PHILIPPINES Law and Practice Contributed by: Patricia A O Bunye and Rafael Raymundo A Evangelista, Cruz Marcelo & Tenefrancia
4.2 Tax Incentives for Mining Investors and Projects Contractors are entitled to fiscal and non-fiscal incentives under the OIC. The Mining Act pro - vides that mining activities should always be included in the Investment Priorities Plan (now the SIPP). The relevant guidelines state that the exploration of mineral resources or the process - ing of minerals to produce semi-processed min - eral products may qualify for registration with incentives limited to capital equipment. Under the CREATE Act, income-tax incentives are now categorised according to tiers depend - ing on the location and industry of the registered project or activity. Under the 2022 SIPP, min - ing activities are classified under Tier I, in which case registered projects or activities may enjoy an income tax holiday for up to six years, and a further ten years to avail of either the special cor - porate income tax or certain enhanced deduc - tions. There are currently no tax stabilisation agree - ments on mining in force in the Philippines. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects Gains realised on a transfer of licence are gen - erally subject to income tax. Transfers through corporate structuring outside the Philippines are not subject to tax levies. 5. Mining Investment and Finance 5.1 Attracting Investment for Mining Aside from untapped mineral reserves, investors are provided with fiscal and non-fiscal incen - tives, such as income tax holidays, special cor - porate income tax and certain enhanced deduc -
For MAs and FTAAs over areas covered by small-scale miners, the contractor shall pay roy - alties to the small-scale miners concerned upon utilisation of the minerals, depending upon their agreement. Mining operations within mineral reservations are subject to a royalty paid to the MGB of not less than 5% of the market value of the gross output of the minerals or mineral products extracted or produced, exclusive of all other taxes. Government Share The total government share in Mineral Produc - tion Sharing Agreements is the excise tax on the mineral product or 4%, based on the actual market value of the gross output thereof at the time of removal. The government’s share in co-production and joint venture agreements shall be negotiated with the contractor, considering the capital investment, the risks involved, the contribution to the economy and other factors for fair and equitable sharing. The government is also enti - tled to compensation for its other contributions, as agreed upon by the parties, consisting of the contractor’s income tax, excise tax and other taxes, duties and fees provided in existing laws. The government share in an FTAA is negotiated by the government and the contractor and con - sists, among other things, of the contractor’s income tax, customs duties and fees on import - ed capital equipment, excise tax on minerals, royalties for mineral reservations and IPs, local business tax, and other national and local gov - ernment unit taxes, royalties and fees.
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