Mining To Lose Tax Perks

MANILA, Philippines - The government is studying the exclusion of mining operations from the income tax holiday incentives enjoyed by projects listed under the Investment Priorities

Program (IPP) as a way of increasing revenue generation from this sector.

The study group of the proposed mining policy is deliberating on the possible removal of mining under the 2012 IPP of the Board of Investments. Once listed under the IPP, a project can enjoy four to six years of ITH depending on the classification of the project, whether it falls under a pioneer or non-pioneer status.

''It is accepted that the position of government is its (revenue) share in mining is not adequate. So there are ideas that come up that say mining projects should not be given the IPP incentives because the mining resource itself is already the incentive,'' said Mines and Geosciences Bureau (MGB) Director Leo L. Jasareno during a press briefing at the Philippine Information Agency.

The study group is led by Department of Environment and Natural Resources Sec. Ramon JP Paje, Presidential Adviser on Environmental Protection Sec. Nereus Acosta.

President Benigno S. Aquino III is expected to issue perhaps within this month a new mining policy that is expected to raise government's revenue share in mining ventures.

When the new policy is issued after a consultation, Jasareno said government will right away lift a moratorium on new mining permit issuance, which should raise mining investments this year.

He does not expect that government will meet its targeted investment of $1.2 billion for 2011, but remains optimistic.

''We're still waiting for the complete record. But we may have a problem because we had a moratorium. Who would invest if we have a moratorium? It's hypocrisy to look forward to a good figure if we have moratorium. But I'm being optimistic that despite the moratorium, we might attain our $1.2- billion target.''

The BOI's IPP does not automatically name mining as a top program to deserve tax holidays. The BoI is still crafting this year's IPP. But because some companies have been given this incentive, local government units (LGUs) and the national government forfeit a significant tax revenue for six-seven years.

''There are mining projects that are already finished but have not been able to pay any tax. They come to areas and go without local government's collecting any tax because there are income tax holidays that last for seven years,'' he said.

The study group is also looking into removing incentives from mining operations that only produce and directly export ore even if they are considered part of special economic zones.

''There are views that come up that only downstream processing operations should receive incentives for special ecozones,'' he said.

Despite this plan, Jasareno said that any changes that government will impose under a new mining policy this will take into account private sector contracts with government.

''The mining policy will respect provisions of existing contracts. If the contracts have to be visited, there should be mutual agreement. There should be renegotiation, and no changes should be immediately imposed,'' he said.

Originally, the government has proposed to slap a five percent excise tax on mining operations on top of the existing two percent. This is by declaring all mines to be under a mineral reservation, believing this will make government's revenue share in mining a fair one as it raises revenue to P7 billion from less than P1 billion.

Authors: mining - Yahoo! News Search Results