Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. 
HORIBATA AND HON. NICOLAS ENCISO VIII 
EXPLANATORY NOTE 
The Philippines is considered to be one of the mineral endowed countries in the world. 
Yet, the overall contribution of metallic mining to our Gross Domestic Product (GDP) 
is as small as less than half a percent on average in the last five years. This fact alone 
begs for a revised mining tax structure that provides for a better revenue sharing 
between the mining industry and the government. 
However, the revision of our existing mining taxes should consider the overall intention 
of our government to reform our existing tax regimes. For example, the new mining 
tax structure has to necessarily address the doubling of the Excise Tax from 2% to 4% 
of gross revenue as a result of the TRAIN law, which has already adversely affected 
mining operations. 
Moreover, this proposal does away with small-scale mining operations as it would be 
too complex to cover.  It also does not include non-metallic producers to be consistent 
as well with the government’s “Build, Build, Build” program. For example, quarry 
operators for limestone and aggregates are necessary for cement production. To 
include these would simply result in further inflationary pressures on the economy. 
Based on the foregoing, and over and above the doubling of Excise Tax Rate to 4%, 
this measure proposes the following: 
A margin-based Royalty is applied to net income from mining operators at a rate of 
1% to 5%, and is applicable to all metallic operations outside of mineral reservations. 
As previously mentioned, this proposal already considers other impositions. The 
application of 5% Royalty across the board, on top of other impositions, would bring 
the total to above 10%.  
In addition, a margin-based Royalty applied to income is the same structure that is 
used by large mining countries such as Chile, Peru, South Africa, and Canada. In fact, 
July 14, 2022
5:03 pm
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the proposed rate still results in a higher Average Effective Tax Rate (AETR) of 78.1% 
compared to the aforementioned major mining countries.  
This proposal likewise anticipates the impending passage of TRABAHO Bill, in which 
there will be no incentives at all for the mining industry should it not be included in the 
Strategic Investments Priority Plan. 
This representation believes that this measure is a step toward furthering quality 
investments in the mineral sector and preventing the closure of big operations by 
providing an internationally competitive tax scheme. 
The approval of this bill is earnestly sought. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
 MIGUEL LUIS R. VILLAFUERTE 
TSUYOSHI ANTHONY G. HORIBATA 
NICOLAS ENCISO VIII 


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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY G. 
HORIBATA AND HON. NICOLAS ENCISO VIII 
AN ACT  
ESTABLISHING THE FISCAL REGIME FOR THE MINING INDUSTRY 
Be it enacted by the Senate and House of Representatives of the Philippines 
in Congress assembled: 
SECTION 1. Section 34(B) of the National Internal Revenue Code of 1997, as 
amended, is hereby amended to read as follows: 
"SEC 34. Deductions from Gross Income. — x x x 
"(A) Expenses. — 
“x x x 
"(B) Interest. — 
“(1) x x x 
“(2) x x x 
“(3) x x x 
“(4) LIMITATION OF INTEREST EXPENSE DEDUCTIONS FOR MINING 
CONTRACTORS: 
(A) IF A MINING CONTRACTOR HAS A DEBT-TO-EQUITY RATIO IN
EXCESS OF 3 TO 1 AT ANY TIME DURING A TAXABLE YEAR, A 
DEDUCTION IS DISALLOWED AS A TAX-DEDUCTIBLE EXPENSE 
FOR THE INTEREST PAID BY THE MINING CONTRACTOR DURING 
2014


 
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THAT YEAR ON THAT PART OF THE DEBT THAT EXCEEDS THE 3 
TO 1 RATIO FOR THE PERIOD THE RATIO WAS EXCEEDED. 
 
(B) IF THE DEBT-TO-EQUITY RATIO OF A MINING CONTRACTOR 
EXCEEDS 3 TO 1 FOR AN INCOME YEAR, SUBSECTION (A) DOES 
NOT APPLY IF, AT ALL TIMES, DURING THE YEAR, THE AMOUNT 
OF THE DEBT OF THE MINING CONTRACTOR DOES NOT EXCEED 
THE ARM'S LENGTH DEBT AMOUNT. 
 
