The House of Representatives approved on second reading on Wednesday a bill exempting from income and excise taxes small-scale miners selling gold to the Bangko Sentral ng Pilipinas (BSP).
The House Bill 3297 aims to amend several provisions under Republic Act 7076 or The People’s Small-Scale Mining Act of 1991 to shore up the country’s gross international reserves (GIR) by buying gold from small-scale miners. The proposed amendment seeks to encourage small-scale miners to sell their mined gold to the central bank.
Under the proposed bill, gross income tax exemptions apply to the sale of gold by registered small-scale miners, and traders to the BSP.
“The gold sold or eventually sold to the BSP shall further be exempt from the payment of excise tax. A taxpayer who had paid excise tax before the sale of gold to the BSP may file a claim for refund or credit with the Internal Revenue Commissioner for the excise tax paid,” the Lower House said in a statement.
The proposed tax treatment and privileges given to the direct sale of gold to the BSP also applies to gold sold by small-scale miners to traders for eventual sale to the Central Bank.
The bill’s principal author, deputy Speaker Evelina Escudero, explained that the imposition of two percent excise tax and five percent creditable withholding tax on gold purchases from small-scale miners and traders caused a huge drop in the volume of gold sold to the BSP.
“From BSP’s total gold purchases in 2010 of 918,110 troy ounces, purchases declined by 98 percent to 20,354 troy ounces in 2014. In terms of value, from the 2010 figure of P49.543 billion, BSP only purchased P984 million worth of gold in 2014,” Escudero said in an explanatory note.
75 percent of gold mined in the Philippines comes from small-scale mining. Escudero argued taxing the sale of gold only marginalizes small-scale miners that have an estimated annual income of only P64, 942 or P250 per day.
Photo Courtesy of House of Representatives
