Tax bureau moves on small-scale miners, taps BSP as collector

MANILA, Philippines - The Bureau of Internal Revenue (BIR) has issued a revenue regulation that taps the Bangko Sentral ng Pilpinas (BSP) to collect the appropriate excise tax on gold and other metallic mineral products sold to it by small-scale miners. "We checked the excise tax compliance of the mining industry. We found out the compliance of small-scale miners is very low. That is the reason why we decided to issue that regulation where we would ask another party to collect from the small scale miners," BIR Commissioner Lilian B. Hefti said in an interview. Under Revenue Regulations No. 7-2008, a holder of small-scale mining contract is liable to pay an excise tax rate of 2% on every sale of gold to BSP, based on actual market value, which refers to the "prices competitive with those prevailing in the world market regardless of the volume or weight by which the BSP has agreed to buy the gold." The miners are also subject to the 10% creditable witholding tax, or CWT. "As such, it shall, upon payment to the small-scale miner of its purchase of gold, deduct from such payment the correspon-ding excise tax due thereon. Such deduction shall be in addition to the 10% CWT required to be withheld on income payments or purchases of minerals and mineral pro-ducts," the revenue regulation read. BIR noted that, since the 1980s, "small-scale mining has significantly contributed to the mineral industry and national economy with the gold rush in Davao and the sporadic panning activities that followed in 37 other provinces. Production from small-scale and panning activities was higher than that of primary and secondary producers." Presidential Decree No. 1899, pro-mulgated on Jan. 23, 1984, defined small-scale mining as "any single unit mining operation having an annual production of not more than 50,000 metric tons of ore." Mining activities that rely heavily on manual labor using simple implements and do not use explosives or heavy mining equipment are considered small-scale mining. Republic Act No. 7076, or the People’s Small-Scale Mining Act of 1991, sought to address social, economic, technical and environmental problems connected with small-scale mining. - BusinessWorld