EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
V .' lO n 'tr 0* ‘ il- ■ 
' ■ f
S E N A T E
*19 
JULIO 
A 9 :1 4
Introduced by Senator Juan Miguel F. Zubiri
AN ACT
ESTABLISHING THE FISCAL REGIME FOR THE MINING INDUSTRY
EXPLANATORY NOTE
The Philippines is a diverse and mineral-rich nation. According to statistics, the 
Philippines is the fifth most mineral-rich nation in terms of gold, chromite, nickel and 
copper. The Philippines has an estimated $840 billion worth of metallic and non-metallic 
reserves as of 2012.1
According to the Mines and Geosciences Bureau (MGB), total estimated production 
value for metallic minerals reached PhP121.94 Billion in 2018 while Estimated Gross Value 
Added (GVA, excluding crude oil) in mining at current prices for the same year amounted 
to PhP107.90 Billion. The mining industry plays a very important role in local and regional 
economic development. A total of 212,000 workers were employed in the mineral industry 
in 2018. Mining also contributed to the country's foreign exchange earnings through 
exports which amounted to US$4.26 Billion (metallic minerals and mineral products) for 
the same period. The government collected PhP25.70 Billion in national and local taxes, 
fees and royalties in 2017.2
However, we must not forget that, although we have all these untapped valuable 
resources and their potential to contribute to the country's development, in most aspects 
of mining activities, the hazard of environmental and ecological degradation always exists. 
Thus, we must also consider the protection of our environment by ensuring responsible, 
sustainable and socially-acceptable mining practices.
This bill seeks to ensure that the Philippines not only maximizes the use of its 
mineral resources but also receives a fair share from mining revenues. It proposes to 
impose royalties based on a scale ranging from 1% to 5% on all metallic operations 
including those conducted within and outside mineral reservation areas, whether large- 
or small-scale, as well as additional tax on their windfall profits.
Ultimately, it is the hope of this bill to create a mining industry that is not 
exploitative, but rather responsible for the benefit of the mining sector, the government, 
the environment, and most of all for the benefit of the Filipino people.
1https://www.rappler.com/business/spedal-report/whymining/whymining-latest-stories/11983-fast-facts- 
mining-philippines, accessed 27 June 2019.
2h ttp ;//www.mgb.gov.ph/attachment5/article/162/mining%20facts%20and%20figures%20updated%20M 
arch°/o202019.pdf, accessed 27 June 2019.


In view of the foregoing, the approval of this bill is earnestly sought.
IGUEL F. ZUBIRI


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
S E N A T E
\  
, i- 
rr-. >. 
y  
.
■» 
of tir A
)
T9 JULIO A9T4
Introduced by Senator Juan Miguel F. Zubiri
AN ACT
ESTABLISHING THE FISCAL REGIME FOR THE MINING INDUSTRY
1
2
Be it enacted by the Senate and the House o f the Representatives o f the Philippines 
in Congress assembled:
SECTION 1. The chapter title of Chapter VII Title VI of the National Internal 
Revenue Code of 1997, as amended, is hereby amended to read as follows:
3 
"CHAPTER VII -  [EXCISE TAX ON MINERAL PRODUCTS] TAXATION OF
4 
MINERAL PRODUCTS."
5 
SEC. 2. Sex. 151 of Chapter VII, Ttle VI of the National Internal Revenue Code
6 
of 1997, as amended, is hereby amended to read as follows:
7 
"SEC. 151. TAX ON Mineral Products.
8 
SEC. 3. A new section designated as Section 151-A under Chapter VII, Ttle VI of
9 
the National Internal Revenue Code of 1997, as amended, is hereby inserted and shall 
10 
read as follows:
11
"SEC. 151-A. ROYALTY. -
12
13
14
15
16 
17
A. FOR ALL LARGE-SCALE METALLIC MINING OPERATIONS OUTSIDE OF 
MINERAL RESERVATIONS. -  MINING CONTRACTORS OF LARGE- 
SCALE METALLIC MINING OPERATONS OUTSIDE OF MINERAL 
RESERVATIONS SHALL PAY TO THE GOVERNMENT A MARGIN-BASED 
ROYALTY ON INCOME FROM MINING OPERATIONS IN ACCORDANCE 
WITH THE FOLLOWING TABLE:


