Special fiscal incentives eyed for mining

First posted 01:39am (Mla time) June 23, 2006
By Michelle Remo
Inquirer

http://news.inq7.net/archive_article/index.php?ver=1&index=1&story_id=6117

THE mining sector, which the government says is expected to attract as much as $7 billion worth of investments annually, is likely to get special privileges under the government’s program to rationalize the grant of financial incentives for investments.

The Senate ways and means committee headed by Senator Ralph Recto plans to file a bill that will withdraw tax and duty breaks that are deemed unnecessary. But a government official said Recto had asked the Department of Finance, Department of Energy and Department of Environment and Natural Resources to assist the committee in doing a study to determine the appropriate incentives for the mining sector.

Recto’s bill will be aimed at limiting the grant of financial incentives to exporters, effectively removing all tax- and duty-free privileges given to domestic-oriented investments.

But the senator said mining companies not engaged in exports could be given incentives, such as reduced income tax rate and application of net operating loss carryover (nolco), the source said.
The ways and means committee is considering a 15-percent income tax on mining companies, compared with the 35 percent imposed on corporate income taxpayers.

Nolco allows preferred companies to deduct previous years’ losses from taxable incomes for the current year, thereby reducing their tax liabilities.

Under the Senate committee’s plan, only mining companies operating in the 20 poorest provinces would qualify for the special incentives.

The Department of Finance is gathering data on local government incomes to identify the provinces that would be covered.

The National Economic and Development Authority (NEDA) estimates that the mining sector can generate investments of $5-$7 billion annually in the medium term. It says the Philippines has $840 billion to $1 trillion worth of untapped mineral resources, and developing these would let the government collect an additional P17-P23 billion in taxes every year.

The Senate committee is concerned that removing financial incentives from mining investments might derail investment plans.

With INQ7.net