The Department of Finance (DOF) has amended its annual revenue forecast to Php 6.3 billion from Php 10.23 billion over the next four years, under the proposed five-tier margin-based tax system for the mining industry, due to lower global metal prices.
In a report by Business World, Finance Assistant Secretary Karlo Adriano S. Fermin said that the government is anticipating earning Php 4.48 billion from royalty taxes on miners within mineral reservations, Php 1.07 billion from those outside reservations, and Php 730 million from a windfall profit tax.
The DOF’s updated proposal introduces a tiered system for royalties and windfall profit taxes on mining operations. It includes a 1.5-5% royalty rate for miners outside designated mineral reservations, with a similar five-tier structure applied to a windfall profit tax ranging from one to 10%.
Additionally, the department looks to maintain the current system where large-scale metallic mining operations within mineral reservations are taxed at 5% of their gross output.
Previously, under a four-tier proposal, the DOF had projected revenues of Php 5.5 billion from royalties within mineral reservations, Php 1.31 billion from royalties outside reservations, and Php 3.37 billion from the windfall profit tax.
Fermin explained that the revised revenue estimates reflect the latest data and a decline in global metal prices.
As of August 15, data from the Mines and Geosciences Bureau indicated that nickel prices had dropped by 19.1% to USD 16,035 per metric ton (/MT) from USD 19,825/MT a year earlier. Meanwhile, gold prices rose by 28.5% to USD 2,449 per ounce from USD 1,906 per ounce, and copper prices increased by 8.1% to USD 8,906/MT from USD 8,242/MT.
Fermin noted that the five-tier system was a compromise after consultations with mining stakeholders, who were concerned about higher effective tax rates.
