Small gold miners to enjoy tax perks
Credit to Author: THE MANILA TIMES| Date: Wed, 22 May 2019 16:22:58 +0000
PRESIDENT Rodrigo Duterte has signed into law a bill that seeks to strengthen the country’s gross international reserves (GIR) by offering tax incentives to local small-scale miners, a move welcomed by the Bangko Sentral ng Pilipinas (BSP).
Signed on March 29 but revealed to the media only on Wednesday, Republic Act (RA) 11256 amended the National Internal Revenue Code to exempt from taxation income from gold sold by these miners directly to the BSP.
Small-scale miners who sold gold to accredited traders for eventual sale to the central bank would also enjoy the same exemptions, as the commodity is presumed to have been bought from them.
The law also said that if these miners paid the excise tax for the gold before its sale to the Bangko Sentral, they could file for a refund or credit for it.
RA 11256 also gives the central bank governor; the heads of the Environment and Interior departments; and the Bureau of Internal Revenue (BIR) chief 60 days from the effectivity of the law to recommend to the Finance secretary the implementing rules and regulations (IRR) its for promulgation.
The IRR must include provisions for the registration and accreditation requirements of small-scale miners and traders in order to avail themselves of the exemptions.
One of the bill’s authors, Sen. Juan Edgardo “Sonny” Angara, had cited studies in saying that between 2005 and 2010, the BSP purchased nearly 1,000,000 troy ounces of gold or 2,362 gold bars that came from small-scale mining.
These purchases, however, declined to 35,000 troy ounces in 2012 after BIR imposed the tax requirement in 2011, according to him. That figure further slid to 14,700 troy ounces in 2017.
As of September last year, the BSP had only purchased 7,600 troy ounces, or an equivalent of 19 gold bars, Angara said.
The reduction, he added, had constrained the central bank from increasing the country’s GIR level, which ended 2018 at P79.193 billion.
The GIR is a measure of a country’s ability to settle import payments and service foreign debt.
‘Excellent, much-needed’
Also on Wednesday, BSP Governor Benjamin Diokno said in a message to reporters that RA 11256 was an “excellent and much-needed” measure.
“The new tax regime would allow [the] BSP to increase its purchases of domestic gold to further build up the country’s GIR,” he explained.
According to BSP Deputy Governor Diwa Guinigindo, the new law would allow the central bank to continue buying gold with peso instead of tapping the country’s dollar reserves.
“If we use dollars to buy gold from the world market, it would simply involve a rebalance of the FX (foreign exchange) reserve composition from dollar to gold,” Guinigundo explained in a separate message.
Lastly, the BSP officials said RA 11256 would prevent the smuggling of Philippine gold through the black market to other countries and allow small-scale miners and traders to sell gold at international market prices.
CATHERINE S. VALENTE AND MAYVELIN U. CARABALLO
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