Amendments to NIRC of 1977 Re: Taxation of Minerals and Mineral Products

September 19, 1980

BATAS PAMBANSA BLG. 84

AN ACT AMENDING CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS AMENDED, GOVERNING THE TAXATION OF MINERALS AND MINERAL PRODUCTS AND FOR OTHER PURPOSES

SECTION 1. Section 202 of the National Internal Revenue Code of 1977, as amended, is hereby further amended to read as follows:

"SEC. 202. Articles not subject to percentage tax on sales. — The following shall be exempt from the percentage taxes imposed in Sections 194, 195, 196, 197, 198, 199 and 201:

"(a) Articles subject to tax under Title IV of this Code.

"(b) Articles subject to tax under Section 203 of this Code.

"(c) .22 caliber firearms and cartridges as well as other forms of ammunitions sold or delivered directly to the Armed Forces of the Philippines or any government instrumentality or agency engaged in maintaining peace and order for their use or issue.

"(d) Articles shipped or exported by the manufacturer or producer, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the articles so exported.

"(e) Articles sold by 'registered export producers' to (1) other 'registered export producers' (2) 'registered export traders' or (3) foreign tourists or travelers, which are considered as 'export sales'.

"Any percentage or specific tax paid under this Title or Title IV, respectively, on domestically manufactured or in imported raw materials used in the manufacture of finished products exported shall be allowed to be credited against other tax liabilities of the manufacturer-exporter: Provided, however, That the amount of the tax on the raw material, part, accessory, or other article shall be indicated as separate item in the sales invoice.

"Sales to foreign tourists paid for in acceptable foreign currency directly made by manufacturers or producers shall be considered export sales if the articles purchased are actually brought out of the Philippines by the buyers upon their departure."

SECTION 2. Section 253 of the same Code is hereby amended to read as follows:

"SEC. 253. Occupation fee. — A locator, holder, or occupant of a mining claim shall pay to the Commissioner of Internal Revenue or his duly authorized representatives on the date of the registration of the mining claim in the Office of the Mines Regional Recorder concerned, and on the same date every year thereafter an annual occupation fee of ten pesos per hectare or fractional part thereof, until the lease covering the mining claim shall have been granted. For this purpose the Office of the Mines Regional Recorder shall submit to the revenue district officer of the place where the mining claim is located or at its nearest office a complete list of all mining claims registered with it, indicating therein the name/s of locator/s, area in hectares, location, and date registered. Thirty per centum of all the fees collected under this Section shall accrue to the province, and seventy per centum to the municipality in which the mining claims are located: Provided, That in case the mining claims are located in a chartered city, the full amount shall accrue to the city concerned. Failure to pay the occupation fee herein required within thirty days after demand shall cause the mining claims to be open for relocation and lease by other persons qualified to locate and lease the same under the provisions of Presidential Decree No. 463, as amended, otherwise known as the Mineral Resources Development Decree of 1974, in the same manner as if no location of the said mining claims had ever been made, unless the locator, holder, occupant, his heirs, executors, administrators or legal representatives, shall have paid the delinquent occupation fees plus a surcharge of twenty-five per centum for every year of delinquency and have resumed occupation of the claims before relocation by other persons.

"No lease shall be granted on any mining claim until the occupation fees and surcharges required to be paid under this Section shall have been fully paid: Provided, however, That nothing herein contained shall be construed to extend the period within which application for lease of mining claims shall be filed from the date of recording of the mining claims in the Office of the Mines Regional Recorder, as provided for under Presidential Decree No. 463, as amended."

SECTION 3. Section 254 of the same Code is hereby amended to read as follows:

"SEC. 254. Rentals and royalties on mineral lands under lease. — For the privilege of exploring, developing, exploiting and disposing of the minerals from the lands covered by lease, there is hereby imposed upon the lessee, rentals and royalties as follows:

"(a) Rentals —

"(1) On coal-bearing public lands, an annual rental of five pesos per hectare or fraction thereof for each and every year for the first ten years, and ten pesos per hectare or fraction thereof for each and every year thereafter during the life of the lease.

"(2) On public lands bearing quarry resources, an annual rental of fifty pesos per hectare or fraction thereof for each and every year during the life of the lease.

"(3) On all other mineral lands containing metallic and non-metallic minerals under existing mining laws or decrees, ten pesos per hectare or fraction thereof for each and every year during the life of the lease.

"The rental shall 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 thereafter during the life of the lease. Thirty per centum of all the rentals collected shall accrue to the province, and seventy per centum tothe municipality in which the mining claims are located: Provided, That in case the mining claims are located in a chartered city , the full amount shall accrue to that city.

"(b) Royalties —

"(1) On coal, such royalties as may be specified in the lease, which shall not be less than twenty centavos per ton of one thousand and sixteen kilograms at the time of removal.

"(2) On all non-metallic minerals and quarry resources, a royalty tax of three per centum of the actual market value of the annual gross output thereof at the time of removal.

"(3) On all metallic minerals, a royalty tax of five per centum of the actual market value of the gross output thereof at the time of removal.

"A lessee, owner or operator who sells his minerals, mineral products or quarry resources locally shall be subject to sales tax."

SECTION 4. Section 255 of the same Code is hereby amended to read as follows:

"SEC. 255. Royalty taxes collectible on minerals, mineral products or quarry resources extracted or produced from all mineral lands not covered by lease. — The royalty taxes above prescribed shall be collected on all minerals or mineral products or quarry resources extracted or produced from all mineral lands not covered by lease."

