PBBM signs enhanced fiscal regime for large-scale metallic mining

President Ferdinand "Bongbong" Marcos Jr. signed into law Republic Act No. 12253, or the "Enhanced Fiscal Regime for Large-Scale Metallic Mining Act," establishing a new fiscal framework for large-scale metallic mining.

The new law aims to provide a fairer, clearer, and more responsive system for both the people and the environment, while safeguarding it and turning mineral wealth into a driver of sustainable growth.

The Department of Finance expects the new measure to generate an estimated average annual incremental revenue of P6.26 billion for existing mines.

Under the new system, all large-scale metallic mining operations are now subject to a unified tax regime, simplifying distinctions among different mining agreements.

Companies operating within designated mining sites are mandated to pay a royalty of five percent of their gross output, while those outside mineral reservations will be subject to a five-tier royalty rate, ranging from 1 percent to 5 percent.

Additional taxes are imposed when a company's profit margin exceeds 30 percent through a five-tier windfall profits tax ranging from 1 to 10 percent, ensuring the government receives a fair share of extra profits.

Each mining contractor is recognized as a separate taxable entity, preventing the consolidation of income and expenses of all mining projects by the same taxpayer.

The law also establishes safeguards by implementing a 2:1 debt-to-equity ratio, or a thin capitalization rule, to limit the amount of tax-deductible borrowing cost arising from debt.