestraldomainstothelegitimateCertificateofAncestralDomainsTitle(CADT)orCertificateofAncestralLandsTitle(CALT)holdersandnottotheheadclaimantonly.WhenanancestraldomainisnotcoveredbyaCADT/CALT,oriscoveredbyadifferenttitleissuedinfavorofmembersoftheICCs/IPs,thenmineralresourcesshallneverthelessbemanagedbytheICCs/IPsconcernedwhenitcanbepresumedthattheareaispartofancestraldomain.Anareaispresumedtobepartofanancestraldomainbyvirtueofhistoricrightsandself-delineationoftheICCs/IPs.ThepaymentoftheminingroyaltiesshalldirectlybegiventotheICCs/IPsinaprocessthatbuildontheirtraditionalandcustomarylawsandindigenouspoliticalstructure.

A. Managementofroyalty


7

them. paymentsandcommunitybasedagreementsshallbuildontheindigenousknowledgesystemsandpracticesoftheIPs/ICCs.

B. Nominingactivityshallbeconductedwithintheancestraldomains/landsofICCs/IPswithouttheirfree,priorandinformedconsent(FPIC),inadditiontotheconditionssetforinthesucceedingsectionsofthisAct.ForinstanceswhereintherearequestionsonthelegalityorvalidityoftheissuedFPIC,miningactivitiesforwhichtheFPICwasissuedshallbesuspendeduntilaresolutionisreached.

C. ViolationofanyoftheconditionsimposedbytheICCs/IPsonthecontractorshallcausethecancellationofthemineralagreement.

ProvisionsonCorporateIncomeTax

Current:Section27-28,NationalInternalRevenueCodeasamendedbyRA9337CaseinPoint:In2013,corporateincometaxaccountedfor27%oftotalminingcollectionsamountingtoP1.5billion.Miningcompaniespay30%ratebutarealsoentitledtoincometaxholidays.Intheregion,PH’sCITrateisamongthehighest.BK’sStand:


SB1191)



Section7:Thepaymentofgovernmentshareshallbelieuofallnationalandlocaltaxesincludingcorporateincometax,royaltyfortheICCs,dutiesonimportedspecializedminingequipment,feesformayor’sand/orbusinesspermits,andotherfeesandchargesimposedbythehostLGUspursuanttotheLocalGovernmentCodeof1991,asamended.

Noneprovided,assumestatusquo


8

ProvisionsonIncentives

Current:Sections92-93ofRA7942providesforincentivesthatminingcompaniescanavailsuchasaccelerateddepreciationandcarryforwardtaxlosses.CaseinPoint:In2013,eightminingcompaniesavailedfortaxincentiveswhichaccountforabout50%oftotalsalesofthesector.IncomelossduetoincometaxholidayamountedtoP3.2billionin2013alone.Despiteloweffectivetaxrateandincometaxincentives,thePhilippinesstillranked17thoutof25miningcountriesasmostpreferredgloballyamongmininginvestorsaccordingtoa2011surveyofconsultancyfirmBehreDolbear.BK’sStand:BantayKitaproposesthatallincentivesgiventothecompaniesbeeliminatedexceptthoseforpollutionmitigationdevices.Miningcompaniesinvestinacountrynotbecauseoftheincentivesgivenbythegovernmentbutbecauseoftheavailabilityandqualityofmineraldepositsinthecountry.


SB1191)



Section105:"Incentivesthatshallbegiventothecontractorsshallonlybelimitedtopollutioncontrolormitigationdevices."

