• Philippine Resources

COMP Opposes Royalties



The Chamber of Mines of the Philippines (COMP), the country’s biggest group of mining companies, has opposed the recommendation of the Department of Finance (DOF) and the Commission of Audit (COA) to foist royalties on mining projects outside of the mineral reservation areas (MRAs).

COMP released its statement after the COA reiterated its proposal to amend the country’s tax and mining laws.

According to Rocky Dimaculangan, COMP vice president for communications, “Imposing additional royalties on Philippine mining projects outside [MRAs] such as that being proposed will stunt the industry’s growth and will only provide additional revenues in the near term, which we believe is shortsighted.

He added, “It will make the Philippine mining industry uncompetitive and will deter investors from coming in, thus preventing foreign capital influx and other socio-economic benefits, such as the development of the countryside where minerals are abundant, and employment for people in rural areas.”

Presently, royalties are charged only for mining operations within MRAs - there are more than 10 in the country - since the government spends a substantial amount for these areas. With this COMP believes that the royalties should not be imposed on areas outside the MRAs.

Dimaculanguan said the government could instead “take a hard look” at small-scale miners. “The portion of the small-scale mining sector in the country that is unregulated produces far more gold than the legitimate large-scale mining industry—yet this sector does not pay taxes and, for the most part, its output is not captured, which could otherwise form part of the country’s international reserves,” he said.

For its part, COA said that the government has lost over P55 billion in “supposed taxes” in the past decade as these laws do not cover the country’s tax and mining laws. The agency said that these amounts could have been collected if the National Internal Revenue Code (NIRC) had been amended - which also urged the collection of royalties outside the MRAs.

“The opportunity losses and/or forgone revenues from non-imposition of royalty fee to mining companies operating outside the MRAs will continue to surge until the bill seeking … the amendment of Section 151 of the NIRC will be passed into law,” the COA said. “The supposed taxes that could have been collected had the bill been passed and signed into law can be used by the government to finance its priority programs and projects, especially in this time of financial crisis due to the pandemic.”

The Senate also has pending bills to amend the NIRC.

On the other hand, the DOF has appealed to the Senate to pass its original proposal of a rate of 5 per cent for all mining operations. State auditors have found out, furthermore, that this proposal seemed “advantageous” to the government and have recommended that the MGB should “support the stand of the DOF” and “make representations with the Senate to help in the early passage of the bill into law so that taxes can be collected when imposed for the benefit of our country and the people, when necessary.”

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