Enhanced Fiscal Regime Marks Historic Mining Reform
Albay 2nd District Rep. Joey Salceda hailed the upcoming enactment of the enhanced fiscal regime for large-scale metallic mining as a major milestone for fiscal reform. As chairman of the House Committee on Ways and Means, Salceda welcomed the recent ratification of the bicameral conference committee report on this long-awaited measure. He emphasized that this enhanced fiscal regime represents a breakthrough, finally reaching the President’s desk for signature after pending for three consecutive Congresses.
“This bill has been pending for the past three Congresses. Today, it finally makes it to the President’s desk. This is a milestone for fiscal reform,” Salceda said.
New Tax Rules for Mining Operations
The proposed law introduces a progressive and stable tax framework for large-scale metallic mining. It sets a royalty rate of up to five percent of gross output for mines inside mineral reservations and a margin-based royalty of one to five percent for those outside these reservations. Additionally, a windfall profits tax of up to ten percent applies to exceptionally profitable mining operations.
However, Salceda stressed that the bill’s most transformative feature lies not in the tax rates but in its tax administration and transparency provisions. “The most meaningful part of this reform is not the tax rate. It is the state’s ability to finally see and value what is being taken from our soil. We can now audit sales. We can verify prices. We can track the trail from mine to ship,” he explained.
Strengthening Tax Oversight and Transparency
Under the new regime, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) will jointly audit all mineral sales and exports. Both agencies gain full access to marketing agreements, assay reports, and other critical documents to ensure declared mineral values match actual market transactions. Mining companies must submit quarterly and annual returns for royalty and windfall profit taxes. These taxes are explicitly non-creditable and non-refundable to prevent abuse.
To guarantee accurate mineral valuation, the law mandates establishing dedicated labs, acquiring advanced assay equipment, and hiring technical experts within the BIR. The government can also utilize international metal pricing databases and benchmarks to verify that declared prices reflect true arm’s length values.
“We are lifting the veil on an industry that has always been underdeclared and underverified. If you fix the leakages, you do not need excessive tax rates. You just need truth in the numbers,” Salceda remarked.
International Success Inspires Reform
Salceda cited Mongolia’s success in improving mining revenue collections through enhanced transfer pricing enforcement. Mongolia’s first major transfer pricing case in 2019 and 2020 recovered $228 million in back taxes and blocked $1.5 billion in loss claims from a multinational mining company. This amounted to approximately 1.7 percent of Mongolia’s GDP — achieved without raising tax rates.
Ensuring Fair Taxation and Local Benefits
The bill also includes ring-fencing provisions that treat each mining agreement as a separate taxable entity to stop income shifting and tax base erosion. It demands full transparency from mining firms by requiring disclosure of ownership structures and financial information, including documents previously protected by confidentiality rules.
Moreover, 40 percent of mining revenues will be promptly released to local government units (LGUs) without any holdbacks. Ten percent of mineral reservation royalties will fund the Mines and Geosciences Bureau and the Metals Industry Research and Development Center, supporting improved mineral governance and downstream industry development.
“This completes the comprehensive tax reform program we began in the 17th Congress. We now have not just better tax laws. We have better tax tools. We can now enforce our fiscal sovereignty over our mineral resources,” Salceda concluded.
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