Section9:RecoverablePre-OperatingExpenses-Pre-operatingexpensesallowedforrecoveryunderthisactbelimitedtoactualexpensesandcapitalexpendituresrelatingtothefollowingwhichshallhavebeenincurredbeforethecommencementofcommercialoperation:

a. Costofacquisition,maintenanceandadministrationofthecontractarea;

b. Costofexploration,evaluationofexploredareas,feasibilityandenvironmentalstudies,andrehabilitationofareasaffectedduringthepre-operatingperiod;

c. CostofmeaningfulCSRprojectsandactivitiesundertakenfortheaffectedcommunitieswithinthecontractarea

d. Paymentstolandownerssurfacerightsholders,claimownersandIPsorICCsifany

e. Trainingexpensesforpersonnel

f. Consultancyfeesincurredforworkdirectlyrelatedtotheminingoperationsandconsistentwiththecontractor’sapprovedworkprogram

g. Costsforestablishmentandadministrationoffieldandregionalofficesincludingadministrativeoverheads

SECTION13.Incentives.AlltaxincentivesgrantedtomineralminingandquarrycontractorsshallberepealeduponeffectivityofthisAct.Incentivesthatshallbegiventothecontractorsshallonlybelimitedtopollutionmitigationdevices.


9

incurredwithinthePhilippineswhichareproperlyallocabletotheminingoperationsanddirectlyrelatedtotheperformanceofthecontractor’sobligation

h. Costofconstructinganddevelopingtheminewhichincludemachineryandequipmentandrealproperty;and

i. GeneralandadministrativeexpensesactuallyincurredbytheContractortosupporttheexplorationtheexplorationandtheconstructionanddevelopmentofthemines

Theactualcostof(c),(f),and(i)shallbeallowedtobedeductedbuttheiraggregateamountshallnotexceeds5%oftheaggregatecostsof9b)and(h)PaymentsmadetoGovernment,bothnationalandlocal,shallnotbeconsideredforrecovery.Allpre-operatingexpensesreportedforrecoveryshallbesubjecttoverificationbytheMGBand/orPMDCortheirdesignatedrepresentativeorauditor.

ProvisionsonExportTax

Current:Noprovisiononexporttaxonrawmineralsandmineralproducts.CaseinPoint:Currently,100%ofourmineraloresareprocessedoutsidethecountry.Indonesiastartedimposinganaverage20percentdutyon14mineraloreexportsincludingcopper,goldandnickellastMay2014toencouragedomesticprocessing.BK’sStand:BantayKitaisproposinganexporttaxof20%ofthevalueofraworeexport.Thisistomaximizethecountry’sbenefitfromthesemineralresourcesbyencouragingthedevelopmentofhighervalue-addeddownstreamindustrieswhichwillbringadditionalbenefitsofminingtothecountrygiventhefactthattheindustryisnotanemploymentgenerator.


SB1191)



Noexporttaxprovision,assumestatusquo

Noexporttaxprovision,assumestatusquo

SECTION11.ExportTaxonRawOre.Aprogressiveexporttaxsystemonthegrossvalueofraworeexportedisherebyimposedtoencouragetheprocessingofraworeinthecountry.A20%exporttaxonthegrossvalueofraworewillbeimposedtwoyearsuponeffectivityof


10

thisAct;40%onthefollowingyear;and60%theyearafter.SECTION12.BanonExportofRawOre.ToensureavailabilityofrawmaterialsforprocessingplantslocatinginthePhilippines,abanonexportofraworeshallbeimposedonthefifthyearofthisAct’seffectivity.

ProvisionsonDownstreamIndustry

Current:CaseinPoint:About95%ofourcopper,forexample,isexportedabroadwhiletheonlycopper-processingplantinthePhilippinesprocessesimportedcopper.Theextractionofmineralsisorientedtowardsexportandnotdirectlylinkedtoindustriessuchasmanufacturing.Asaresult,GDP(average0.7%)andemploymentcontribution(average0.6%)ofthesectorhasbeenminimal.BK’sStand:Thecountryneedstolinkextractionofmineralswithotherindustriesandinducedomesticprocessingtogeneratemorejobsandvalue-addingactivities.


SB1191)



Section93:…MineralprocessingshallbeincludedintheInvestmentPriorityplantobepreparedbytheBoardofInvestmentinaccordancewithExecutiveOrderNo.226,asamended,otherwiseknownastheOmnibusInvestmentCodeof1987andshallalwaysbelistedaspreferredareaofinvestment.

