Tax Liability of a Corporation Engaged in the Prospecting, Exploration, Development and Exploitation of Non-Metallic Minerals

January 12, 1990 BIR RULING NO. 003-90 24 (a):100; 151 (a) (2) 00-00 003-90 Gentlemen : This refers to your letter dated April 10, 1989 stating that you are a corporation engaged in the prospecting, exploration, development and exploitation of non-metallic minerals like silica, quartz, feldspar, clay and even pebbles and stones; that said non-metallic minerals are simpler to mine, underground workings not required and no processing is involved as the extracted materials are delivered to end-users in their original form; and that you have opted to obtain Small Scale Mining Permit from the Mines and Geo-Sciences Bureau, Department of Environment and Natural Resources pursuant to P.D. No. 1899 and Mines Administrative Order No. MRD-41 dated June 4, 1984 which provide that permittees shall be exempted from the payment of all taxes except income tax for a period co-terminus with the terms of the permit. Based on the foregoing, you are requesting clarification from this Office as to kind of taxes and the corresponding rates due from you once you start commercial extraction and disposal at the onset of the dry season. In reply, please be informed that effective March 10, 1987, E.O. No. 93 has already withdrawn the tax exemption of small scale mining permittees/licensees under P.D. No. 1899. Such being the case, the said non-metallic minerals shall be subject to the excise tax of 3% based on the actual market value of the annual gross output thereof at the time of removal pursuant to Section 151(a) (2) of the Tax Code, as amended by EO No. 273, in addition to the 10% VAT under Section 100(a) thereof. (Section 126, Tax Code). Finally, you are subject to the corporate income tax of 35% on the taxable income received during the year pursuant to Section 24 (a) of the same Code. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner