Duterte signs law exempting small-scale miners from tax when they sell gold to BSP
President Rodrigo Duterte has signed a law exempting small-scale miners from paying income and excise taxes when they sell their gold to the Bangko Sentral ng Pilipinas (BSP).
Duterte signed Republic Act 11256 on March 29.
The law amended some provisions of the National Internal Revenue Code so that the income derived from the sale of gold to the BSP by registered small-scale miners and accredited traders as well as the sale of gold by these miners to accredited traders for eventual sale to the BSP will not be included in gross income and will be exempted from taxation.
The gold sold or eventually sold to the BSP is exempted 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 Bureau of Internal Revenue Commissioner for the excise tax paid.
The sale of gold by small-scale miners to traders for eventual sale to the BSP will enjoy the same tax treatment and privileges given to the direct sale of gold to the BSP.
All gold sold to the BSP by accredited traders shall be presumed to have been purchased from small-scale miners, according to the law.
The law gives the BSP governor and the secretaries of the environment and interior and local government as well as the BIR commissioner 60 days from the effectivity of RA 11256 to recommend to the Department of Finance secretary the implementing rules and regulations for promulgation.
The IRR must include provisions for the registration and accreditation requirements of small-scale miners and traders in order to avail of the tax exemptions under the new law.
Senator Juan Edgardo Angara, one of the authors of the measure, said in January that between 2005 and 2010, BSP purchased close to 1,000,000 troy ounces of gold or 2,362 gold bars produced from small-scale mining activities.
But the BSP’s gold purchases drastically declined to 35,000 troy ounces in 2012 after the BIR imposed the tax requirement in 2011, and further slid to 14,700 troy ounces of gold in 2017.
The senator said that as of September last year, BSP had only purchased 7,600 troy ounces or an equivalent of 19 gold bars.
He said the reduced sale of gold had constrained the BSP from increasing the level of the country’s gross international reserves (GIR).
The GIR is a measure of a country’s ability to settle import payments and service foreign debt.
The country’s GIR contracted last year, partly due to the government’s foreign exchange obligations, the BSP said in a report in January.
Data released by the central bank showed the GIR totaled $78.460 billion as of end-December 2018, from $81.569 billion in the same period in 2017.
“The measure enables the BSP to better build up the country’s GIR by buying domestically-produced gold from small-scale miners using pesos,” Angara said.