(C) FOR PURPOSES OF THIS SECTION, THE TERM –  
 
(1) ARM'S LENGTH DEBT AMOUNT SHALL MEAN THE 
AMOUNT OF DEBT THAT A BANK THAT IS NOT AN 
ASSOCIATE OF THE MINING CONTRACTOR WOULD BE 
PREPARED TO LEND TO THE MINING CONTRACTOR 
HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE 
MINING CONTRACTOR 
 
(2) ASSOCIATE SHALL MEAN ANY OTHER PERSON WHO 
ACTS 
OR 
MAY 
ACT 
IN 
ACCORDANCE WITH 
THE 
DIRECTIONS, REQUESTS, SUGGESTIONS, OR WISHES OF 
THE 
FIRST-MENTIONED 
PERSON, 
AND 
THE 
FIRST-
MENTIONED PERSON IS AN ASSOCIATE OF THE SECOND-
MENTIONED PERSON 
 
(3) DEBT SHALL MEAN THE GREATEST AMOUNT, AT ANY 
TIME 
DURING 
AN 
INCOME 
YEAR, 
OF 
THE 
DEBT 
OBLIGATIONS OF THE MINING CONTRACTOR ON WHICH 
INTEREST IS PAYABLE AS DETERMINED ACCORDING TO 
INTERNATIONAL FINANCIAL REPORTING STANDARDS 
 
(4) DEBT OBLIGATION SHALL MEAN AN OBLIGATION TO 
MAKE A REPAYMENT OF MONEY TO ANOTHER PERSON, 
INCLUDING 
AN 
OBLIGATION 
ARISING 
UNDER 
A 


 
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PROMISSORY NOTE, BILL OF EXCHANGE, OR BOND, BUT 
NOT INCLUDING ACCOUNTS PAYABLE OR AN OBLIGATION 
TO MAKE REPAYMENT OF MONEY IN RESPECT OF WHICH 
NO INTEREST IS PAYABLE 
 
(5) EQUITY SHALL MEAN THE GREATEST AMOUNT, AT ANY 
TIME DURING AN INCOME YEAR, OF THE EQUITY OF THE 
MINING CONTRACTOR AS DETERMINED ACCORDING TO 
INTERNATIONAL FINANCIAL REPORTING STANDARDS AND 
INCLUDES AN OBLIGATION TO MAKE A REPAYMENT OF 
MONEY IN RESPECT OF WHICH NO INTEREST IS PAYABLE 
 
 
"(C) Taxes. — 
 
“x x x 
 
"(D) Losses. —  
 
“x x x 
 
"(E) Bad Debts. —  
 
“x x x 
 
"(F) Depreciation. —  
 
“x x x 
 
"(G) Depletion of Oil and Gas Wells and Mines. —  
 
“x x x 
 
"(H) Charitable and Other Contributions. —  
 
“x x x 
 
"(l) Research and Development. —  
 
“x x x 
 
“(J) Pension Trusts. — x x x 
“(K) Additional Requirements for Deductibility of Certain Payments. — x x x 
“(L) Optional Standard Deduction. — x x x 
 
SEC. 2. The chapter title of Chapter VII, Title VI of the National Internal Revenue Code 
of 1997 (NIRC), as amended, is hereby amended to read as follows: 
 
"CHAPTER VII – [EXCISE TAX ON MINERAL PRODUCTS] TAXATION OF 
MINERAL PRODUCTS". 


 
6
 
SEC. 3. The section title of Section 151, Chapter VII, Title VI of the National Internal 
Revenue Code of 1997, as amended, is hereby amended to read as follows: 
 
"SEC 151. TAX ON Mineral Products. – 
 
SEC. 4. A New section shall be inserted as Section 151-A of the National Internal 
Revenue Code of 1997, as amended, to read as follows: 
 
"SEC 151-A. ROYALTY. – 
 
(A) FOR LARGE-SCALE METALLIC MINING OPERATIONS WITHIN 
MINERAL RESERVATIONS. – MINING CONTRACTORS OF LARGE-SCALE 
METALLIC MINING OPERATIONS WITHIN MINERAL RESERVATIONS 
SHALL PAY TO THE GOVERNMENT A ROYALTY EQUIVALENT TO THREE 
PERCENT (3%) OF THE GROSS OUTPUT OF THE MINERALS OR 
MINERAL PRODUCTS EXTRACTED OR PRODUCED BY THE MINING 
OPERATIONS, EXCLUSIVE OF ALL OTHER TAXES; 
 