Noneprovided SECTION17.ThereisherebycreatedtheMiningDownstreamCoordinatingCouncil.TheDENR,incoordinationwithDepartmentofTradeandIndustry(DTI),DepartmentofScienceandTechnology(DoST),NationalEconomicDevelopmentAuthority(NEDA),theminingindustry,civilsociety,shallsubmitwithinaperiodofsix(6)monthsa15-yearstrategicminingdownstreamdevelopmentprogramandroad-mapbasedonthePhilippineDevelopmentPlanandNationalIndustrializationPlanforthedevelopmentofdownstreamindustriesandcreationofjobsforstrategicmetallicandnonmetallicmineralssubjecttoreviewevery5years.SECTION18.TheMDCCshallbeco-chairedbytheSecretariesofDENRandDTIandshallhavethefollowingadditionalmembers:Representative,miningindustry;Representative,civilsocietyorganizations;Chairperson,BoardofInvestments.


11

SECTION19.TheCouncilshallhavethefollowingpowersandfunctions:

A. Submitaworkplanwithinsixty(60)daysfromtheeffectivityofthisActforthedevelopmentoftheminingdownstreamindustry;

B. Conductandfacilitatethenecessarycapacityandinstitutionalbuildingprogramsforallconcernedgovernmentagenciesandinstrumentalitiesandstakeholders;

C. Requesttheassistanceofanygovernmentagencyorinstrumentality,includinggovernment-ownedandcontrolledcorporationsandlocalgovernmentunits(LGUs),intheimplementationoftheminingdownstreamdevelopmentprogramandroad-map;

D. Conductquarterlymeetingsamongmembersofthecouncil;

E. SubmitquarterlyprogressreportstothePresidentonthestatusoftheimplementationoftheminingdownstreamdevelopmentprogramandroad-map;and,

Performsuchotherfunctionsandactsasmaybenecessary,properorincidentaltotheattainmentofitsmandatesandobjectives,orasmaybedirectedbytheChairpersons

ProvisionsonExciseTax

Current:The2%excisetaxonmineralproductsasdeterminedundertheNationalInternalRevenueCode,isthegovernment’ssharefromproductionofmineralsunderthePhilippineMiningAct.CaseinPoint:BK’sStand:


SB1191)



Noneprovided,assumestatusquo Noneprovided,assumestatusquo


12

ProvisionsonNaturalResourceTrustFund

Current:ThePhilippineshasnonaturalresourcetrustfundforminerals.Governmentproceedsfrommininggodirectlytothenationaltreasury.CaseinPoint:Manyresourcerichcountrieshaveamassedenormouswealthfromtheirnaturalresourcesbutwerenotdirectlyspentbutrathersavedinatrustfund.NorwayholdsthelargestsovereignwealthfundsourcedfromcommoditiesamountingtoUSD885billionasof2016.Intheregion,BruneiholdsawealthfundamountingtoUSD40billionwhileTimorLestehasUSD17billion-13timesitsnominalGDP.BK’sStand:BKproposesthatnationalandlocaltrustfundsbecreated.Thisistoensurethatproceedsarewellaccountedforandthatbenefitstrickledowntofuturegenerations.


SB1191)



None. SECTION16.NaturalResourceTrustFund.ToensureintergenerationalequityasarightoffuturegenerationsofFilipinosandtransparencyandaccountabilityintheuseofproceedsfromtheextractionofmineralandquarryresources,thenationalgovernmentshallcreateanationalnaturalresourcetrustfundwherealltheproceedsfromminingactivitiesexcludingsharesoflocalgovernmentunitsshallaccrue.Likewise,localgovernmentunitsaremandatedtocreatealocalnaturalresourcetrustfundwheresharesfromnationalgovernmentandlocallycollectedtaxesfromminingandquarryingshallaccrue.

