BIR opposes proposal to scrap tax on gold

Posted at 11/12/12 12:01 PM

MANILA, Philippines - The Bureau of Internal Revenue (BIR) is opposing some lawmakers' proposal to scrap the tax on gold.

Four lawmakers are urging the BIR to suspend the tax, saying it has reduced the gold sales by small-scale miners to the Bangko Sentral.

 Under the law, small-scale miners are required to sell their gold only to the BSP. But with the withholding tax on gold implemented in the last quarter of 2011, small-scale miners started selling gold to smugglers outside the country.

BIR Commissioner Kim Henares argued if lawmakers wanted the tax on gold scrapped, they might as well ban mining.

"No, when you mine, you destroy the environment. That's why you compensate the government... Under our law, everything found under the earth is owned by the government and you should pay government for that," she said on Mornings@ANC.
Henares pointed out that the problem is not taxation but with law enforcement of local government units and the Department of Environment and Natural Resources.

"It's not a taxation problem. Even if you remove the 5% creditable and the 2% excise tax, they will still not sell to the BSP because BSP will have to report to BIR that this person earned this much money and they should pay taxes... The problem is not taxation, but law enforcement side of it," Henares said.

In the second quarter, the amount of gold sold by small-scale miners and traders to the BSP fell 98% from a year earlier. The decline in BSP's gold purchases began in the second half of 2011, when the BIR collected the excise tax and creditable withholding tax from gold sales by small-scale miners and traders.

The BSP purchased a total of 168 kg of gold in the April-June quarter, valued at P334.9 million ($8 million), substantially lower than the 7,510 kg it purchased in the same period last year.

Gold reserves are important to the BSP because it gauges a country's ability to pay back debts.

The average gold production in the country is 30 tons per year, 70% of which comes from small-scale miners. - ANC