Around ₱6.3 billion worth of annual revenues from existing mines is expected to be added to the government’s coffers following the enactment of the enhanced mining fiscal regime, according to the Department of Finance (DOF).

“The new measure is expected to generate an estimated average annual incremental revenue of ₱6.26 billion for existing mines,” the Department of Finance (DOF) said in a statement on Thursday, Sept. 4.

Signed by President Ferdinand R. Marcos Jr. into law on Thursday, Sept. 4, the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act simplifies the mining fiscal regime by removing complex tax distinctions among different mining agreements.

“All large-scale metallic mining operations are now subject to a unified tax regime aimed at encouraging investment in the sector and promoting tax compliance,” the DOF said.

It ensures the government earns its fair share by imposing a royalty tax on mines outside mineral reservations and a windfall profits tax on all large-scale metallic mines, boosting revenues for local government units (LGUs).

Under the new regime, mines outside mineral reservations will face a five-tier royalty rate of one percent to five percent, while low-margin mines pay a minimum 0.1-percent royalty on gross output, and all large-scale metallic mines are subject to a five-tier windfall profits tax of one to 10 percent.

It also includes a safeguard limiting tax-deductible borrowing from related parties by enforcing a 2:1 debt-to-equity ratio, known as a thin capitalization rule.

It also introduces a project-by-project ring-fencing rule, stopping companies from combining profits and losses across different mining projects to offset taxes.

Additionally, the law strengthens oversight by enforcing strict monitoring and auditing of mineral sales and exports, while promoting transparency through public data disclosure and a multi-stakeholder governance system.

Under this law, research, monitoring, and enforcement will receive funding of 10 percent of royalties from mines within mineral reservations for mineral exploration and studies.

Some funds will also be used to establish laboratories and equip the Bureau of Internal Revenue (BIR) with specialized tools to enable proper oversight and validation of mineral resource valuations for taxation purposes.

Finance Secretary Ralph G. Recto vowed to implement the law “swiftly, efficiently, and with full transparency. We will also continue to engage with all stakeholders to ensure that the law delivers on its promise.”