Manila: President Ferdinand R. Marcos Jr. signed Republic Act (RA) 12253, known as the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, in a ceremony at Malaca±an Palace. The act aims to ensure the government receives an equitable share of revenues from large-scale mining activities.
According to Philippines News Agency, the new fiscal regime is designed to create a more robust mining infrastructure while ensuring that the government receives a fair share of the extra profit generated by the sector. President Marcos highlighted the global surge in demand for minerals, which are essential for new technologies, clean energy components, and the green and digital economy.
RA 12253 seeks to streamline and rationalize fiscal policies in the mining industry, promoting transparency, accountability, and good governance. The law is expected to generate a total estimated revenue of PHP25.08 billion from 2026 to 2029, averaging PHP6.26 billion annually.
The law introduces a 5-tier, margin-based royalty system with rates between 1 percent and 5 percent on income from mining operations outside mineral reservations. It also sets a minimum royalty rate of 0.1 percent for mines below the margin threshold. Additionally, a 5-tier windfall profits tax ranging from 1 percent to 10 percent has been established.
To limit tax-deductible borrowing costs, a 2:1 debt-to-equity ratio or thin capitalization rule is implemented. A ring-fencing rule per project prevents income and expense consolidation across projects, stopping companies from offsetting losses against profits from more profitable ventures.
The law clarifies that mining contractors will be subject to a local business tax rate of 0.5 percent and maintains existing tax rates for operations within mineral reservations. It also introduces measures to improve governance, such as monitoring mineral sales and exports, public disclosure of mining data, and forming a multi-stakeholder accountability group.
The enhanced fiscal regime aims to reduce revenue leakages, maximize collections, and strengthen governance in the sector while protecting the environment and communities using natural capital accounting data. Furthermore, the law streamlines local government unit share disbursements from mining taxes to prevent delays.
As part of the new regulations, 10 percent of mining royalties from within mineral reservations will be allocated for exploration efforts by the Mines and Geosciences Bureau and the Metals Industry Research and Development Center. This will include establishing mineral valuation laboratories and acquiring tools for the Bureau of Internal Revenue, funded by the retained BIR share of the Special Education Fund under RA 5447.
