PB 2013-12 - Mining - Policy Brief - Final - Revised - 010614 PDF
PB 2013-12 - Mining - Policy Brief - Final - Revised - 010614 PDF
PB 2013-12 - Mining - Policy Brief - Final - Revised - 010614 PDF
S E N A T E E CO N O M I C PL A N N I N G O F FI C E
December 2013
PB-13-02
Introduction
The mining industry has a great potential to be a key growth
sector in the Philippines given the countrys vast and rich
mineral resource deposits. Mining can spur economic
growth and generate employment opportunities in local
communities as mining companies invest in infrastructure,
utilities and other facilities within the mining sites. It can
likewise contribute to the country's foreign-exchange
earnings through exports and bring much needed revenues
to the government through taxes and fees paid on mining
and other related activities.
It appears though that the Philippine mining industry has
not lived up to its potential. Critics have argued that the
industry has had negligible contribution to the domestic
economy and absorbed only a few workers. Its destructive
impact on the environment and on the welfare of the
people has also been pointed out. Proponents, meanwhile,
claim that the flawed provisions in the current laws
pertaining to the mining sector as well as other constraints
have impeded investments in the sector, thereby limiting its
contribution to the economy.
In order to address these challenges, President Benigno
Aquino III issued Executive Order No. 79 on July 6, 2012. It
sought to strengthen the protection of the environment,
promote responsible mining, and provide a more equitable
revenue-sharing scheme amid the projected boom in the
sector. It is envisioned to harmonize mining policies and
regulations in the country and make players in the mining
industry more transparent and accountable. Pursuant to
these objectives, EO 79 focused on strengthening
coordination among stakeholders to ensure strict
compliance by mining operators to the existing mining laws
and regulations.
1|Page
163.2
160
1.2
1
0.9
140
120
0.8
0.7
0.7
0.6
100
0.7
1
145.3
106.1
100.8
102.2 87.1
80
72.5
60
41.1
4.5
0.6
0.4
43.4
4.9
3.9
50.2
40
5.2
0.8
0.7
0.6
5.3
0.2
20
3
2
1
1.8
0.4
0.4
3.8
0.4
0.4
0.4
0.4
0.4
0.3
0.4
0.3
0
Minerals and Mineral Products
Non-Metallic Mineral Manufactures
Value
Share to GDP
2|Page
0.7
0.6
0.4
0.3
0.3
0.6
0.2
0
1000
800
719.5
708.4
604.2
618.5
600
400
200
190.3
160
0
2006 2007 2008 2009 2010 2011 2012*
Source: MGB
Table 1. Taxes, Fees and Royalties from Mining (PhP Million), 2003-2016
Taxes, Fees and
2003
2004
2005
2006
2007
2008
2009
Royalties from Mining
Fees, Chargers and
Royalties Collected by
79.8 120.1 210.2 192.1 774.0 557.4 396.2
DENR-MGB
Excise Tax Collected
155.8 232.5 251.4 489.6 942.1 660.3 718.8
by BIR
Taxes Collected by the
1,039.2 2,769.1 4,733.6 5,313.2 8,371.7 5,949.5 10,272.5
NGAs
Taxes and Fees
226.9 358.5 453.5 395.0 359.8 522.2 992.8
Collected by LGUs
TOTAL
1,501.7 3,480.2 5,648.7 6,389.9 10,447.6 7,689.4 12,380.0
2010
2011
2012*
496.6
be
experienced
communities.
by
potential
mining
7|Page
Congress
may
also
legislate
the
institutionalization of the Extractive Industries
Transparency Initiative (EITI) in the Philippines.
The EITI is a global standard for transparency in
the extractive industry sector that involves the
reconciliation of company payments with
government receipts by an independent
administrator, and disclosure of this information
to the public. Its objective is to ensure that
accurate figures about revenues are publicly
available, to identify any potential discrepancies
between payments and receipts and to
investigate and address the underlying causes of
such. Government, mining companies and civil
society groups will work together on this
process. It is a voluntary initiative in which
participating mineral and oil-rich governments
agree to publish their receipts from oil, gas and
mining activities, and extractive sector
companies.
The Philippines was admitted as a candidate
country by the EITI International Board on May
22, 2013 during the International EITI
Conference in Sydney, Australia. The Philippines
is among the 37 countries that have committed
to implement or are implementing the EITI.
9|Page
References:
Alonzo, E.M. (2012). Issues affecting the mining industry. STRSO Taxbits, 3 (15). Retrieved from
http://www.senate.gov.ph/publications/taxbits%2015%20vol3%20September%20%20October%20%2
02012.pdf.
