Section 6Sec./Art. 6

A new section designated as Section 151-A under Chapter VII, Title VI of the National Internal Revenue Code of 1997, as amended, is hereby inserted to read as follows:

"Section 151-A. Royalty. -

(A) Royalty Rate for Large-Scale Metallic Mining Operations. - Royalties shall be levied on large-scale metallic mining operations, or the exploration, development, and utilization of metallic minerals under a mineral agreement or financial or technical assistance agreement, as defined under Republic Act No. 7942, otherwise known as "The Philippine Mining Act of 1995", based on the following rates:

(1) Operations Within Mineral Reservations. - Large-scale metallic mining operations within mineral reservations, as defined in Republic Act No. 7942, shall be subject to a royalty on income from metallic mining operations, based on the following rates:

Margin

Rate

Over 0% but not over 15%

1.0%

Over 15% but not over 30%

2.0%

Over 30% but not over 45%

3.0%

Over 45% but not over 60%

4.0%

Over 60%

5.0%

Provided, That if the margin of large-scale metallic mining operations outside mineral reservations is less than or equal to zero percent (0%), a minimum royalty of one-tenth (1/10) of one percent (1%) of the gross output of the minerals or mineral products extracted or produced shall be imposed.

(B) For purposes of this section, the term:

(1) Gross Output shall mean the gross output as defined in Section 151(B)(1) of this Code;

(2) Income from Metallic Mining Operations shall mean the gross output less deductions directly attributable to mining operations which include:

(a) Mining, milling, transporting, and handling expenses together with smelting and refining costs incurred;

(b) General and administrative expenses actually incurred by the metallic mining contractor or operator;

(c) Environmental expenses of the metallic mining contractor or operator, including such expenses necessary to fully comply with its environmental obligations as stipulated in the environmental protection provision of the mineral agreement or financial or technical assistance agreement and in the applicable implementing rules and regulations;

(d) Expenses for the development of host and neighboring communities and of geosciences and mining technology, including training costs and expenses, as stipulated in the mineral agreement or financial or technical assistance agreement and in the applicable implementing rules and regulations;

(e) Lease and royalty payments to claim owners or surface landowners relating to the contract area during the operating period, if any;

(f) Continuing exploration and development expenses within the contract area after the pre-operating period;

(g) Interest expense charged on loans, subject to Section 34(B)(2)(d) of this Code, or such other financing-related expenses incurred by the metallic mining contractor or operator subject to financing requirements in the relevant mineral agreement or financial or technical assistance agreement, which shall not more than what is applicable for arm's length transactions at the time the financing was arranged, and where such loan are necessary for its operation;

(h) Depreciation, depletion, or amortization; and

(i) Duties, fees, charges, and taxes, excluding royalty, as provided in this section, and windfall profits tax, as provided in Section 151-B and subject to the limitations under Section 34(C) of this Code.

(3) Margin shall mean the ration of income from metallic mining operations to gross output.

(C) Quarterly Returns, Payment, Bond; Final Adjustment. -

(1) For locally produced or extracted metallic mineral or mineral products from inside and outside mineral reservations, the mining contractor or operator shall file a return and pay the royalty within sixty (60) days after the end of the calendar quartet when such products were removed, subject to such conditions s may be prescribed by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. For this purpose, the mining contractor or operator shall file a bond in an amount that approximates the amount of royalty due on the removals for the said quarter, subject to the filing of a final royalty adjustment return covering the total royalty due for the preceding calendar or fiscal year.

If the sum of the quarterly royalty payments made during the said taxable year is not equal to the total royalty due for the entire year, the mining contractor or operator shall either:

(a) Pay the balance of royalty still due; or

(b) Carry over the excess credit.

(2) The royalty tax return shall be either electronically or manually filed with and the tax paid to the Bureau of Internal Revenue through any revenue district office through the revenue collection officer, authorized agent bank, or authorized tax software provider, except as the Commissioner otherwise prescribes.

(D) Non-refundability and Non-creditability of Royalty. - Similar to the excise tax imposed on mineral products under Section 151 of this Code, royalty on mineral products shall not be creditable or refundable even if the mineral products duly paid under this section are actually exported.

(E) Collection of Royalties from Mining Operations. - Any provision of law to the contrary notwithstanding, payment of the royalty due from mining operations under this section and other royalties subject to the share accruing to the Mines and Geosciences Bureau under Section 5 of Republic Act No. 7942, otherwise known as "The Philippine Mining Act of1995", shall be collected by the Bureau of Internal Revenue."