DENR drafting EO capping mining royalty sans law simplifying fiscal regime

The Department of Environment and Natural Resources (DENR) is crafting an executive order (EO) that will address conflicting policies on the mining industry’s fiscal regime while a law is being deliberated in Congress.

At the sidelines of the Mining Policy Forum in Mandaluyong City on Thursday, organized by the Chamber of Mines of the Philippines, DENR Undersecretary for Integrated Sciences Carlos Primo David told reporters that a proposed EO will be presented to the President this month.

David said the DENR together with the Department of Finance (DOF) “are working together on the draft EO.”

The Environment official said the EO would “address some of the conflicting provisions in the NCIP (National Commission on Indigenous Peoples), Local Government Code.”

“There is also the issue of conflicting interpretation of the law on mining royalty, which needs to be addressed, through the EO,” said David.

The DENR official said conflicting interpretations of the mining royalty combined often cause mining investors to be on a wait-and-see attitude.

With this, David emphasized the need to put a cap on mining royalty.

“For any royalty, you’ll have to put a ceiling because if there’s no ceiling, it can be 1%, 2%, 10% up to 100%.  That is something that we have to address… What the law specifies right now, he said, is the minimum,” he said.

Under the current fiscal regime, mining companies pay 2% excise tax on minerals extracted outside mineral reserves, while those in mineral reserves pay an additional 5% royalty.

For indigenous peoples communities hosting mining operations, mining companies also pay at least 1% of their gross output.

On Wednesday, President Ferdinand Marcos Jr. urged lawmakers to push for a simplified fiscal regime for the country's mining industry through the passage of Rationalization of the Mining Fiscal Regime measure, which proposes a revised fiscal regime, imposing a four-tier, margin-based royalty ranging from 1.5% to 5% on income from mining operations outside of mineral reservations.

David said the EO being drafted by the DENR is not intended to replace any legislation.

“Any legislation needs another legislation but the EO should correct some of the issues such as conflict with the IRR and other provisions of the law, such as in the NCIP,” he said.

The DENR official said that eventually, when a new fiscal regime is passed by Congress, the EO would be set aside.

The Presidential Communications Office (PCO) said under the current fiscal regime, the obligations of mining groups and companies vary depending on the mining agreement. The present fiscal regime also imposes taxes only for mines operating within a mineral reservation. —RF, GMA Integrated News