1
2
3
4
5
6 
7
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%
B. 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;
8
9
10
11
12
13
C. FOR SMALL-SCALE METALLIC MINING OPERATIONS WITHIN OR 
OUTSIDE MINERAL RESERVATIONS. -  MINING CONTRACTORS OF 
SMALL-SCALE 
METALLIC 
WITHIN 
OR 
OUTSIDE 
MINERAL 
RESERVATIONS SHALL PAY TO THE GOVERNMENT A ROYALTY 
EQUIVALENT TO ONE TENTH (1/10) OF ONE PERCENT (1% ) OF GROSS 
OUTPUT;
14
D. FOR PURPOSES OF THIS SECTION AND SECTION 151-B, THE TERM -
15
16
(1) 'MARGIN' SHALL MEAN THE RATIO OF INCOME FROM MINING 
OPERATIONS BEFORE CORPORATE INCOME TAX TO GROSS OUTPUT;
17
18
19
20 
21 
22
23
24
(2) 'GROSS OUTPUT' SHALL MEAN THE ACTUAL MARKET VALUE OF 
MINERALS OR MINERAL PRODUCTS FROM EACH MINE OR MINERAL 
LAND OPERATED AS A SEPARATE ENTITY, WITHOUT ANY DEDUCTION 
FOR MINING, PROCESSING, REFINING, TRANSPORTING, HANDLING, 
MARKETING OR ANY OTHER EXPENSES: PROVIDED, THAT OF THE 
MINERALS OR MINERAL PRODUCTS SOLD OR CONSIGNED ABROAD BY 
THE MINING CONTRACTOR UNDER COST, INSURANCE OR FREIGHT 
(CIF) TERMS, THE ACTUAL COST OF OCEAN FREIGHT AND INSURANCE


2
3
4
5
6
7
8 
9
10
1
SHALL BE DEDUCTED: PROVIDED FURTHER, THAT IN THE CASE OF 
MINERAL CONCENTRATES WHICH ARE NOT TRADED IN COMMODITY 
EXCHANGED IN THE PHILIPPINES OR ABROAD, SUCH AS COPPER 
CONCENTRATES, THE ACTUAL MARKET VALUE SHALL BE WORLD PRICE 
QUOTATIONS 
OF THE 
REFINED 
MINERAL 
PRODUCTS 
CONTENT 
THEREOF PREVAILING IN THE SAID COMMODITY EXCHANGED, AFTER 
DEDUCTING THE SMELTING, REFINING, TREATMENT, INSURANCE, 
TRANSPORTATION AND OTHER CHARGES INCURRED IN THE PROCESS 
OF CONVERTING MINERAL CONCENTRATES INTO REFINED METAL 
TRADED IN THOSE COMMODITY EXCHANGES;
11
12
(3) 'INCOME FROM MINING OPERATIONS' SHALL MEAN THE GROSS 
OUTPUT LESS DEDUCTIBLE EXPENSES, WHICH INCLUDE:
13
14
15
(A) MINING, MILLING, TRANSPORT AND HANDLING EXPENSES 
TOGETHER WITH SMELTING AND REFINING COSTS OTHER THAN 
SMELTING AND REFINING COSTS PAID TO THIRD PARTIES;
16
17
(B) GENERAL AND ADMINISTRATIVE 
EXPENSES ACTUALLY 
INCURRED BY THE MINING CONTRACTOR IN THE PHILIPPINES;
18
19
20 
21 
22
23
24
(C) ENVIRONMENTAL EXPENSES OF THE MINING CONTRACTOR, 
INCLUDING SUCH EXPENSES NECESSARY 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;
25
26
27
28
29
30
31
(D) 
EXPENSES 
FOR 
THE 
DEVELOPMENT 
OF 
HOST 
AND 
NEIGHBORING COMMUNITIES AND FOR THE DEVELOPMENT OF 
GEOSCIENCES 
AND 
MINING 
TECHNOLOGY, 
INCLUDING 
TRAINING COSTS AND EXPENSES AS STIPULATED IN THE 
MINERAL 
AGREEMNT 
OR 
FINANCIAL 
OR 
TECHNICAL 
ASSISTANCE 
AGREEMENT 
AND 
IN 
THE 
APPLICABLE 
IMPLEMENTING RULES AND REGULATIONS;


