Philippine Daily Inquirer
10:58 pm | Monday, November 12th, 2012
A gold trader holds gold nuggets bought from miners and workers at a mining site in the village of Mt. Diwata, Monkayo town, Compotela valley, in Mindanao on July 16, 2012. The Bangko Sentral ng Pilipinas has joined calls for a review of the taxation for gold sales, believing that smuggling of the precious metal out of the country could become even more rampant if the tax issue remains unresolved. AFP PHOTO/TED ALJIBE
MANILA, Philippines—The Bangko Sentral ng Pilipinas has joined calls for a review of the taxation for gold sales, believing that smuggling of the precious metal out of the country could become even more rampant if the tax issue remains unresolved.
Asked to comment on criticisms of the taxes on gold sales, BSP Deputy Governor Diwa Guinigundo saw merit to the proposal for the Bureau of Internal Revenue to soften its stance on taxation of gold.
But different from the call of legislators to remove the taxes on gold, the BSP’s proposal is to adjust the manner of computing the taxes.
The BSP is the entity authorized to buy gold mined within the country. Proceeds of gold sold to the BSP are charged a 5-percent creditable withholding tax and a 2-percent excise tax. Said taxes are computed based on the gross amount of gold sales.
The problem with the current tax system is that only those who directly sell gold to the BSP are taxed.
From mining sites, gold undergoes a chain of sale from one trader to another. The last trader—the one nearest to one of the BSP’s gold-buying sites and thus the one who sells the gold to the BSP—is the one charged by the BIR with the 5-percent creditable withholding tax and the 2-percent excise tax.
The BIR has desks in all of the five gold-buying sites of the BSP—Baguio City, Quezon City, Naga City, Davao City and Zamboanga City. This is to ensure collection of the taxes immediately upon sale of gold by traders to the BSP.
“Congress and BIR would have to work out a practical, acceptable, realistic base [rather than the gross amount of gold] on which to apply the tax rates,” Guinigundo said.
“It would appear, therefore, to be more practical to do the adjustment before the tax rates are applied. Otherwise, we might be seeing more black-market disposition of local gold in the global markets. Tax revenues would also be reduced in the process,” the BSP official added.
Due to the tax issue, a significant volume of gold is believed to be smuggled out of the country. The BSP admitted that the amount of gold it has been buying has shrunk significantly since 2011, when the BIR strictly enforced the collection of taxes on sale of gold by setting up desks in the BSP’s gold-buying sites.
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Tags: Bangko Sentral ng Pilipinas , Business , Diwa Guinigundo , gold , gold smuggling , metals , Mining and quarrying , state budget and taxes
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