MANILA, Philippines – The adoption of a seven percent single levy for all mining operations – combining excise and royalty taxes – as well as the phasing out of mineral production sharing agreements (MPSA), where the government only collects two percent excise taxes, and a 10 percent “cash-flow surcharge” is being recommended by the International Monetary Fund (IMF) to the Philippines to improve government share in revenues from mining, a draft technical assistance report obtained by the STAR showed.
“The most promising alternative that retains a cash-flow based levy would be a cash flow surcharge, which could be known as the new additional government share,” the IMF report titled “Reform of Fiscal Regimes for Mining and Petroleum” stated.
“The mission considers a rate of surcharge on cash flow in the range of 10 percent to be appropriate,” the draft added.
The surcharge will be determined by adding the mining company’s regular taxable income plus its interest and other financing charges. Capital expenditures and corporate income tax would however be deducted from the surcharge base.
MPSAs should be phased out, IMF said, with the government just having a single “mining regime” consisting of Financial Technical Assistance Agreement (FTAA), which allows the government to have a 50 percent of share in mining revenues.
IMF however said the surcharge is needed to improve the FTAA mechanism since the latter is a “cash flow-based levy” that is “problematic in several respects.”
It pointed to the allowance granted by the FTAAs to mining companies for “recovery period.” The government can only get its additional mining share from the company upon its recovery of all expenses during the extraction. This recovery period is even allowed to be extended, subject to approval of the Department of Environment and Natural Resources. –Prinz P. Magtulis (The Philippine Star)
#WearMask #WashHands
#Distancing
#TakePicturesVideos
