Section 4Sec./Art. 4

Section 34(B) of Republic Act No. 8424 or the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 34. Deductions from Gross Income. - x x x

(A) Expenses. -

x x x

(B) Interest. -

(1) General. - x x x

(2) Exceptions. - No declaration shall be allowed in respect of interest under the succeeding subparagraphs:

(a) x x x;

(b) x x x;

(c) x x x; or

(d) Interest incurred on related party debts of metallic mining contractors or operators, in excess of the allowable interest based on a quarterly related-party debt-to-equity ration of two (2) to one (1) at any time during a taxable year.

For purposes of this subsection, the term:

(i) Debt shall mean the greatest amount, at any time during a taxable year, of the related-party debt obligations of the metallic mining contractor or operator, on which interest is payable as determined according to international financial reporting standards;

(ii) Equity shall mean the greatest amount, at any time during a taxable year, of the equity of the metallic mining contractor or operator, in accordance with international financial reporting standards, including an obligation to make a repayment of money without interest payable;

(iii) Metallic Mining Contractor shall mean a qualified person, acting alone or in a consortium, who is a party to a mineral agreement or financial or technical assistance agreement on metallic mineral production as defined under Republic Act No. 7942, otherwise known as "The Philippine Mining Act of 1995"; and

(iv) Metallic Mining Operator shall mean an entity commissioned by the metallic mining contractor to conduct mining operations duly approved by the Mines and Geosciences Bureau within the area covered by the mineral agreement or financial or technical assistance agreement by virtue of a validly executed operating agreement, memorandum of agreement, or other similar forms of government.

(3) Optional Treatment of Interest Expense. - x x x

x x x."