A. ThenationaltrustfundshallbegovernedbytheDepartmentofBudgetandManagementunderaspecialaccount.

B. Thelocaltrustfundsshallbegovernedaslegislatedbylocalsangguniansconcernedprovidedthattransparencyandaccountabilitymechanismsareputinplace.

C. Thegoverningbodiesmayinvestupto60%ofthemoneyinthetrustandshallnotberequiredtoreturnthebalanceofthetrusttothenationalgovernmentattheendofeveryfiscalyear.

D. Thefundsmaybeusedbythenationalandlocal


13

governmentstosupporteducationalprograms,technologicalresearchprogramsofnationalandlocalrelevance,andhealthservicesdeemedtobenefitfuturegenerationsofFilipinos.

E. ThefundsarestrictlysubjectedtoannualauditbystateauditorsandmandatorydisclosurestothePhilippineExtractiveIndustriesandTransparencyInitiative.

ProvisionsonRingFencing

Current:CaseinPoint:BK’sStand:“Ringfencing”preventstheconsolidationofincomeandexpensesacrossminingprojectsbythesametaxpayer.Itlimitstheconsolidationofincomeandtaxdeductionsfromexplorationanddevelopmentexpendituresfordifferentactivitiesandprojectsundertakenbythesameinvestor.Thismeansthatlossesfromotherminingprojectsarepreventedfrombeingdeductedfromprojectsthataremoreprofitable.BothBantayKitaandMICCproposalshaveringfencingprovisions.


SB1191)



Section7:Eachfinalminingareaistreatedasaseparatetaxableentity.IftheContractorhasmorethanonefinalminingareainacontractareaorisapartytomorethanonemineralagreement,eachfinalminingareashallbetreatedasaseparatetaxableentity.

Section6.SeparateTaxablePersonality.Eachminingoperationinaminingareawillbeconsideredaseparatetaxableentity.Ifaminingcontractorispartyorholdsmorethanonemineralagreement,heshallbetreatedasaseparatepersoninrespectofthebusinessoperationsrelatedtoeachminingarea.

ProvisionsonZoning

Current:CaseinPoint:BK’sStand:CreatingMIZwillhaveimplicationsintheLocalGovernmentCodeandwillremovetheLocalChiefExecutive’sregulatorypoweroverminingoperationstoissuethepowertobusinesspermitsandotherlicenserequirements.ThiswillalsoaffectanLGU’spowertocreateitsownsourceofrevenuefromlevyingoftaxes,fees,andcharges,whichiscontrarytotheprincipleoflocalautonomy


14


SB1191)



Noneprovided,assumestatusquo Section5:MiningindustryZone-AllMiningAreasgovernedbythisActshallbedeclaredbythePresidentasMiningIndustryZone(MIZ),throughapresidentialproclamationuponendorsementbytheSecretaryoftheDepartmentofEnvironmentandNaturalresources(DENR).Forthispurpose,onlytheminingareasapprovedandcertifiedbytheMinesandGeosciencesBureau(MGB)maybeendorsedbytheDENR-SecretarytothePresident.TheMGBapprovalandcertificationprocessshallpassthroughconsultationwiththeconcernedLocalGovernmentUnit(LGU)andtheIndigenousCulturalCommunities(ICC),iftheminingareaiswellwithinancestraldomain.ThisconsultationprocessshallincludeanLGUendorsementfortheestablishmentoftheminingareaasMIZ.InconsiderationofthepaymenttoLGUof40%ofthetotalgovernmentsharereferredtoinsection12ofthisAct,theLGUendorsementshallincludeawaiverofitspowertoregulatetheminingbusinessoperationsthroughissuanceofbusinesspermitsandotherlicenserequirementsimposedbytheLGUpursuanttotheLocalGovernmentCodeof1991,asamended.TheestablishmentoftheMIZmustconformtothefollowingcriteria:

a. Theproposedareaisa“GoZone”asidentifiedbyanappropriategovernmentagencyorunderanyapplicablelaw

b. ThefinalminingareashallbeendorsedbytheSecretaryoftheDepartmentofEnvironmentandNaturalResources(DENR)tothePresident;

c. Thefinalminingareamusthaveasignificant



15

advantagetotheeconomyanditspotentialprofitabilitycanbeestablishedand;

d. OthercriteriamaybedeterminedbytheMiningIndustryCoordinatingCouncil(MICC)oraninter-agencyGroupthatmaybecreated,taskedorassignedbythePresident

