By Ruth Abbey Gita-Carlos | Philippine News Agency
President Ferdinand R. Marcos Jr. signed on Thursday Republic Act (RA) 12253 or the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act in a ceremony at Malacañan Palace to ensure an equitable share of mining revenues for the government.
In a keynote speech, Marcos said the simplified fiscal regime for large-scale mining would make the mining infrastructure more robust and give the government a fair share from the extra profit.
“Around the world, the demand for minerals is surging. These minerals are needed to service the new technologies, for batteries, solar panels, [and] other vital components of clean energy. Some even call these resources as the building blocks of a green and digital economy. We are blessed because the Philippines is rich in such resources,” he said.
“With the signing of the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, we are putting into place a system that is fairer, that is clearer and more responsive to the needs of both our people and the environment,” Marcos added.
RA 12253 seeks to simplify and rationalize the fiscal regime for large-scale metallic mining, while upholding the principles of transparency, accountability and good governance in the mining industry.
With the signing of the law, the estimated revenue impact from 2026 to 2029 is projected at P25.08 billion in total or an average of P6.26 billion annually.
Key salient features of the law include the imposition of a 5-tier, margin-based royalty at rates ranging from 1% to 5% on income from metallic mining operations outside mineral reservations, and a minimum royalty rate of 0.1% on gross output for mines below the margin threshold.
The new law also introduces a 5-tier, margin-based windfall profits tax at rates ranging from 1% to 10% on income from metallic mining operations.
To limit the amount of tax-deductible borrowing costs arising from the debt, RA 12253 implements a 2:1 debt-to-equity ratio or a thin capitalization rule applicable to related-party debt.
The new law adopts a ring-fencing rule on a per-project basis to prevent taxpayers from consolidating income and expenses across mining projects, thereby stopping companies from offsetting losses against profits from more profitable projects.
It also clarifies that the applicable local business tax rate on mining contractors is 0.5% and retains the imposition of the 5% royalty for mines inside mineral reservations; 25% corporate income tax; 4% excise tax; 1% (minimum) indigenous people royalty; and applicable withholding taxes.
The enhanced mining fiscal regime aims to improve governance by introducing transparency and accountability measures, such as the monitoring and auditing of mineral sales and exports, the public disclosure of mining data, and the establishment of a multi-stakeholder accountability group.
It seeks to reduce revenue leakages, maximize collections, and strengthen sector governance while protecting the environment and communities through natural capital accounting data under the Philippine Ecosystem and Natural Capital Accounting System.
The new fiscal regime also streamlines the disbursement of local government unit shares from mining taxes to address delays.
According to the law, around 10% of mining royalty from inside mineral reservations will be earmarked for the exploration by the Mines and Geosciences Bureau and the Metals Industry Research and Development Center for the establishment of mineral valuation laboratories and facilities, and for the acquisition of the Bureau of Internal Revenue (BIR) tools, funded from the retained BIR share of the Special Education Fund under Section 3 of RA 5447.
