RMC No. 17-2013: Clarifies the taxes due from Financial or Technical Assistance Agreement (FTAA) Contractors during “Recovery Periods”

Key points

1. No tax exemption. Non-collection of the “government share” during the recovery period under RA No. 7942 (Philippine Mining Act of 1995) is not an express grant of tax exemption. RA No. 7942 mentions no such exemption.
2. Taxes in the Mining Act. Section 83 makes the contractor liable for Income Tax under the NIRC after the Income Tax holiday lapses. Section 84 makes the contractor liable for Excise Tax on mineral products under Section 151 of the NIRC, except that for a mineral production sharing agreement the government share applies.
3. Rule applied. Exemptions are construed strictly against the taxpayer, and the claimant must justify it by the clearest grant of law. FTAA contractors therefore pay NIRC taxes during and after the recovery period, as compliance with tax obligations and not as the government share.
4. Rulings revoked. BIR Ruling Nos. 010-07 dated May 4, 2007 and 008-07 dated April 3, 2007 are revoked and invalidated. Inconsistent revenue issuances are repealed, amended or modified.

Who is affected

• FTAA contractors

Deadlines and effectivity

• Applies during and after the recovery period