Amcham warns of investment losses over plans to remove mining perks

MANILA, Philippines – A foreign business group is pushing for consultations to be conducted by the government with the private sector regarding a plan to remove incentives to new mining projects which may affect investments to the sector.

John Forbes, chair of the legislative committee of the American Chamber of Commerce of the Philippines, said the government must hold discussions with the private sector first before it implements the plan to stop the grant of incentives to new mining projects which may have an impact on mining investments.

“We haven’t seen an official document but we hope the government would consult with investors before changing established tax practices regarding CIT (corporate income tax) and VAT (value-added tax),” he said in a text message.

Other foreign chambers declined to comment citing that they need to see a document containing the changes first.

Environment Secretary Ramon Paje said last week the Mining Industry Coordinating Council (MICC), created by Executive Order (EO) 79 which contains reforms for the mining sector, agreed to remove incentives granted to mining companies.

In particular, Paje said, the MICC has agreed to do away with tax holidays given to mining firms with new projects.

The agreement, he said, was reached during the first meeting of the MICC which is composed of the climate change adaptation and mitigation, as well as economic development clusters, officials of the Department of Justice, the National Commission on Indigenous Peoples and the Union of Local Authorities of the Philippines.

The plan to stop the grant of tax holidays to mining firms is part of efforts to increase the government’s share from mining operations.

Under the Philippine Mining Act of 1995, firms which have mineral agreements with the government are entitled to fiscal and non-fiscal incentives granted under EO 226 or the Omnibus Investments Code of 1987.

Under EO 226, firms enjoy different incentives such as tax holidays as well as exemptions from duty on imported capital equipment and spare parts, among others.

For Financial or Technical Assistance Agreement (FTAA) contractors, the Mining Act states that an additional incentive in the form of a tax holiday on national taxes is granted from the start of the construction and development period up to the end of the cost recovery period but shall not exceed five years from the start of the commercial operations.

EO 79 was released earlier this month. It seeks to implement reforms to ensure environmental protection and responsible mining operations.

The Mines and Geosciences Bureau aims to raise mining investments to the country this year to $2.27 billion from $618.50 million last year.

Last year’s mining investments fell short of the $1.4 billion projection as firms opted to put on hold their funds for projects pending the release of the new mining policy. -Louella D. Desidero (The Philippine Star)