(B) FOR LARGE-SCALE METALLIC MINING OPERATIONS OUTSIDE OF 
MINERAL RESERVATIONS. – MINING CONTRACTORS OF LARGE-SCALE 
METALLIC 
MINING 
OPERATIONS 
OUTSIDE 
OF 
MINERAL 
RESERVATIONS SHALL PAY TO THE GOVERNMENT A MARGIN-BASED 
ROYALTY ON INCOME FROM MINING OPERATIONS IN ACCORDANCE 
WITH THE FOLLOWING TABLE: 
 
 
MARGIN 
 
 
 
 
ROYALTY 
 
1% UP TO 10% 
 
 
 
1.00% 
 
ABOVE 10% UP TO 20%  
 
1.50% 
 
ABOVE 20% UP TO 30%  
 
2.00% 
 
ABOVE 30% UP TO 40%  
 
2.50% 
 
ABOVE 40% UP TO 50%  
 
3.00% 
 
ABOVE 50% UP TO 60%  
 
3.50% 
 
ABOVE 60% UP TO 70%  
 
4.00% 
 
ABOVE 70%  
 
 
 
5.00% 
 


 
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(C) FOR SMALL-SCALE METALLIC MINING OPERATIONS. – MINING 
CONTRACTORS OF SMALL-SCALE METALLIC MINING OPERATIONS 
SHALL PAY TO THE GOVERNMENT A ROYALTY EQUIVALENT TO ONE-
TENTH (1/10) OF ONE PERCENT (1%) OF GROSS OUTPUT; 
 
(D) FOR THE PURPOSES OF THIS SECTION, THE TERM – 
 
(1) MARGIN SHALL MEAN THE RATIO OF INCOME FROM MINING 
OPERATIONS BEFORE CORPORATE INCOME TAX TO GROSS 
OUTPUT. 
 
(2) INCOME FROM MINING OPERATIONS SHALL MEAN THE 
GROSS 
OUTPUT 
LESS 
DEDUCTIBLE 
EXPENSES 
WHICH 
INCLUDES: 
(a) 
MINING, 
MILLING, 
TRANSPORT 
AND 
HANDLING 
EXPENSES TOGETHER WITH SMELTING AND REFINING 
COSTS OTHER THAN SMELTING AND REFINING COSTS 
PAID TO THIRD PARTIES; 
 
(b) 
GENERAL 
AND 
ADMINISTRATIVE 
EXPENSES 
ACTUALLY INCURRED BY THE MINING CONTRACTOR IN 
THE PHILIPPINES; 
 
(c) 
ENVIRONMENTAL 
EXPENSES 
OF 
THE 
MINING 
CONTRACTOR, INCLUDING SUCH EXPENSES NEC ESSARY 
TO 
FULLY 
COMPLY 
WITH 
ITS 
ENVIRONMENTAL 
OBLIGATIONS AS STIPULATED IN THE ENVIRONMENTAL 
PROTECTION PROVISION OF THE MINERAL AGREEMENT 
OR FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT 
AND IN THE APPLICABLE IMPLEMENTING RULES AND 
REGULATIONS; 
 
(d) EXPENSES FOR THE DEVELOPMENT OF HOST AND 
NEIGHBORING 
COMMUNITIES 
AND 
FOR 
THE 


 
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DEVELOPMENT 
OF 
GEOSCIENCES 
AND 
MINING 
TECHNOLOGY, 
INCLUDING 
TRAINING 
COSTS 
AND 
EXPENSES AS STIPULATED IN THE MINERAL AGREEMENT, 
OR FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT, 
AND IN THE APPLICABLE IMPLEMENTING RULES AND 
REGULATIONS; 
 
(e) ROYALTY PAYMENTS TO CLAIM OWNERS OR SURFACE 
LAND OWNERS RELATING TO THE CONTRACT AREA 
DURING THE OPERATING PERIOD, IF ANY; 
 