Alyansa Tigil Mina (2011). ATM Position Paper on the Continued Adoption of the Aquino Government of the
Revitalization of the Philippine Mineral Industry Policy. Retrieved from http://www.slideshare.net/
farahsevilla/atm-policy-paper-on-mining-in-the-philippines.
Ateneo School of Government Policy Brief (2011). Is There a Future for Mining in the Philippines? Retrieved
from http://bantaykita.ph/pdfs/ASOG_Mining%20Policy%20Brief.pdf.
Disini, Artemio F. (2009). Economy stays buoyant despite downturn. Mining Journal special publication
Philippines.
Retrieved
from
http://www.mining-journal.com/_data/assets/supplement_file_
attachment/0003/173217/Philippines_scr.pdf.
Doyle, C., Wicks, C., and Nally, F. (2007). Mining in the Philippines: Concerns and Conflicts. Report of a FactFinding Mission to the Philippines. Society of St. Columban, West Midlands, UK, 63pp.
Habito, Cielito F. (2010). An Agenda for High and Inclusive Growth in the Philippines. Available from
http://www.slideshare.net/no2mininginpalawan/agenda-for-high-and-inclusive-growth-in-the-philippines.
International Finance Corporation (IFC) Jobs Study (2013). Assessing Private Sector Contributions to Job
Creation and Poverty Reduction. Retrieved from http://www.ifc.org/wps/wcm/connect/
d3b612004e3468c783d5ab7a9dd66321/IFC_FULL+JOB+STUDY+REPORT_JAN152013_FINAL.pdf?MOD
=AJPERES.
Mining Industry Statistics (2013). Retrieved from http://www.mgb.gov.ph/Files/Statistics/MineralIndustry
Statistics. pdf.
Mining Journal Special Publication, London (2006). Philippines: Revitalizing the Minerals Industry. Retrieved
from http://denver.miningopp.govtools.us /DOCUMENTS/ Philippines_MiningJournal.pdf.
Mining Journal Special Publication, London (2006). Philippine Mining: A Wealth of History and Experience.
Retrieved from http://denver.miningopp.govtools.us /DOCUMENTS/ Philippines_MiningJournal.pdf.
Michelitsch, R., Armenta, G., Casadevall-Massuet, F., Datta, M., Denisova, A., Grover,R., LLeyva,L., Oikawa, J.
and Shi, A. (2013). Assessing Private Sector Contributions to Job Creation and Poverty Reduction.
International Finance Corporation (IFC) Jobs Study. Retrieved from http://www.ifc.org/wps/wcm/
connect/d3b612004e3468c783d5ab7a9dd66321/IFC_FULL+JOB+STUDY+REPORT_JAN152013_FINAL.p
df?MOD=AJPERES.
Nakayama, K., Caner, S., and Peter Mullins (2011). Philippines: Technical Assistance Report on Road Map for a
Pro-Growth and Equitable Tax System. International Monetary Fund (IMF) Report, 12/60. Retrieved
from http://www.imf.org/external/pubs/ft/scr/2012/cr1260.pdf.
National Economic and Development Authority (2013). Philippine Development Plan (PDP) 2011-2016
Midterm Review. Pasig City.
Pasimio Jr., H. (2005) Extracting Growth from Mining. SEPO Policy Insight. Retrieved from
http://www.senate.gov.ph/publications/PI%202005-11%20%20Extracting%20Growth%20from%
20Mining.pdf.
What is EITI? Retrieved from http://eiti.org/eiti.
This Policy Brief was principally prepared by Mr. Sherwynne B. Agub with inputs from Microeconomics
Sector Head Peter Anthony S. Turingan, under the supervision of the SEPO Directors and the overall guidance
of its Director General.
The views and opinions expressed herein are those of the SEPO and do not necessarily reflect those of
the Senate, of its leadership, or of its individual members. For comments and suggestions, please e-mail us at
sepo@senate.gov.ph.