SECTION 5. Section 256 of the same Code is hereby amended to read as follows:

"SEC. 256. Time, manner and place of payment of royalties. — The royalty taxes shall be due and payable upon the removal of the minerals or mineral products or quarry resources from the locality where mined.

"Before removing any mineral or mineral products or quarry resources subject to the royalty tax, the person liable to the said tax shall file, in duplicate, a return setting forth the quantity and the actual market value of the mineral or mineral products to be removed and pay the royalty taxes due thereon to the revenue district officer, collection agent, or the treasurer of the city or municipality of the place where the mine is located except as hereinbelow provided.

"However, the output of the mine may be removed from such locality without the prepayment of such royalty taxes if the lessee, owner, or operator shall file a bond in the form and amount and with such sureties as the Commissioner may require, conditioned upon the payment of such royalty taxes. It shall be the duty of every lessee, owner, or operator to make a true and complete return in duplicate setting forth the quantity and the actual market value of the minerals or mineral products or quarry resources removed during each calendar quarter, of the balance, if any, in cases where payment are made upon removal, and pay the royalty taxes due thereon within twenty days after the end of each quarter to the revenue district officer, collection agent, or the treasurer of the city or municipality of the place where the mine is located.

"In case the royalty taxes are not paid within the period prescribed above, there shall be added thereto a surcharge of twenty-five per centum, the increment to be a part of the tax and the entire unpaid amount shall be subject to interest at the rate of twenty per centum per annum. Where a false or fraudulent return is made, there shall be added to the royalty taxes a surcharge of fifty per centum of their amount, and the entire unpaid amount shall be subject to interest at the rate of twenty per centum per annum. The amounts so added shall be collected in the same manner and as part of the royalty taxes."

SECTION 6. Section 257 of the same Code is hereby amended to read as follows:

"SEC. 257. Definitions. — When used in this Title —

"(a) The term 'gross output' shall be interpreted as the actual market value of minerals or mineral products, or of bullion from each mine or mineral lands operated as a separate entity without any deduction from mining, milling, refining, (including all expenses incurred to prepare the said minerals or mineral products in a marketable state) as well as transporting, handling, marketing, or any other expenses: Provided, however, That if the minerals or mineral products are sold or consigned abroad by the lessee or owner of the mine under C.I.F. terms, the actual cost of ocean freight and insurance shall be deducted: Provided, finally, That in the case of mineral concentrate not traded in commodities exchanges in the Philippines or abroad such as copper concentrate, the actual market value shall be the world price quotations of the refined mineral product content thereof prevailing in the said commodities exchanges, after deducting the smelting, refining and other charges incurred in the process of converting the mineral concentrates into refined metal traded in those commodities exchanges.

 

"(b) The term 'minerals' shall mean all naturally occurring inorganic substances (found in nature) whether in solid, liquid, gaseous, or any intermediate state.

"(c) The term 'mineral products' shall mean things produced and prepared in a marketable state by simple treatment such as washing or drying, but without undergoing any chemical change or process or manufacturing, by the lessee, concessionaire or owner of mineral lands.

"(d) The term 'quarry resources' shall mean any common stone or other common mineral substances as the Director may declare to be quarry resources such as, but not restricted to, marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate: Provided, they contain no metal or metals or other valuable minerals in economically workable quantities."

SECTION 7. Section 258 of the same Code is hereby repealed.

SECTION 8. Section 259 of the same Code is hereby amended to read as follows:

"SEC. 259. Specific penalties. — Anyone liable to make a return of the actual market value of the output of mines or to pay the royalty taxes required in Section 256, who refuses or neglects to file such return, or to pay such royalty taxes at the time or times specified therein; and any lessee, owner, or person in charge of any minerals, mineral products and quarry resources upon which the royalty taxes imposed in this Title are applicable, who removes, in violation of the first paragraph of said Section, or who allows or procures the unlawful removal from the mines of any such products, upon which the royalty taxes have not been paid; and any person who abets or aids in the unlawful removal of minerals, mineral products or quarry resources shall be fined not more than five thousand pesos and imprisoned for not more than three years.

"Anyone required by this Title to make, render, or file a return of the actual value of the output of mines, who makes, renders, or files a false or fraudulent return with intent to defeat or evade the payment of the royalty taxes, as the case may be, shall be fined not more than ten thousand pesos and imprisoned for not more than five years."

SECTION 9. The provisions of Sections 194, 195, 196, 197, 199, and 201 of this Code, to the contrary notwithstanding, the mining taxes on minerals and mineral products paid under Title VII shall not be allowed as a tax credit against any sales tax or other tax liabilities.

SECTION 10. The takes herein imposed shall be in lieu of all charges and fees imposed on minerals, mineral products and quarry resources under existing general or special laws, which charges and fees are hereby abolished.

SECTION 11. The Minister of Finance, upon recommendation of the Commissioner of Internal Revenue and in consultation with the Minister of Natural Resources, shall promulgate the necessary rules and regulations for the effective enforcement of this Act.

SECTION 12. All acts, laws, decrees, executive orders, rules and regulations, or parts thereof, which are contrary to or inconsistent herewith, except those granting tax incentives, are hereby repealed, amended or modified accordingly.

SECTION 13. This Act shall take effect upon its approval. However, the rates prescribed in Section 3 of this Act shall take effect as follows:

(a) On non-metallic minerals and quarry resources, fifty per centum of the rate prescribed therein until March 31, 1981, and thereafter the full rate shall be imposed.

(b) On all metallic minerals, fifty per centum of the rate prescribed therein until March 31, 1981, and thereafter the full rate shall be imposed.

Approved: September 19, 1980

Published in the Official Gazette, Vol. 76 No. 43 Page 7988 on October 27, 1980.