THE BANGKO SENTRAL ng Pilipinas (BSP) sees increased gold purchases next month after the Bureau of Internal Revenue (BIR) issued the rules exempting from income and excise taxes the golds that traders and small miners sell to the central bank.
BIR Commissioner Caesar Dulay issued Revenue Regulation (RR) No. 4-2020 last week, Feb. 18, the implementing rules and regulations (IRR) for Republic Act (RA) No. 11256 which exempts the gold that traders and registered small-scale miners (SSM) sell to the BSP from income and withholding taxes as well as excise tax.
President Rodrigo R. Duterte signed RA 11256 on March 29, 2019.
The regulations will take effect first week next month or 15 days after its publication on a newspaper on Thursday, Feb. 20.
Sought for comment, the BSP Mint and Refinery Operations Department told BusinessWorldthis will likely increase their gold purchases gradually since the tax exemption privileges require prior documentary approvals.
“The BSP expects an increase in gold purchases when the law takes effect next month. However, we also expect the influx of sales to be gradual taking into consideration the documentary requirements that the law prescribes. Likewise, we anticipate greater benefit to our SSMs due to its use of BSP’s prevailing international market price of gold,” the department said in an e-mailed response.
The tax exemptions are also applicable to the gold that registered small-scale miners sell to traders, which will eventually be sold to the central bank.
“If an excise tax has been otherwise paid prior to the sale of gold to the BSP, the taxpayer may file a claim for refund or credit with the Commissioner of Internal Revenue for the excise tax paid,” the IRR stated.
With this, the BIR said all small-scale miners and accredited traders should secure a tax identification number which the bureau will use as basis for the tax exemption. The bureau will also use a valid certification issued by the BSP as basis for the exemption and non-withholding of taxes.
The BSP Mint and Refinery Operations Department said the VAT exemption’s effect to its existing gold stock is unclear at this time “since there are several factors to consider, such as compliance to requirements especially now that the BSP is strengthening its commitment to responsible sourcing.”
“Nevertheless, the BSP is upbeat in the prospect of returning gold sales to the BSP, and that in turn, will help increase our gold stock,” it added.
Meanwhile, BIR warned that the seller will be “primarily and solely liable for any deficiency taxes” if they find that the tax-free gold, which should be sold the central bank, was not transacted with the BSP. — Beatrice M. Laforga