10 | P a g e
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012+
41.1
43.4
50.2
72.5
102.2
87.1
106.1
145.3
163.2
100.8
30.3
32.6
37.1
43.9
60.0
53.6
65.8
88.2
96.9
72.8
0.7
0.6
0.6
0.7
0.9
0.7
0.8
1.0
1.0
0.7
637
797
820
2,103
2,605
2,498
1,470
1,929
2,840
2,265
1.8
2.0
2.0
4.5
5.3
5.2
3.9
3.8
6.0
4.9
128
165
171
182
223
211
156
162
177
145
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.3
0.4
0.3
190.3
708.4
604.2
719.5
968.3
618.5
160
104,000
118,000
123,000
141,000
149,000
158,000
169,000
197,000
211,000
252,000
0.3
0.3
0.4
0.4
0.4
0.5
0.5
0.5
0.6
0.7
79.8
120.1
210.2
192.1
774.0
557.4
396.2
800.6
1,180.8
1,644.1
155.8
232.5
251.4
489.6
942.1
660.3
718.8
1,305.9
6,985.8
n/a
1,039.2
2,769.1
4,733.6
5,313.2
8,371.7
5,949.5
10,272.5
10,187.9
12,886.0
5,817.8
226.9
358.5
453.5
395.0
359.8
522.2
992.8
1,070.8
1,179.1
496.6
1,501.7
3,480.2
5,648.7
6,389.9
10,447.6
7,689.4
12,380
22,231.7
22,079.8
7,958.5
11 | P a g e
Mineral
Taxes
Australia
Chile
China
30.0%
18.5%
25.0%
State
Royalties
(State)
Specific
Mining
Tax
(Federal)
14.0%
Resource
Tax
(Federal)
Copper
2.7-3.5%
Gold
1.0-2.5%
Copper
5-7 RMB
per tonne
Gold
1.5-7 RMB
per tonne
Iron Ore
6.5-7.5%
Iron Ore
10-20
RMB per
tonne
Coal
7.0-10.0%
Minerals
Resource
Rent Tax
or MRRT
(Federal)
Coal
2-8 RMB
per tonne
Gold
N/A
Compensation for
Mineral
Resource
(Federal)
Iron Ore
22.5%
Copper
0.5-4.0%
Coal
22.5%
Gold
0.5-4.0%
Copper
N/A
India
Indian
Company
32.45%
Foreign
Company
42.024%
Royalty
(State)
Copper
4.2%
Gold
2.0%
Iron Ore
10.0%
Coal
55 + 5.0% (P)
-INR 130 +
5.0% (P)
Indonesia
Peru
Philippines
South Africa
25.0%
30.0%
30.0%
28.0%
Government
Royalty
(Federal)
Mining
Royalty
(Regional)
Copper
4.0%
Copper
1.0-12.0%
Gold
3.75%
Gold
1.0-12.0%
Iron Ore
3.0%
Iron Ore
1.0-12.0%
Coal
3.0-7.0%
Coal
1.0-12.0%
Special
Mining Tax
(National)
The 5%
representing
a surcharge
and P being
the sales
price per
tonne of
coal at mine
mouth.
Copper
2.0-8.4%
Gold
2.0-8.4%
Iron Ore
2.0-8.4%
Coal
N/A
Special
Mining
Contribution
(National)
Copper
4.0-13.12%
Iron Ore
0.5-4.0%
Coal
0.5-4.0%
Gold
4.0-13.12%
Excise Tax
(Federal)
Copper
2.0%
Gold
2.0%
Iron Ore
2.0%
Coal
1.0-PhP10.00/
metric tonne
Royalties to
Mineral
Reservations
(Federal)
Mining and
Petroleum
Resources
Royalty or
MPRR
(Federal)
Copper
0.5-7.0%
Gold
0.5-5.0%
Iron Ore
0.5-7.0%
Coal
0.5-7.0%
Copper
5.0%
Gold
5.0%
Iron Ore5.0%
Coal
5.0%
Royalties to
Indigenous
Cultural
Communities
(Federal)
As agreed
Iron Ore
4.0-13.12%
Tax on
Exports
N/A
N/A
N/A
Ore
Extracted
10.0-20.0%
N/A
Coal
N/A
N/A
N/A
N/A
Processed
Ore
10.0-40.0%
Refined
Metal
10.0%
12 | P a g e
Withholding
Tax
Dividends
30.0%
Dividends
35.0%
Dividends
10.0%
Dividends
N/A
Dividends
20.0%
Dividends
4.1%
Dividends
15.0-30.0%
Dividends
10.0%
Interest
10.0%
Interest
4.0-35.0%
Interest
10.0%
Interest
21.01%
Interest
20.0%
Interest
4.9%
Interest
20.0%
Interest
N/A
Royalties
30.0%
Royalties
30.0%
Royalties
10.0%
Royalties
10.51%
Royalties
20.0%
Royalties
30.0%
Royalties
30.0%
Royalties
12.0%
Services
Fee
5.0%
Services
Fee
15.020.0%
Services
Fee
varies
Services
Fee
42.02%
Services
Fee
20.0%
Services
Fee
15.0%
Services
Fee
30.0%
Services
Fee
N/A
10
10
13 | P a g e