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Republic Act 12253: Heralding a Reformed Fiscal Regime for Large-Scale Metallic Mining Operations in the Philippines

  • September 25, 2025

Republic Act 12253: Heralding a Reformed Fiscal Regime for Large-Scale Metallic Mining Operations in the Philippines

By: Francesca Marie V. Flores

On September 4, 2025, President Ferdinand R. Marcos Jr. signed into law Republic Act 12253 (RA 12253), formerly Senate Bill No. 2826, or the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, during a ceremonial event held at the Malacañan Palace. The law was promulgated to simplify the country’s mining fiscal regime while ensuring a fairer government share of natural resource revenues, promoting a more transparent and equitable mining tax system, and safeguarding the country’s natural resources.

In his speech, President Marcos stated that the signing of the law establishes a simplified fiscal regime for large-scale metallic mining operations—promoting a more dynamic and resilient mining infrastructure and ensuring the government secures a larger share of windfall profits.

“With the signing of the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, we are putting into place a system that is fairer, that is clearer, and more responsive to the needs of both our people and the environment,” President Marcos said.

“Sa ilalim ng batas na ito, mas magiging simple ang pamamalakad at paggamit sa pondo na mula sa pagmimina, matitiyak na may bahagi ang pamahalaan sa kita, maitataguyod ang malinaw at tapat na sistema, at maibibigay ang seguridad sa mga mamumuhunan,” the President added.

To ensure transparency and accountability, RA 12253 provides for the monitoring and auditing of mineral sales and exports, requires public disclosure of mining data, and mandates the creation of a multi-stakeholder accountability body. These mechanisms aim to minimize revenue leakages, optimize government collections, and enhance governance in the mining sector, while promoting environmental protection and community welfare through the use of natural capital accounting data, in accordance with the Philippine Ecosystem and Natural Capital Accounting System.

One of the law’s key features is the introduction of a five-tier, margin-based royalty system, ranging from 1% to 5% on income derived from metallic mining operations outside mineral reservations, with a minimum royalty of 0.1% applied to gross output for mines falling below the margin threshold.

It also features a five-tier, margin-based windfall profits tax ranging from 1% to 10% on mining income. It enforces a 2:1 debt-to-equity ratio through a thin capitalization rule, which limits the deductibility of related-party borrowing costs.

All these measures taken together project that the total revenue from 2026 to 2029 from the fiscal regime is set to reach ₱ 25.08 billion, averaging ₱ 6.26 billion per year.

The signing of the law also ushers in a novel per-project ring-fencing rule to prevent taxpayers from consolidating income and expenses across multiple mining operations, thereby prohibiting the offsetting of losses from one project against the profits of comparably more profitable ones.

The law affirms that mining contractors are subject to a local business tax rate of 0.5%. It also maintains the current fiscal obligations, including a 5% royalty on operations within mineral reservations, a 25% corporate income tax, a 4% excise tax, a minimum 1% royalty payable to indigenous peoples, and applicable withholding taxes.

Under the new fiscal regime, the disbursement of local government shares from mining taxes will be optimized to mitigate delays. In addition, 10% of royalties are allocated from mining operations within mineral reservations to support the exploration activities of the Mines and Geosciences Bureau (MGB), the establishment of mineral valuation laboratories and facilities by the Metals Industry Research and Development Center (MIRDC), and the acquisition of necessary tools by the Bureau of Internal Revenue (BIR).

Generally, the mining sector has an optimistic outlook on the future of large-scale metallic mining under the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act. Although stakeholders acknowledge that the new law entails higher taxes, they also recognize that it sets forth much-needed stability as the Philippines aims to strengthen its position in the global market for critical minerals.

In a statement, Chamber of Mines of the Philippines (COMP) President Michael Toledo declared, “The new tax regime aligns the Philippines with global mining jurisdictions, making us more competitive and attractive to investors—especially at a time when global demand for critical minerals is rising.”

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FNS has been providing top quality legal service in the Philippines for the last twenty five years.  We maintain a visible presence in the Makati Central Business District with our headquarters in the main hub of business in Ayala Avenue and a liaison office in Hong Kong.

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CONTACT US

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  • info@fnslaw.com.ph
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