BSP PR/via Naomi Tiburcio – PTV News
The BSP today announced that Republic Act (RA) No. 11256, An Act to
Strengthen the Country’s Gross International Reserves (GIR),was approved by
Congress and signed by President Rodrigo R. Duterte on 29 March 2019.
The new law exempts from excise and income tax the sale to the BSP of gold
sourced from small-scale mining activities. The measure also covers the sale of gold
by small-scale miners to accredited traders for the eventual disposal to the central
bank.
R.A. No. 11256 seeks to remedy the 99% drop in BSP’s domestic gold
purchases from more than 900 thousand fine troy ounces (FTO) in 2010 to around 10
thousand FTO in 2019 as a result of the taxation of the sale of gold to the BSP
beginning July 2011.
The tax regime under R.A. No. 11256 would allow the BSP to increase its
purchases of domestic gold to further build up the level of the Philippines’ GIR,
which serves as the country’s primary buffer against external economic shocks. An
increase in BSP’s gold purchases using pesos leads to a net increase in the GIR,
thereby improving the country’s economic standing and lowering the cost of both
funding for the Republic as well as doing business for the private sector. It also
prevents the smuggling of Philippine gold through the black market to other
countries and allows small-scale miners and traders to sell gold at international
market prices.
While the National Government would only forego around P35 million
annually from its income on BSP’s gold purchases, the Philippines as a whole is
expected to benefit from keeping the gold right in the Philippines for sale to the BSP.
Aside from helping build up the foreign reserves of the country, the law is expected
to also lead to greater availability of gold in the domestic markets for jewelry
making, dental requirements and other industrial and commercial uses.”
