PHILIPPINES Law and Practice Contributed by: Patricia A O Bunye and Rafael Raymundo A Evangelista, Cruz Marcelo & Tenefrancia
in response to the call for the mining industry to align with the responsible mining practices of Australia and Canada. TSM requires min - ing companies to annually assess their tailings management, community outreach, safety and health, biodiversity conservation, crisis manage - ment, energy use and greenhouse gas emissions management. 3.4 Energy-Transition Minerals Based on the United States Geological Survey, the Philippines has the fourth-largest nickel reserves in the world, and according to S&P Global, accounted for 11% of the global mined nickel production in 2022. Thus, even during the downturn of the mining industry in the Philip - pines, local mining companies continued to ship nickel to China, Japan and other markets. The Philippine government recognises the fol - lowing: • the need to utilise this natural resource by restricting its export and developing the local processing industry; and • that nickel is important to achieving a transi - tion to a cleaner, greener and more sustain - able future. As an energy-transition mineral (ETM), nickel is a vital component for the lithium-ion batter - ies used in electric vehicles, the use of which is currently being endorsed and developed by the Philippine government, having passed Republic Act No 11697, An Act Providing for the Develop - ment of the Electric Vehicle Industry, in 2021. In connection with the above, the President of the Philippines signed Executive Order No 12 on 13 January 2023, providing a temporary zero importation tariff on electric vehicles and their spare parts for a period of five years. It is hoped
that this will encourage motorists to shift from traditional modes of transportation to electric vehicles. An influx of electric vehicles could lead to a demand for nickel which, in turn, may neces - sitate new government or legislative action. In this regard, it has been reported that the cur - rent Trade Secretary believes that the Philippines can be a supplier of electric vehicle components, specifically ETMs, for batteries. In this connec - tion, the Department of Energy has publicly announced that it aims to roll out approximately 2.5 million electric vehicles by 2028. 4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes Taxes After the lapse of the income tax holiday granted to the contractor by the Omnibus Investments Code (OIC) and the Corporate Recovery and Tax Incentives for Enterprises Act of 2022 (CREATE Act), the contractor pays income tax, which is set at a preferred rate for up to ten years. The contractor is also liable for excise tax on mineral products, value-added tax under the National Internal Revenue Code, customs duties under the Tariff and Customs Code and local business taxes and real property tax under the Local Gov - ernment Code. The contractor must likewise pay an annual occupation fee, based on the area occupied, and mine waste and tailings fees. Royalties Contractors shall pay royalties to the ICCs con - cerned, based on the agreed payment, which may not be less than 1% of the gross output.
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