Bezant Resources, the AIM-listed copper-gold exploration and development company operating in the Philippines and Argentina, says it is working with other major operators in the Philippine mining sector in a bid to ascertain more about a potential new revenue-sharing tax regime that is being proposed. It says that the proposals are already having a negative impact on its business.
For approximately two years, the Philippines Government has been undertaking an extensive review of all aspects of its domestic mining industry covering licence ownership, development pathways and financial and social obligations. The review forms part of the government’s ongoing drive to restructure most of the country’s major domestic industries.
It has recently been reported that the Mining Industry Coordinating Council (MICC), a civil service body, is putting forward a proposal for a revenue-sharing scheme for mining companies whereby the government would receive 55% tax on a mining operation's adjusted net revenue or 10% tax on its gross revenue, plus a percentage of windfall profit, whichever is higher.
In order for MICC’s proposal to become law, MICC must submit its proposal to the President of the Philippines who must then put an appropriate bill to, firstly, Congress and secondly to the Senate for their approval. To date, the MICC has not confirmed that its proposal has been formally submitted to the President and there is no fixed time period by which the President would thereafter be required to pass the proposed bill via Congress and the Senate for approval.
The Chamber of Mines of the Philippines has expressed its opposition and concerns with respect to the tax proposal. Bezant is currently working with certain other major operators in the Philippines mining sector to seek to consult with the MICC and the government in order to outline how such a revenue-sharing scheme would potentially adversely affect inward investment for the Philippines.
As the Mining Review was nominally initiated as part of a private sector-wide plan to liberalize the Philippines’ domestic economy (the majority of the country’s GDP stemming from remissions from workers overseas), Bezant’s Board believes that the current MICC proposal is seemingly at odds with this objective.
Bezant’s CEO Bernard Olivier says, “We firmly believe that both the community and country in which a mining project is located should benefit from any future mining activities that are conducted in a responsible and sustainable manner. However, the tax structure and fiscal regime of the host country should be of a reasonable nature and internationally competitive in order to attract and maintain the requisite foreign investment.
“The proposed revised tax structure for the Philippines mining sector is already having a negative impact on our ongoing discussions with interested parties regarding the potential sale or JV of our flagship Mankayan project. Accordingly, we fully support COMP in its opposition to MICC’s proposal and concur with its view that the proposed revised tax regime is neither equitable nor internationally competitive.” www.bezantresources.com