About P1.5 million gold sales were purchased by the Bangko Sentral ng Pilipinas (BSP) in Baguio the previous month as a direct result of the recent adjustment of the creditable withholding tax (CWT) imposed on gold in late 2017.
As per the Department of Finance (DOF), more than a million worth of gold was sold in January 2018 to BSP-Baguio, a grand upscale from zero sales since 2012, after the reformed CWT on gold sales was signed last November.
In Republic Act No. 7076 or the People’s Small-Scale Mining Act of 1991, the Central Bank buys gold from small-scale miners, which is then refined for international trade.
The adjustments made in the CWT, which features gold tradings taxed at the previous five percent to one percent, that both the seller and the BSP can benefit from, as Finance Chief Carlos Dominguez III puts it: “The advantages to the seller are lower transportation costs and accurate assays; BSP is the use of pesos to buy gold which is used as our international reserve.”
Dominguez added the government is now able to collect gold taxes at one percent unlike in the past.
The move to reduce the CWT is seen to encourage small-scale miners to sell back their gold produce to the BSP, especially in areas like Davao, Zamboanga, Naga, and Baguio to get a fair market price rather than getting ripped off at the black market.
Meanwhile, revenue regulations (RR) are rated at two percent, keeping the excise tax on gold sales.
RR’s will also allow the BSP to build its gross international reserves without having to spend dollars as it would be able to buy gold directly using local currency, Dominguez said.
“Unlike using pesos to buy foreign exchange to buy gold, which will affect the peso-dollar rate, this flexibility will not have a direct impact on the movement of the peso against the dollar,” he said.
