The Bangko Sentral ng Pilipinas said Friday gold purchases jumped by more than 1,000 percent in 2020 from a year ago, after the Bureau of Internal Revenue exempted the transactions from taxes.
BSP mint and refinery operations department director Joseph Norbert David said in an online media lecture BSP’s gold-buying activities in 2020 surged 1,034 percent to 115,800.995 troy ounces from 10,207.645 troy ounces in 2019.
“The lifting [of the tax imposition] had positive impact on our gold buying,” David said. He said the bulk of the gold usually bought by the BSP came from Baguio and Davao regions.
David said the BSP was aware of reports that some small-scale miners were still selling gold directly to the black market. He said BSP’s buying prices were at par with international gold prices.
He said to discourage the practice of small-scale miners selling gold to the black market, the BSP made its offer rates attractive and tried to fast-track the turnaround time of payment.
“If they transact with the BSP, we can be sure that the gold assaying is accurate,” he said. Gold assaying is a process used to measure purity of items containing gold. The process of gold assaying is a way to ensure that gold coins or gold bullion bars produced by a gold mint meet the correct purity standards and content.
The Bureau of Internal Revenue in 2020 exempted from income and excise taxes the sale of gold to the Bangko Sentral to strengthen the country’s gross international reserves.
BIR Commissioner Caesar Dulay issued Revenue Regulations No. 4-2020 to encourage gold traders to sell the commodity again to the BSP and discourage the sale to the black market.
Under the revised guidelines, the sale of gold by accredited traders and registered small-scale miners is exempt from both income and excise taxes. If excise tax was paid prior to the sale of the gold to the BSP, the taxpayer may file a refund claim with the BIR.
To get the tax-free privilege, a trader should secure a tax identification number that will serve as the basis for the income and excise tax exemption the sale.
The regulations define accredited traders as a person or entity engaged in the business of buying and selling gold that complied with the BSP’s gold trader accreditation.
Government think tank Philippine Institute of Development Studies said last year the government was losing billions as the bulk of the country’s mineral production from small-scale mining – mainly gold – were being sold straight to the black market.
PIDS said in a study there was no way for the government to measure the contribution of small-scale mining to the economy because most of its output was leaked through the black market.
It said the main factor why small scale miners preferred the black market was the imposition of tax on gold production of small-scale mining in 2010 by the BSP and the BIR.
The BSP buys gold through its gold buying stations located in the BSP Security Plant Complex in Quezon City, BSP Baguio, BSP Naga, BSP Davao and BSP Zamboanga.