NominingoperationscanbeundertakeninanyminingareawithouttheLGU/ICCendorsementandthePresidentialproclamationofanMIZ.

ProvisionsonScopeandApplication

Current:ThePhilippinegovernmentmayenterintooneofthefollowingformsofamineralagreement:mineralproductionsharingagreement,aco-productionagreement,andajointventureagreement.Amineralagreementgrantsthecontractorexclusiverighttoconductminingoperations.CaseinPoint:AsofOctober31,2016,thereare311mineralproductionsharingagreementscovering587,497hectaresnationwide.ExecutiveOrder79ofPresidentBenignoAquinoIIIimposedamoratoriumontheissuanceofnewpermitsuntilanewminingfiscalregimeisputinplace.BK’sStand:BantayKitaproposesthatthenewtaxstructurebeapplicabletocurrentcontracts.


SB1191)



Section4:ThisActshallgovernandapplytonewMineralAgreementsandFinancialorTechnicalAssistanceAgreementscoveringlarge-scalemetallicmineraloperationsthatareenteredintoupontheeffectivityofthisAct.ThisshallalsocoverexistingMAsandFTAAswheresuchagreementsprovidethatanytermsandconditionsresultingfromrepealoramendmentofanyexistinglawsorregulationsorfromtheenactmentofalaw,regulationoradministrativeordershallbeconsideredapartofsaidagreements.

Section5.ScopeandApplication.ThisActshallandapplytonewMineralAgreementsandFTAAscoveringlarge-scalemineralminingoperationsthatareenteredintoupontheeffectivityoftheAct.ThisshallalsocoverexistingMineralAgreementsandFTAAswheresuchagreementsprovidethatanytermsandconditionsresultingfromrepealoramendmentofanyexistinglawsorregulationorfromtheenactmentofalaw,regulationoradministrativeordershallbeconsideredapartofsaidagreements.TherenewalandrenegotiationofexistingMineralAgreementsandFTAAsshallalsobegovernedbythisAct.


16

ProvisionsonCollectingAgency

Current:CaseinPoint:BK’sStand:TheMICCbillprovidesforaperiodwhentheBureauofTreasuryshouldtransferthesharetoLGUs.TheIPshareisdirectlygiventoIPcommunities.ItproposestoamendtheminingactbyremovingtherequirementthatIPsharesbeputinatrustfund.


SB1191)



Section13:ThegovernmentshareshallberemittedandpaidquarterlybytheContractortothegovernment.TheICCshareshallbedirectlyremittedandpaidbythecontractortotheICCwithin5daysfromtheendofeachquarter.Within5daysfromtheendofeachquarter,theContractorshallpaythegovernmentshare,netoftheICCshare,ifapplicable,throughtheElectronicFilingandPaymentSystem(EFPS)facilityoftheBIRoritsaccreditedbankwhichshallcreditsuchpaymenttotheBureauofTreasury(BTr)onthefollowingbankingdayfrompayment.TheBTr,within5bankingdaysfromthereceiptthereof,shalldepositthe40%LGUsharetotheaccountoftheLGUsthroughtheirrespectiveGFIsortheirauthorizedagentbank.


Date post:	23-Apr-2018
Category:	Documents
Upload:	vuque
View:	215 times
Download:	1 times

Bantay kita MINING TAX BILLS Compared · of RA 7942 Case in Point: The Philippines’ effective tax...

Documents