(f) CONTINUING EXPLORATION 
AND DEVELOPMENT 
EXPENSES WITHIN THE CONTRACT AREA AFTER THE PRE-
OPERATING PERIOD; 
 
(g) INTEREST EXPENSES CHARGED ON LOANS OR SUCH 
OTHER FINANCING-RELATED EXPENSES INCURRED BY 
THE MINING CONTRACTOR SUBJECT TO THE FINANCING 
REQUIREMENT 
IN 
THE 
MINERAL 
AGREEMENT 
OR 
FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT, 
WHICH SHALL NOT BE MORE THAN THE PREVAILING 
INTERNATIONAL RATES CHARGED FOR SIMILAR TYPES 
OF TRANSACTIONS AT THE TIME THE FINANCING WAS 
ARRANGED, AND WHERE SUCH LOANS ARE NECESSARY 
FOR THE OPERATION; 
 
(h) DEPRECIATION, DEPLETION, AND AMORTIZATION; 
 
(i) TAXES, DUTIES, FEES, AND CHARGES; AND 
 
(j) ALL OTHER COSTS AND EXPENSES RELATED TO 
MINING OPERATIONS AND SALE OF MINERALS AND 
MINERAL PRODUCTS. 
 


 
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(3)  MINING CONTRACTOR SHALL MEAN A QUALIFIED PERSON 
ACTING ALONE OR IN CONSORTIUM WHO IS A PARTY TO A 
MINERAL 
AGREEMENT 
OR 
FINANCIAL 
AND 
TECHNICAL 
ASSISTANCE AGREEMENT.” 
 
SEC. 5. A new section shall be inserted as Section 151-B of the National Internal 
Revenue Code of 1997, as amended, to read as follows: 
 
“SEC. 151-B. WINDFALL PROFITS TAX – 
 
IN ADDITION TO THE TAXES IMPOSED UNDER THIS CODE, THERE IS 
HEREBY IMPOSED FOR EACH TAXABLE YEAR A AMRGIN-BASED 
WINDFALL PROFITS TAX ON INCOME FROM MINING OPERATIONS 
BEFORE CORPORATE INCOME TAX, IN ACCORDANCE WITH THE 
FOLLOWING TABLE: PROVIDED, THAT IT SAHLL BE DEDUCTIBLE FROM 
TAXABLE INCOME, AS DEFINED IN SECTION 31, CHAPTER V, TITLE OF 
THIS CODE: 
 
 
 
MARGIN 
 
 
 
 
RATE 
 
 
MORE THAN 35% UP TO 40%  
1% 
 
 
MORE THAN 40% UP TO 45%  
2% 
 
 
MORE THAN 45% UP TO 50%  
3% 
 
 
MORE THAN 55% UP TO 55%  
4% 
 
 
MORE THAN 55% UP TO 60%  
5% 
 
 
MORE THAN 60% UP TO 65%  
6% 
 
 
MORE THAN 65% UP TO 70%  
7% 
 
 
MORE THAN 70% UP TO 75%  
8% 
 
 
MORE THAN 75% UP TO 80%  
9% 
 
 
MORE THAN 80%  
 
 
10% 
 
SEC. 6. Each Mining Operation Treated as a Separate Taxable Entity. – Each 
mining operation, which is subject to a Mineral Agreement or Financial or Technical 
Assistance Agreement, shall be treated as a separate taxpayer with respect to each 
other and every Mineral Agreement of Financial or Technical Assistance Agreement it 
holds or is a party to. 


 
10
 
If a Mineral Agreement or Financial or Technical Assistance Agreement is renewed, 
the renewal shall be treated as part of the original agreement. 
 
SEC. 7. Exemption from Confidentiality Clauses. – Mining contractors for all 
metallic and nonmetallic mining operations, whether large-scale or small-scale, shall 
observe fiscal transparency and comply with the requirements of the Extractive 
Industries Transparency Initiative (EITI) of government, and, for this purpose, shall be 
exempted from application of the confidentiality clauses of the National Internal 
Revenue Code of 1997, as amended, including Section 270 in relation to Section 71 
therein, to the extent of their participation in the EITI. 
 
