Philippines: Simplified tax framework for metallic mining

The president in early September 2025 signed Republic Act No. 12253 introducing a simplified tax framework for metallic mining.

Key measures include:

• Section 34(B): Interest on related-party debts of metallic mining contractors/operators exceeding at any time during a tax year the allowable quarterly 2:1 related-party-debt-to-equity ratio will be non-deductible. Debt and equity are defined per international financial reporting standards.
• Section 151-A: Introduction of a royalty system for large-scale metallic mining, with specific rates for operations within and outside mineral reservations.
• Section 151-B: Implementation of a windfall profits tax on net income from metallic mining operations, with tiered rates based on profit margins (Note: The windfall profits tax is not deductible for income tax purposes.)
• Section 151-C: Establishment of a "ring-fencing" approach for tax reporting, treating each mining agreement as a separate taxable entity.
• Section 151-D: Authorization for tax audits and monitoring of sales and exportation of minerals.
• Revenue sharing (sections 287 and 287-A):
  • Local government units receive a 40% share of the national government's gross collection from mining-related taxes and royalties.
  • 10% share of the royalty derived from mining operations within mineral reservations are allocated to the Mines and Geosciences Bureau and the Metals Industry Research and Development Center for development projects.

For more information, contact a KPMG tax professional in the Philippines:

Leandro Ben M. Robediso | lrobediso@kpmg.com