Mining projects in Caraga generate more than 1B taxes


Mining projects in Caraga generate more than 1B taxes

·     Philsaga Mining Corporation is lone large-scale gold producer

It is quite known today that Caraga Region is noted as the mining capital of the Philippines due to the presence of several large-scale mining companies doing exploration or operating in the area.

Mining investments has been steadily increasing due to the world demand for nickel, chromite and gold which are abundant in Caraga. These minerals are shipped to China, Japan, Australia and Greece.

For the year 2010, there were 339 shipments made for nickel and chromite ores from large-scale mining companies with SIRC- Platinum Group Metals Corporation operating in Cagdianao, Claver, Surigao del Norte and CTP Construction and Mining Corporation (CTPCMC) with project in Carrascal, Surigao del Sur as the highest ore transporters for the year.

Small-scale mining operators in Dinagat Islands also contributed to the total chromite production.

In terms of gold, the lone large-scale gold producer, Philsaga Mining Corporation in Agusan del Sur produced 3,225.249 kg. gold bullions and 351.239 kg. silver.

As provided for under the Mining Act of 1995,the government shall have a share in Mineral Production Sharing Agreement (MPSA) and this will be in the form of Excise Tax on mineral products as provided for in R. A. No. 7729, the National Internal Revenue Code. Under the Code, the companies must pay Two percent (2%)Excise Tax. For 2010, the estimated total Excise Tax paid by mining companies in Caraga is P376,155,493.04.

Aside from the Excise Tax, companies operating within the Surigao Mineral Reservation (SMR) pay an additional Five percent (5%) Royalty Tax based on the gross market value of the minerals/mineral products extracted or produced from the Mineral Reservations exclusive of all other taxes.

In Caraga Region, the SMR covers some municipalities in Dinagat Islands, and a portion of the Surigao del Norte and Surigao del Sur. So the Royalty Tax collected for the year 2010 reachedP510,786,934.29.

Pursuant to Sections 289-290, Chapter 2 of the Local Government Code of the Philippines that in addition to the Internal Revenue Allotment (IRA), the Local government units (LGUs) shall have an equitable share in the utilization and development of the national wealth within their respective areas.

In cognizant with the above provisions of the Code, out of the collection of the national government from the preceding fiscal year from mining taxes, royalties, etc., the LGUs shall have 40% share in the national wealth, which shall further be divided in the following manner: 20 % Province, 45% component city/Municipality and 35% Barangays. Provided, however, that where the natural resources are located in two (2) or more provinces, or in two (2) or more component cities or municipalities or in two (2) or more barangays, their respective shares shall be computed on the basis of: 1) Population – Seventy percent (70%); and (2) Land area – Thirty percent (30%). In the case of where the natural resources are located in a highly urbanized or independent component city: 1) city – Sixty-five percent (65%); and 2) barangay – Thirty-five percent (35%) Provided, however, That where the natural resources are located in such two (2) or more cities, the allocation of shares shall be based on the formula on population and land area as specified in the Local Government Code.

In cognizance with the above provision, 60% of the Royalty Tax, which is being retained by the national government, amounted to P306,472,160.57 and the 40%, which will be downloaded to the various LGUs in the region the following year, is P204,314,773.71.

Other than the Excise Tax and Royalty Taxes, the government also receives payment for Customs duties/fees, Value Added Tax, Capital Gains Tax, Income Tax and Documentary Stamp Tax wharfages/PPA charges from the mining projects that go to the government. These taxes are collected by other agencies of the government like the Bureau of Internal Revenue, Bureau of Customs and the Philippine Ports Authority.

There are also taxes and fees that are paid directly to the concerned LGUs like the Occupation Fees. The Mining Act mandates the collection of an annual occupation fee in accordance with the following schedule: a) For exploration permit – Five pesos (P5.00) per hectare or fraction thereof per annum, b)For mineral agreements and financial or technical assistance agreements – Fifty pesos (P50.00) per hectare or fraction thereof per annum; and c)For mineral reservation – One hundred pesos (P100.00) per hectare or fraction thereof per annum.

These Occupation fees are paid directly to the treasurer of the municipality or city where the onshore mining areas are located, or to the Director in case of offshore mining areas.

Thirty per centum (30%) of all occupational fees collected from the holders of mining rights in onshore mining areas shall accrue to the province and seventy per centum (70%) to the municipality in which the onshore mining areas are located. In a chartered city, the full amount shall accrue to the city concerned.

The Occupation fee is just one of the many taxes that are being paid by mining companies directly to the LGUs. Taxes like the Real property tax; local business tax, residence tax, community tax, registration fee and the withholding tax are likewise directly paid to the concerned LGU.

Another collection from various taxes and fees in 2010, which reached an estimated amount of P298,235,773.53 were paid. This includes the royalty payments made to the Indigenous Peoples in Caraga.

So the estimated total taxes and fees collected from mining projects in Caraga is summed at P1,185,178,200.86.Surigao del Norte registered the highest collections from the mining projects in the amount of P590,249,605.65, followed by Surigao del Sur with P266,570,410.98,Agusan del Sur with P217,895,773.16, Dinagat Islands with P97,814,909.36 and Agusan del Norte with P12,647,501.71.

In a nutshell, mining in Caraga does not only supplement the coffers of the local government units in the region but also that of the national government. The region is one of the top raters in generating taxes and fees from mining today that significantly contributed to the general welfare of the entire country and the province, municipality, barangays that host the project.

However, LGUs in Caraga Region have been clamoring that their share from the national wealth should be collected by them directly since it takes a considerable time before they receive it from the national government thus, delaying the implementation of the necessary development projects for their constituents.

It is just a matter of time and commitment of the leaders to make their best effort so that these taxes and fees from mining will really translate to the full development of the communities, affected by the mining projects, and the country as a whole.


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