DOF cuts creditable withholding tax on gold sales to 1 percent

November 22, 2017

Finance Secretary Carlos Dominguez III has signed a new set of Revenue Regulations (RR) reducing the creditable withholding tax on gold sales from 5 to 1 percent, a move seen to encourage small-scale miners to sell back their gold produce to the Bangko Sentral ng Pilipinas (BSP).

The revenue regulation, which was signed by Dominguez last week, kept the excise tax on gold sales at 2 percent, a DOF press release said Wednesday.

Dominguez said the Monetary Board of the BSP has already been advised of the RR prescribing the new creditable withholding tax rate for gold sales.

“With this new tax rate and the possible reduction both in the assay fee and in the processing of gold payments in the Security Plant Complex (SPC), small-scale gold miners have committed to sell back their gold produce to the BSP,” Dominguez said.

Dominguez said he will “propose bottom line-friendly appropriate numbers to the Monetary Board in consultation with SPC.”

He said the new creditable withholding tax rate will help gold miners in the cities of Davao, Zamboanga, Naga and Baguio to get a fair market price for their gold produce instead of being shortchanged when they sell to the black market.

“We will also be working with the Congress to institutionalize this Revenue Regulation through an appropriate amendment to the National Internal Revenue Code,” Dominguez said.

Dominguez said the revenue regulation will also allow the BSP to build its gross international reserves (GIR) without having to spend dollars as it would be able to buy gold directly using local currency.

“Unlike using pesos to buy foreign exchange to buy gold, which will affect the peso dollar rate, this flexibility will not have a direct impact on the movement of the peso against the dollar,” Dominguez said.

The BSP purchases gold from small-scale miners in accordance with Republic Act No. 7076 or the People’s Small Scale Mining Act of 1991, and from other sources. It then refines the gold purchased into forms acceptable in the international bullion markets.

It has five gold-buying stations in Quezon City and the cities of Baguio, Davao, Zamboanga and Naga. DMS