BIR Ruling

January 18, 1968 Gold Mining Industry Assistance Board Office of the President Manila Attention: Mr . Leocadio D . Santiago Acting Vice Chairman Technical Committee Gentlemen : This refers to your letter dated September 20, 1967 requesting information as to what is the basis of this Office in computing the "production tax", the gross value or "actual market value" of gold or the net value thereof after deducting the bonus equivalent to the seven and one-half percent (7 %) of all assistance paid to gold producers and the bank charges provided for in Republic Act No. 4859. It appears that under Republic Act No. 3089, otherwise known as "The Gold Mining Industry Assistance Act of 1961" as amended by Republic Acts Nos. 3472 and 3840, gold mines are classified as either "marginal" or "over-marginal" gold mines. That these mines pursuant to said Act are given assistance in the form of a subsidy from the government of P65 for marginal gold mines and P50 for over-marginal gold mines. However, under Section 5 of said Act, as amended by R.A. 3472, gold mines enjoying assistance shall give a bonus equivalent to 7 % of the assistance they received to be distributed among their employees whose salaries do no exceed P500 per month. It further appears that the bonus of 7 % as provided under the law is not to be taken from the assistance given to the gold producers but from the gross receipts derived from the operation of their business as can be gleaned from the pertinent provision of the law which states that "a bonus equivalent to 7 of the assistance" shall be given as a bonus. Moreover, the giving of the bonus is a condition imposed by law for the grant of the assistance. lexlib In view of the foregoing, this Office is of the opinion and so holds that the entire amount of the assistance received by gold producers forms part of the actual market value of their gross output of gold, and hence, should be subject to 1 % ad valorem tax under Section 243 of the Tax Code. Consequently, the official price of gold at $35.00 an ounce plus the assistance received by gold producers under existing law serves as the basis of the 1 % ad valorem tax under Section 243 of the Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue