QuestionsQuestions (BIR PREVENUE REGULATION NO. 13-94)
The regulation is promulgated pursuant to Section 245 of the NIRC, as amended, to implement Section 151, Chapter VII, Title VI of the NIRC as amended by Executive Order No. 273 and further amended by Republic Act No. 7729, which imposes excise tax on minerals and mineral products.
“Minerals” are naturally occurring inorganic substances found in nature in solid, liquid, gaseous, or intermediate states. “Mineral products” are those produced and prepared in a marketable state by simple processes like washing or drying, without undergoing any chemical change, manufacturing, or other manufacturing processes by the lessee/concessionaire/owner.
“Mineral concentrates” are products obtained by concentrating disseminated or lean ores by mechanical means without altering the original chemical composition, mainly to separate undesirable minerals/constituents. It is important because the Regulations provide specific rules on valuation of concentrates (including cases where not traded in commodity exchanges and exportation scenarios).
“Quarry resources” are common stone or other common mineral substances declared by the Director of the Bureau of Mines and Geo-Sciences, including sand and gravel. The limitation is that they contain no metal or other valuable minerals in economically workable quantities.
All lessees, concessionaires, owners, or operators of mines, processors of minerals, quarry/mines licensees or permittees, producers, and manufacturers of mineral products—whether natural or juridical—are liable for excise tax due on removals from the minesite/place of production. If removed without payment, the owner or person in possession is liable.
Ten pesos (P10.00) per metric ton.
Two percent (2%) based on the actual market value of the annual gross output at the time of removal for locally extracted/produced goods; for importation, the value used by the BOC in determining tariff/customs duties, net of excise tax and VAT.
Metallic minerals are taxed based on actual market value of gross output at time of removal (locally) or the BOC value used for customs duties, net of excise tax and VAT (imported), using a time-based schedule. For copper and other metallic minerals: first three years after R.A. 7729 effectivity—1%; fourth and fifth year—1.5%; sixth year and thereafter—2%. Gold and chromite are taxed at 2%.
A tax of 15% of the fair international market price is imposed on the first taxable sale (barter, exchange, or similar transaction) in its original state. The tax is to be paid by the buyer/purchaser within 15 days from actual or constructive delivery. The fair international market price is determined in consultation with an appropriate government agency.
Generally, taxes are based on actual market value at the time of removal from the locality where mined or from the place of production, with no deduction for mining, milling, refining, or other expenses to prepare minerals into marketable state, and no deduction for transporting/handling/marketing—except for specific allowances stated in the Regulations.
When minerals or mineral products are sold or consigned abroad under C.I.F. terms, the actual cost of ocean freight and insurance is allowed as deductions from actual market value (to arrive at the tax base).
The excise tax base is the amount appearing in the provisional invoice issued by the exporter. The determination of actual market value must be made within 90 days from actual exportation, and if not determinable within the period, an extension may be granted by the Regional Director upon request in meritorious cases.
The Regulations provide: Actual Market = (Quarry Cost per unit × Ave. Selling Price of manufactured/finished product per unit) ÷ Cost of Goods Sold per unit. Example given: cement factory using lime from its own quarry, resulting in computed excise tax based on actual market value times production times the applicable rate.
Every export shipment must be covered by an export permit from the RDO with jurisdiction. The application must state kind and quantity, destination and consignee, loading vessel and voyage number, and attach certified true copy of provisional invoice for mineral concentrates. When necessary, an exporter's bond may be required, conditioned on payment of excise tax upon final determination of actual market value. Proof of exportation must be submitted within 30 days from actual exportation.
It is due and payable upon removal of the minerals/mineral products/quarry resources from the locality where mined. Before removal, the liable person files (BIR Form No. 2223) in triplicate showing quantity and actual market value and pays the excise tax to an accredited bank (or to the Collection Officer/authorized Treasurer where there are no accredited banks).
The output may be removed without prepayment if the lessee/owner/operator files a bond conformably with NIRC Section 151(c) in the form and amount/sureties required by the Commissioner. The taxpayer must still file a true and complete return (BIR Form No. 2223) in triplicate for minerals removed during the calendar quarter and pay the excise tax due within 20 days after the end of the quarter.
Taxpayers must keep an O.R.B. (BIR Form No. 2222) and enter daily (or on transaction dates) in the debit side: date, kind, and quantity extracted/produced; and on the credit side: date, kind, quantity removed, actual market value, and excise tax paid. The O.R.B. is delivered/installed by an authorized Revenue Officer, monthly transcript sheets must be submitted to the RDO within the first 10 days of each month, and records must be made available for inspection.
Violations are subject to the pertinent penalties under Title X of the NIRC, as amended.