Gov’t exempts gold sales to central bank from taxes to boost reserves

THE GOVERNMENT has exempted from excise and income taxes the sale of gold by small-scale miners to the Bangko Sentral ng Pilipinas (BSP) in a bid to “further build up” the country’s foreign exchange shield against external financial shocks.

President Rodrigo R. Duterte on March 29 signed Republic Act No. 11256, titled: “An Act To Strengthen The Country’s Gross International Reserves (GIR)” — a copy of which was furnished reporters on Wednesday — which also covers small-scale miners’ gold sales to accredited traders for the eventual sale to the central bank.

Sought for comment, BSP Deputy Governor Diwa C. Guinigundo said in a mobile phone message that the move can be expected to add “at least $1 billion every year” to the GIR, which climbed for the fifth straight month to $83.956 billion in April from the upward-revised $83.613 billion in March and the $79.608 billion logged in April 2018. “But it can be much more especially now that sale to BSP is tax free. They don’t have to sell to the black market and get lower price,” Mr. Guinigundo said.

“RA No. 11256 seeks to remedy the 99% drop in BSP’s domestic gold purchases from more than 900,000 fine troy ounces (FTO) in 2010 to around 10,000 FTO in 2019 as a result of the taxation of the sale of gold to the BSP beginning July 2011,” the central bank explained in its own statement.

Sought for comment, Finance Assistant Secretary Antonio Joselito G. Lambino II said in a separate text message that the tax exemption can be expected to result in “about P900 million” in foregone revenues, although the BSP said separately that “the national government would only forego around P35 million annually from its income on BSP’s gold purchases…” — Arjay L. Balinbin