A law has been passed exempting gold sales by small-scale miners to the central bank from excise and income taxes to beef up the country’s foreign exchange reserves and prevent smuggling, the Bangko Sentral ng Pilipinas said on Wednesday.
President Rodrigo Duterte signed the law into effect on March 29, the central bank said in a statement.
By law, all gold produced by small miners in the Philippines should be sold to the central bank at around world market prices. However, miners have circumvented taxes introduced in 2011 by selling gold on the black market.
Gold sold to the central bank fell 99 percent to 10,000 fine troy ounces this year from more than 900,000 fine troy ounces in 2010 because of taxes imposed in 2011, government data showed.
An increase in the country’s gross international reserves will improve the country’s economic standing and lower the government and the private sector’s cost of funding, the central bank said as a reason for the exemption.
This should more than offset the 35 million pesos ($666,793) the government expects to lose annually in foregone revenues from the tax exemptions.
The tax exemption also includes the sale of gold by small-scale miners to accredited traders, which then sell the precious metal to the central bank.
Gold accounted for nearly 10% of the country’s gross international reserves of $83.96 billion at end April. ($1 = 52.4900 Philippine pesos)—Reporting by Neil Jerome Morales; editing by Christian Schmollinger