SEC. 8. Fiscal Regime Under Financial or Technical Assistance Agreements and 
Other Mineral Agreements. – The fiscal regime provided herein and the applicable 
terms and conditions provided under existing laws shall be embodied in the Mineral 
Agreements and Financial or Technical Assistance Agreements entered into by the 
government. 
 
SEC. 9. Vested Rights. – A valid mineral agreement and technical assistance 
agreement existing prior to the effectivity of this Act shall continue to be governed by 
its terms and conditions, except if these provide that terms and conditions resulting 
from repeal or amendment of existing laws or regulations or from the enactment of a 
new law or regulation shall be considered a part of said financial and technical 
assistance agreement and mineral agreement. 
 
SEC. 10. Registration of Small-scale Miners for Taxation Purposes. – All persons 
engaged in small-scale mining activities shall register with the Mines and Geosciences 
Bureau (MGB) and with the Mining Board of the concerned local government unit in 
accordance with Republic Act No. 7076 or the “People’s Small-Scale Mining Act of 
1991,” and may organize themselves into cooperatives in order to qualify for the 
awarding of a people’s small-scale mining contract. 
The Mining Board shall submit an annual report to the MGB of all the small-scale 
mining contracts entered into for the small-scale utilization of a plot of mineral land 
including the respective production output, taxes and fees paid. 


 
11
 
For this purpose, a tax identification number shall be required for registration and 
secured from the Bureau of Internal Revenue. 
 
SEC. 11. Disposition of Royalties for the Natural Resource Trust Fund. – The 
provisions of existing laws to the contrary notwithstanding, the revenues collected from 
the margin-based royalty paid by the large-scale metallic mining operations outside of 
mineral reservations shall accrue to the Natural Resource Trust Fund under this Act. 
The Bureau of Treasury shall create a Special Account on said revenues and shall 
serve as its fund manager. 
The Natural Resource Trust Fund shall be remitted to the Bureau of Treasury 
within the first quarter of the succeeding income year. The fund shall redound to the 
benefit of provinces, cities, municipalities, and barangays directly affected by mining 
operations which shall commence three (3) years after the effectivity of this Act, and 
every six (6) years thereafter. 
The Natural Resource Trust Fund shall be used by the local government unit 
concerned to support educational programs, technological research programs of local 
relevance, disaster risk management, rehabilitation of abandoned mines before the 
enactment of Republic Act No. 7942 of the “Philippine Mining Act of 1995,” and health 
service programs of the communities directly affected by mining activities: Provided, 
That the Department of Budget and Management, in consultation with the Department 
of Environment and Natural Resources and the Department of Finance, shall issue 
rules and regulations governing the allocation and disbursement of the fund allocated 
to provinces, cities, municipalities, and barangays not later than one hundred and 
eighty (180) days from the effectivity of this Act. 
 
SEC. 12. Implementing Rules and Regulations. – The Department of Finance, after 
consultation with other concerned government agencies, shall, within ninety (90) days 
from the effectivity of this Act, promulgate rules and regulations to implement the intent 
and provisions of this Act. 
 
SEC. 13. Repealing Clause. –  
(a) The second paragraph of Section 5 of Republic Act No. 7942, otherwise 
known as the Philippine Mining Act of 1995 is hereby amended to assign 


 
12
the Bureau of Internal Revenue as the collecting agent of the payment of 
royalty. 
(b) Section 13 of Department of Environment and Natural Resources 
Administrative Order No. 2010-21 is hereby amended insofar as it governs 
the payment of 5% royalty to the Mines and Geosciences Bureau by a 
contractor/permit holder/lessee operating within a mineral reservation. 
(c) All laws, acts, decrees, executive orders, rules and regulations, or parts 
thereof which are contrary to or inconsistent with this Act are hereby 
repealed, amended or modified accordingly. 
 
SEC. 14. Separability Clause. – If any provision of this Act is declared 
unconstitutional or invalid, other parts or provisions hereof not affected thereby shall 
continue to be in full force and effect. 
 
SEC. 15. Effectivity. – This Act shall take effect fifteen (15) days after its publication 
in the Official Gazette or in a newspaper of general circulation. 
 
Approved,