Bangko Sentral ng Pilipinas (BSP) officials applauded the amendment of the National Internal Revenue Code that exempted small-scale miners from paying income and excise tax for the gold that they sell to the central bank.
President Rodrigo R. Duterte signed into law Republic Act (RA) 11256 on March 29, 2019.
BSP Governor Benjamin Diokno said the amended law is “an excellent and much needed law.”
“It remedies the 99 percent drop in domestic gold purchases from more than 900 thousand fine troy ounces (FTO) in 2010 to around 10 thousand FTO in 2019 as a result of the taxation of the sale of gold to the BSP beginning July 2011,” he said.
The BSP chief explained that the amendment of the NIRC will allow the central bank to increase gold purchases from domestic sources “to further build up the country’s gross international reserves (GIR).”
“Higher GIR would lead to improving the country’s economic standing and lowering the costs of borrowing by the Republic as well as the private sector. Moreover, it prevents the smuggling of Philippine gold through the black market to other countries,” he added.
Also, BSP Deputy Governor Diwa Guinigundo said monetary officials “definitely welcome” this development.
“We worked hard for it for the last few years and its passage is a strong symbol that the Government values the welfare of our small scale gold miners who are forced to settle for lower prices for their gold in the blackmarket,” he said.
Guinigundo explained that this measure is a win-win situation for both the small scale miners, who will now have higher return for their gold, and the government, which would be able to buy gold using the local currency instead of using US dollars when it purchases gold overseas.
“With higher and sustained and comfortable import and short term debt coverage, we can be favorably considered both by the market and the credit rating agencies. That should translate into lower borrowing costs for both the Government and the corporates,” he said.
“We hope the gold sale to the BSP can reach almost a million fine troy ounces like it was before the collection of excise tax and creditable tax were mandated by BIR. Now it’s only about 20-30 thousand fine troy ounces,” he added. PNA