Mining council looks at options on revenue-sharing

The Mining Industry Coordinating Council is studying options for a new revenue-sharing arrangement between the government and the mining companies.  

 

"The new scheme will strive to strike a balance between raising government revenue and keeping a fiscal regime that is competitive with other developing countries,” the council noted in a statement. “The arrangement will include a PEZA-type arrangement which processes and facilitates all mining industry requirements through a one-stop shop in new areas designated as mining zones." 

 

The Philippines also wants to use a scheme that paves the way for the country to enter the Extractive Industries Transparency Initiative (EITI), the international practice that makes payments and collections of mining-related fees and taxes by mining companies to the national and local government more transparent through standardized disclosures.

 

From a range of options for computing government share which included the current systems of MPSA (an excise tax), FTAA (a percentage of net mining revenue), and the petroleum fiscal regime for oil and gas exploration, the MICC narrowed down the options to a percentage of Gross Margin or to a percentage of Gross Revenue, where the Income Tax paid is deducted after computing the government share.  

 

It said in both cases, the government would use international benchmarks for metals prices available on the London Metals Exchange as well as for internationally accepted cost for mineral ore production.

 

The government’s share will be earmarked for national and local government units, while indigenous people will continue to receive royalties if the mining area is located in an ancestral land. 

 

Part of the government share will also go to an Environmental Fund for environment programs, but does not cover expenses for mine rehabilitation and decommissioning and other necessary expenses imposed on mining firms to comply with environmental obligations mandated by the 1995 Philippine Mining Act.

 

Under Executive Order 79, the council – a joint committee of the Economic Development Cluster and the Climate Change Cluster – is to draft a new policy and legislation for mining. It is chaired by Finance Secretary Cesar Purisima and Environment Secretary Ramon Paje.  

 

Its core objective is to design a scheme which adopts a single fiscal regime – from two – and a simple formula in determining the revenue sharing scheme that eliminates issues on valuation of outputs and costs of production.  

 

The council said it would stage consultations with the mining industry, civil society, and the business community before coming up with a new fiscal regime for the industry. — VS, GMA News