BIR exempts small-scale gold miners from taxes

MANILA, Philippines — In line with efforts to shore up the country’s foreign exchange reserves, the Bureau of Internal Revenue (BIR) is now exempting small-scale miners (SSMs) from paying income and excise taxes when they sell their gold to the Bangko Sentral ng Pilipinas (BSP).

Internal Revenue Commissioner Caesar Dulay issued Revenue Regulation 04-2020, dated Feb. 18 laying out the guidelines for the availment of tax exemptions applied to the sale of gold to the BSP.

This is pursuant to Republic Act 11256 which amended certain portions of the Tax Code for the purpose of strengthening the country’s gross international reserves.

Under the new rules, income derived from the sale of gold by registered SSMs and traders accredited by the central bank shall be exempt from income tax and consequently, withholding taxes.

Likewise, excise tax shall not be levied against SSMs and traders who sell their gold to the BSP.

The BIR said SSMs who indirectly sell their gold to the BSP through an accredited trader may also enjoy the excise and income tax exemptions.

 “If an excise tax has been otherwise paid prior to the sale of gold to the BSP, the taxpayer may file a claim for refund or credit with the Commissioner of Internal Revenue for the excise tax paid,” BIR said.

All SSMs and accredited traders are required to obtain a tax identification number (TIN) from the BIR.

The BIR said a BSP certification will be issued to SSMs, upon the receipt of a certified copy of a valid and effective small-scale mining contract from the relevant agency; and traders, upon submission of complete accreditation requirements.

This “shall be the basis for the tax exemptions and nonwithholding/ collection of taxes under RA 11256,” according to the BIR.

For SSMs that go through traders instead of going directly to the BSP, they are required to issue an acknowledgement of gold delivery or sale, stating therein their TIN, to the concerned traders to validate the transaction.

This, in turn, shall be submitted to BSP by accredited traders upon the eventual sale of the gold.

 “In any case, all gold sold to the BSP by accredited traders shall be presumed to have been purchased by said accredited traders from SSMs,” BIR said.

The central bank is then required to submit monthly reports to the BIR containing the details of the sales transaction from SSMs and traders.

According to the BIR, SSMs and traders shall be given a period of one year – which may be extended until three years – to comply with the registration and accreditation requirements set forth in the RR.

During this transitory period, the BSP shall issue a temporary certification to SSMs and traders who have pending applications. This will enable them to enjoy the tax exemptions, provided that they comply with Section 10 of the IRR of RA 11256.

“Upon the lapse of the said transitory period, all sale of gold to the BSP by non-registered SSMs and/or non-accredited traders shall be subject to the applicable taxes under the NIRC of 1997, as amended,” BIR said.