Tax Alert No. 35 Republic Act No. 12253 [Enhanced Fiscal Regime for Large-Scale Metallic Mining Act]

An Act Enhancing the Fiscal Regime For the Large-scale Metallic Mining Industry, Amending For The Purpose Sections 34(B), 287, and The Subjects of Title VI And Chapter VII Thereof, And Creating New Sections 151-A, 151-B, 151-C, 151-D, AND 287-A, All Under Republic Act No. 8424, Otherwise Known As The National Internal Revenue Code Of 1997, As Amended, Appropriating Funds Therefor, And For Other Purposes 

On 5 September 2025, Republic Act No. 12253 or the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act was signed into law, overhauling the fiscal framework for large-scale metallic mining in the Philippines. With the new fiscal regime becoming operative on 17 February 2026, the law mandates equitable returns, fiscal transparency, and sustainable development, marking a decisive shift in how the government engages with the mining sector. 

Key changes

• Margin‑based royalties outside reservations: Royalties are now based on profit margins, ranging from 1 percent to 5 percent. A minimum royalty of 0.1 percent applies to low-margin mines. 
• Windfall Profits Tax (WPT): A tiered tax from 1 percent to 10 percent is imposed on excess profits during commodity price surges. 
• Per‑project ring‑fencing: Each mining project is taxed separately. Losses from one project cannot offset profits from another. 
• Thin‑capitalization limit (2:1): Interest deductions on related-party debt are limited to a 2:1 debt-to-equity ratio. 
• Royalty collection by BIR: The Bureau of Internal Revenue (BIR) is now responsible for collecting royalties. 
• Audit and transparency rules: Mining companies must disclose financial and operational data. Confidentiality restrictions are lifted for regulatory purposes. 

Retained provisions

• 4% excise tax on mineral products: Continues to apply regardless of profitability, as provided under RA No. 7942 (Philippine Mining Act of 1995).
• 5% royalty inside mineral reservations: Still imposed on gross output of the minerals or mineral products extracted or produced within designated mineral reservation areas, under RA No. 7942. 
• Gross Output: As defined under Section 151(B)(1) of the Tax Code. 
• 1% minimum royalty for ICCs: Maintained to ensure ICCs receive a guaranteed share from mining activities, based on Section 16 of DENR Administrative Order No. 96-40, Series of 1996.

Please see the attached document for the details of the amendments to the National Internal Revenue Code of 1997 and their implications. 

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