SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
Third Regular Session 
) 
SENATE 
S. BILL N;o. 
2899 
Introduced by SENATO~ SONNY ANGARA 
i 
AN~CT 
'15 
AUG 12 P2:31 
RECE:IVED BY:+ 
TO STRENGTHEN THE COUNTRY'S GROSS INTERNATIONAL RESERVES (GIR) 
, 
AMENDING FOR THE PURPOSE SECTIONS 32 AND 151 OF THE NATIONAL 
INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
Sectiou 17 of Republic Act (RA) No. 7076, or the People's Small-Scale Mining Act of 
1991, provides that "all gold produced by small~scale miners in any mineral area shall be sold to 
the Central Bank, or its duly authorized represejltative, which shall buy it at prices comparative 
with those prevailing in the world market regardless of volume or weight." 
, 
RA No. 7076 was enacted to help promote, develop, protect and rationalize viable small-
scale mining activities in order to generate more employment opportunities and provide an 
equitable sharing of the nation's wealth and natural resources in the Philippines. The above-
quoted provision, in particular, seeks to ensure that small-scale miners would be able to receive a 
fair price for their gold. 
Another key benefit of RA No. 7076 is that it enables the Bangko Sentral ng Pilipinas 
(BSP) to build up the country's gross international reserves (GIR) by buying domestically 
produced gold from small-scale miners using pesos. 
However, per Bureau of Internal Revenue (BIR) Revenue Regulation (RR) No. 6-2012, 
the BSP started to withhold and remit to the National Govermnent 2% excise tax and 5% 
creditable withholding tax (CWT) on its purchase of gold from small-scale miners and traders. 
As a result of this tax imposition, the volume of gold sold to BSP declined drastically. 
Compared to BSP's total gold purchases in 2010 of918,110 troy ounces, purchases decreased by 
98% to 20,354 troy ounces only in 20141• In terms of value, from the 2010 figure of l!49,543 
million, BSP only purchased I!984 million worth of gold in 2014. Evidently, small-scale miners 
and traders had opted to sell their gold elsewhere rather than to the BSP. 
Based on the foregoing, the BSP for practical purposes, has lost the opportunity to build 
up its gold reserves using pesos. Buying gold from the domestic market results in a rise in the 
GIR, unlike buying using foreign currency, which simply alters the composition of the GIR. 
Meanwhile, purchasing gold using dollars acquired from the market affects the money supply. 
To keep money supply manageable and maintain growth would entail additional cost for the 
BSP. Moreover, the BSP buys gold as part of its international reserves as gold still represents 
the ultimate form of payment in the world. Central banks have long held on to gold as part of 
their international reserves for the following reasons: (1) Asset diversification - to invest in 
various revenue sources to protect the value of total reserve portfolio; (2) Economic security -
gold value is less volatile as compared to the value of currencies; and (3) Physical security - gold 
I Based on data provided by the Regional Monetary Affairs Sub-Sector (RMASS). Translated in tenus of gold bars, 
from a total of2,237.12 equivalent gold bars in 2010, only 43.89 gold bars were sold to BSP in 2014. 


maintains an intrinsic value and is less susceptible to foreign exchange controls. Finally, the 
BSP's gold refinery facility is currently operating at below capacity. With the contraction in the 
volume of gold to the BSP, it may have to raise gold refining charges, which would further 
discourage small-scale miners and their traders from selling to the BSP. 
As regards actual National Govermnent collections, while BSP remitted a significant 
amount ofP205 million in taxes for the period of July to December 2011, its remittances for the 
same period in 2013 went down by 82% to a mere P36 million, and has since plateaued at this 
amount. 
Indubitably, the dwindling tax collections of the National Govermnent from the sale of 
gold to BSP should not take precedence over the undue burden that the tax collection has caused 
to BSP and the small-scale miners. 
The proposed legislation would have the effect of assisting the BSP in the fulfillment of 
its mandate under its charter, returning to the formal sector the sale of gold from small-scale 
mining and supporting the trade of small-scale miners as originally envisioned under 
RANo. 7076. 
In view of the foregoing, immediate approval of this bill into law is earnestly sought. 
SONNY ANGARA 


SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
Third Regular Session 
) 
SENATE 
S. BILL No. 2899 
Introduced by SENATOR SONNY ANGARA 
AN ACT 
'sel11lh' 
U}Ht;r, (If Hlcforcrrtnr, 
'15 
AUG 12 P2:31 
TO STRENGTHEN THE COUNTRY'S GROSS INTERNATIONAL RESERVES (GIR) 
AMENDING FOR THE PURPOSE SECTIONS 32 AND 151 OF THE NATIONAL 
INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
1 
SECTION 1. Amendment of Section 32 of the National Internal Revenue Code - Section 32 
2 
(B) (7) of the National Internal Revenue Code of 1997, as amended, is hereby further amended to 
3 
read as follows: 
4 
5 
SECTION 32. Gross Income. -
6 
xxx 
7 
(B) Exclusions from Gross Income. -
The following items shall not be included 
8 
in gross income and shall be exempt from taxation under this Title: 
9 
xxx 
10 
(7) Miscellaneous Items. -
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xxx 
12 
(i) INCOME DERIVED FROM THE SALE OF GOLD PURSUANT TO 
13 
REPUBLIC ACT (R.A.) NO. 7076 -
INCOME DERIVED FROM THE 
14 
FOLLOWING 
TRANSACTIONS 
PURSUANT 
TO 
R.A. 
NO. 
7076, 
15 
OTHERWISE KNOWN AS THE PEOPLE'S SMALL-SCALE MINING ACT 
16 
OF 1991: 
17 
1) THE SALE OF GOLD TO THE BANGKO SENTRAL NG 
18 
PILIPINAS 
BY REGISTERED 
SMALL-SCALE 
MINERS, 
AS 
19 
DEFINED UNDER R.A. 7076, AND ACCREDITED TRADERS; AND 
20 
2) 
THE SALE OF GOLD BY REGISTERED SMALL-SCALE 
21 
MINERS TO ACCREDITED TRADERS FOR EVENTUAL SALE TO 
22 
THE BANGKO SENTRAL NG PILIPINAS. 
23 
1 


1 
SECTION 2. Amendment of Section 151 of the National Internal Revenue Code - Section 
2 
151 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to 
3 
read as follows: 
4 
5 
6 
SECTION 151. Mineral Products. 
xxx 
7 
"(C) NOTWITHSTANDING THE FOREGOING, GOLD WHICH IS SOLD, 
8 
OR EVENTUALLY SOLD, TO THE BANGKO SENTRAL NG PILIPINAS, 
9 
IN ACCORDANCE WITH SECTION 32 (B) (7) (i), SHALL BE EXEMPT 
10 
FROM THE PAYMENT OF EXCISE TAX: PROVIDED, HOWEVER, THAT 
11 
IF EXCISE TAX DUE THEREON HAD BEEN PAID PRIOR TO THE SALE 
12 
OF GOLD TO THE BANGKO SENTRAL NG PILIPINAS, THE TAXPAYER 
13 
MAY FILE A 
CLAIM FOR REFUND 
OR CREDIT WITH THE 
14 
COMMISSIONER FOR THE EXCISE TAX PAID." 
15 
16 
SECTION 3. Tax Incentives and Privileges of Small-Scale Miners. - In addition to the 
17 
foregoing, and notwithstanding the existing provisions of Republic Act (R.A.) No. 6938, 
18 
otherwise known as the Cooperative Code of the Philippines, as amended, and other applicable 
19 
laws, the sale of gold by registered small-scale miners, as defined under R.A. No. 7076, to 
20 
accredited traders for eventual sale to the Bangko Sentral ng Pilipinas shall enjoy the same tax 
21 
treatment and privileges given to the direct sale of gold to the Bangko Sentral ng Pilipinas under 
22 
the Tax Code. 
23 
24 
SECTION 4. Implementing Rules and Regulations. -
Within sixty (60) days after the 
25 
effectivity of this Act, the Governor of the Bangko Sentral ng Pilipinas, the Secretary of 
26 
Enviromnent and Natural Resources, the Secretary of Interior and Local Government and the 
27 
Commissioner of Internal Revenue shall recommend to the Secretary of Finance, for 
28 
promulgation, the necessary rules and regulations necessary for the effective implementation of 
29 
this Act. The rules and regulations shall include provisions for the registration and accreditation 
30 
requirements of small-scale miners and traders in order to avail of the tax exemptions under this 
31 
Act. 
32 
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SECTION 5. Repealing Clause. - All laws, orders, rules, regulations and other issuances or 
34 
parts thereof, which are inconsistent with the provisions of this Act, are hereby revoked, repealed 
35 
or modified accordingly. 
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37 
SECTION 6. Separability Clause. - Should any provision herein be declared unconstitutional, 
38 
the same shall not affect the validity of the other provisions of this Act. 
39 
2 


1 
SECTION 7. Effectivity. - This law shall take effect fifteen (15) days after its publication iu the 
2 
Official Gazette or in a newspaper of general circulation. 
3 
4 
Approved, 
3