2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20
1
(E) ROYALTY PAYMENTS TO CLAIMOWNERS OR SURFACE LAND 
OWNERS RELATING TO THE CONTRACT AREA DURING THE 
OPERATING PERIOD, IF ANY;
(F) CONTINUING EXPLORATION AND DVELOPMENT 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.
21
22
23
24
(4) 'MINING CONTRACTOR' SHALL MEAN A QUALIFIED PERSON 
ACTING ALONE OR IN CONSORTIUM WHO IS A PARTY TO A MINERAL 
AGREEMENT 
OR 
FINANCIAL 
OR 
TECHNICAL 
ASSISTANCE 
AGREEMENT."
25 
SEC. 4. A new section designated as Section 151-B under Chapter VII, Title VI
26 
of the National Internal Revenue Code of 1997, as amended, is hereby inserted and
27 
shall read as follows:
28
"SEC. 151-B. WINDFALL PROFITS TAX. -
29
30
(A) IN ADDITION TO THE TAXES IMPOSED UNDER THIS CODE, THERE 
IS HEREBY IMPOSED FOR EACH TAXABLE YEAR A MARGIN-BASED


2
3
4
5
1
WINDFALL PROFITS TAX ON INCOME FROM MINING OPERATIONS 
BEFORE CORPORATE INCOME TAX, IN ACCORDANCE WITH THE 
FOLLOWING TABLE: PROVIDED, THAT IT SHALL BE DEDUCTIBLE FROM 
TAXABLE INCOME, AS DEFINED IN SECTION 31, CHAPTER V, TITLE I I  
OF THIS CODE:
MARGIN
ROYALTY
MORE THAN 35% UP TO 40%
1%
MORE THAN 40% UP TO 45%
2%
MORE THAN 45% UP TO 50%
3%
MORE THAN 50% 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%
7 
SEC. 5. Section 34 (B) of Chapter VII, Title II of the National Internal Revenue
8 
Code of 1997, as amended, is hereby further amended to read as follows:
9 
"SEC. 34. DEDUCTIONS FROM GROSS INCOME -  xxx
10
11
12
13
14
15
16
17
18 
19
(A) Expenses. -  xxx
(B) Interest. -
(1) xxx
(2) xxx
(3) xxx
(4) LIMITATION OF DEDUCTIONS FOR MINING CONTRACTORS:
(A) IF A MINING CONTRACTOR HAS A DEBT-TO-EQUITY RATIO 
IN EXCESS OF THREE (3) TO ONE (1) AT ANY TIME DURING A 
TAXABLE YEAR, A DEDUCTION IS DISALLOWED AS A TAX- 
DEDUCTIBLE EXPENSE FOR THE INTEREST PAID BY THE MINING


2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
1
THAT EXCEEDS THE THREE (3) TO ONE (1) RATIO FOR THE PERIOD 
THE RATIO WAS EXCEEDED;
(B) IF THE DEBT-TO-EQUITY RATIO OF A MINING CONTRACTOR 
EXCEEDS THREE (3) TO ONE (1) FOR AN INCOME YEAR, 
SUBSECTION (1) 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 'ARM'S LENGTH 
DEBT AMOUNT', SHALL MEAN THE AMOUNT OF DEBT THAT A BANK 
THAT IS NOT AN ASSOCIATE OF THE MINING CONTACTOR WOULD 
BE PREPARED TO LEND TO THE MINING CONTRACTOR HAVING 
REGARD TO ALL THE 
CIRCUMSTANCES 
OF THE 
MINING 
CONTRACTOR;
THE TERM 'ASSOCIATE', SHALL MEAN ANY OTHER PERSON WHO 
ACTS OF 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;
THE TERM '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;
THE TERM 'DEBT OBLIGATION' SHALL MEAN AN OBLIGATION TO 
MAKE 
A 
REPAYMENT OF 
MONEY TO 
ANOTHER 
PERSON, 
INCLUDING AN OBLIGATION ARISING UNDER A PROMISORY 
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;
THE TERM 'EQUITY', SHALL MEAN THE GREATEST AMOUNT, AT 
ANY TIME DURING AN INCOME YEAR, OF THE EQUITY OF THE 
MINING 
CONTRACTOR 
AS 
DETEMINED 
ACCORDING 
TO


1 
THE TERM 'EQUITY', SHALL MEAN THE GREATEST AMOUNT, AT
2 
ANY TIME DURING AN INCOME YEAR, OF THE EQUITY OF THE
3 
MINING 
CONTRACTOR 
AS 
DETEMINED 
ACCORDING 
TO
4 
INTERNATIONAL 
FINANCIAL 
REPORTING 
STANDARDS 
AND
5 
INCLUDES AN OBLIGATION TO MAKE A REPAYMENT OF MONEY
6 
IN RESPECT OF WHICH NO INTEREST IS PAYABLE.
7 
(C)Taxes. -  xxx
8 
(D)Losses. -  xxx
9 
(E) Bad Debts. -  xxx
10 
(F) Depreciation. -  xxx
11 
(G)Depletion of Oil and Gas Wells and Mines. -  xxx
12 
(H)Charitable and Other Contributions. -  xxx
13 
(I) Research and Development. -  xxx
14 
(J) Pension Trusts. -  xxx
15 
(K) Additional Requirements for Deductibility of Certain Payments. -  xxx
16 
(L) Optional Standard Deduction. -  xxx
17 
Premium Payments on Health and/or Hospitalization Insurance of an Individual
18 
Taxpayer. -  xxx"
19 
SEC. 6. Each Mining Operation Treated as a Separate Taxable Entity. -
20 
Each mining operation, which is subject to a Mineral Agreement or Financial or
21 
Technical Assistance Agreement shall be treated as a separate taxable entity. A mining
22 
contractor shall be treated as if a separate taxpayer with respect to each and every
23 
Mineral Agreement or Financial or Technical Assistance Agreement it holds or is a party
24 
to.
25 
If Mineral Agreement or Financial or Technical Assistance Agreement is renewed,
26 
the renewal shall be treated as part of the original agreement.
27 
SEC. 7. Exemption from  Confidentiality Clause. — Mining contractors for all
28 
metallic and non-metallic mining operations, whether large-scale or small-scale, shall
29 
observe fiscal transparency and comply with the requirements of the Extractive
30 
Industries Transparency Initiative (EITI), and, for this purpose, shall be exempted from
31 
application of the confidentiality clauses of the National Internal Revenue Code of 1997,


1 
as amended, including Section 270 in relation to Section 71, to the extent of their
2 
participation in EUI.
3 
SEC. 8. Fiscal Regime Under Financial o r Technical Assistance
4 
Agreements and Other M ineral Agreements. — The fiscal regime provided herein
5 
and the applicable terms and conditions provided under existing laws shall be embodied
6 
in the Mineral Agreements of Financial or Technical Assistance Agreements entered into
7 
by the government.
8 
SEC. 9. 
Vested Rights. — Valid Mineral Agreements or Financial or Technical
9 
Assistance Agreements existing prior to the effectivity of this Act that do not provide
10 
that any terms and conditions resulting from the repeal or amendment of any existing
11 
laws and regulations or from the enactment of a new law or regulation shall be
12 
considered a part of said Mineral Agreement and Financial or Technical Assistance
13 
Agreements, shall continue to be governed by their existing terms and conditions.
14 
SEC. 10. Registration o f Small-Scale Miners. — All persons undertaking
15 
small-scale mining activities shall register as miners with the Mining Board of the
16 
concerned local government unit in accordance with Republic Act No. 7076, "An Act
17 
Creating a People's Small-Scale Mining Program and For Other Purposes" and with the
18 
Mines and Geosciences Bureau (MGB) and may organize themselves into cooperatives
19 
in order to qualify for the awarding of a people's small-scale mining contract.
20 
The Mining Board shall submit an annual report to the MGB of all the small-scale
21 
mining contracts entered into for the small-scale utilization of a plot of mineral land
22 
including the respective production output, taxes and fees paid.
23 
For this purpose, a tax identification number shall be secured from the Bureau of
24 
Internal Revenue as a requirement for registration.
25 
SEC. 11. Im plem enting Rules and Regulations. -  The Department of
26 
Finance, after consultation with other concerned government agencies, shall, within
27 
ninety (90) days from the effectivity of this Act, promulgate rules and regulations to
28 
implement the intent and provisions of this Act.
29 
SEC. 12. Repealing Clause. -  All laws, decrees, executive orders, rules and
30 
regulations, or parts thereof, which are contrary to or inconsistent with this Act are
31 
hereby repealed, amended or modified accordingly.


1 
SEC. 13. Separability Clause. -  If any provision of this Act so declared
2 
unconstitutional or invalid, other parts or provisions hereof not affected thereby shall
3 
continue to be in full force and effect.
4 
SEC. 13. Effectivity. -  This Act shall take effect fifteen (15) days after its
5 
publication in the Official Gazette or in a newspaper of general circulation in the
6 
Philippines.
Approved,