Department of Finance (DOF) Secretary Ralph Recto said Thursday the new enhanced mining fiscal regime is expected to generate an estimated average annual incremental revenue of P6.26 billion for existing mines.
Recto said the measure would protect the environment, while transforming the country’s natural resources into a key driver of sustainable growth. The law will also attract investments, generate jobs, and boost revenues to support essential public services, he said.
“The Department of Finance is committed to implementing this law swiftly, efficiently, and with full transparency. We will also continue to engage with all stakeholders to ensure that the law delivers on its promise,” Recto said.
President Ferdinand Marcos Jr. said in a speech that the law sends a “clear and powerful message” that progress will never come at the cost of people or the planet.
“Minerals are finite. Once extracted, they are gone forever,” he said. “But if we use them wisely, tax them fairly, protect our environment as we mine, and ensure that revenues return to the people, then their value will outlive all of us.”
Signed on Sept. 4, Republic Act (RA) 12253, also known as the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, simplifies the mining fiscal regime by removing complex tax distinctions among different mining agreements.
The new law subjects all large-scale metallic mining operations to a unified tax regime aimed at encouraging investment and promoting tax compliance.
The law also guarantees the government’s fair share of revenues by subjecting mines outside mineral reservations to a royalty tax and all large-scale metallic mining operations to a windfall profits tax. This will especially benefit local government units (LGUs), which are entitled to a share of the national wealth.
The new regime includes a five-tier royalty rate, ranging from 1 percent to 5 percent for mines outside mineral reservations, a minimum royalty rate of 0.1 percent on gross output for mines below the margin threshold, and a five-tier windfall profits tax ranging from 1 percent to 10 percent.
To limit the amount of tax-deductible borrowing costs from related-party debt, the law establishes safeguards by implementing a 2:1 debt-to-equity ratio, also known as a thin capitalization rule.
The law also adopts a ring-fencing rule on a project-by-project basis to prevent the consolidation of income and expenses of all mining projects by the same taxpayer. This prevents companies from offsetting losses from more profitable projects.
RA also 12253 ensures the enforcement of strict monitoring and auditing standards on mineral sales and exports.
It also promotes transparency by mandating the public disclosure of data and establishing a multi-stakeholder mechanism for participatory governance in accordance with international standards.
The law earmarks funds to support research, monitoring, and enforcement in the sector.
Specifically, 10 percent of the royalty collected from mines within mineral reservations will be invested in mineral exploration and research.
The funds will also be used to establish laboratories and equip the Bureau of Internal Revenue (BIR) with specialized tools to enable proper oversight and validation of mineral resource valuation for taxation purposes.
 expects the new enhanced mining fiscal regime to generate an estimated average annual incremental revenue of P6.26 billion for existing mines.){kind=link}