VAT Ruling No. 044-89

February 16, 1989 VAT RULING NO. 044-89 Mr. Generoso M. Herrera Municipal Mayor Municipality of San Ricardo Province of Southern Leyte S i r : In reply to your letter dated May 13, 1988, please be informed as follows: LLpr 1. Are VAT-registered entities no longer required to pay fixed taxes or manufacturer's tax in the case of a mining firm? Answer: Executive Order No. 273 repeated, among other taxes, fixed taxes and manufacturer's sales tax such that VAT-registered mining firms shall be subject to the value-added tax and excise tax. 2. Does the 5% Royalty or Ad Valorem tax paid by a mining firm go to the municipal and province governments or to the National Government? If not, what share, if any, has a local unit from the same? Answer: Silence mining taxes were transferred to Title VI (Excise Taxes) of the Tax Code, as amended by E.O. 273, the term "royalty tax" was repealed. The 5% Ad valorem tax paid by mining firm on metallic minerals goes to the national government. 3. Is a mining firm exempted from the payment of rentals (tax) while its mining lease has not yet been approved by the Bureau of Mines in spite of the fact that it is already in actual operations by virtue of a temporary permit issued by the said Bureau? Answer: Sec. 22 of E.O. 273 reads as follows: The imposition of occupation fee and rentals provided in Sections 215 and 216 (a), respectively, of the NIRC shall henceforth be collected by the Municipality or city where the mining claim is situated. The disposition of the collection shall continue to be in accordance with the provisions of said Section 215 and 216(a). Based on the above it can be deduced that E.O. 273 delegated to other Municipality or city where the mining claim is situated, he power to enforce the provisions of Sections 215 and 216(a) of the Tax Code. Therefore, the provision of Sec. 215 that "the rental share be paid in advance to the Commissioner of Internal Revenue or his duly authorized representative on the date of the granting of the lease and on the same date every year there after during the life of the lease . . ." should be enforce by the Municipality or city. 4. Is a mining firm to pay both rentals and occupation tax? Answer During the pendency of the lease the locator, holder, or occupant of a mining claim shall be liable to the payment of occupation tax under Sec. 215 of the Code. Occupation fee is payable only during the period before the lease covering the mining claim has been granted. cdtech Upon granting of the lease, rentals/excise taxes shall be payable. Very truly yours, VICTOR A. DEOFERIO JR. Deputy Commissioner