New mining tax law boosts investments, ensures environmental safeguards

President Ferdinand R. Marcos Jr. has signed into law Republic Act 12253, or the Enhanced Fiscal Regime for Large-Scale Metallic Mining Act, establishing a simplified and unified tax framework for large-scale mining operations in the Philippines.

The law aims to convert the country’s finite mineral wealth into long-term investments, job creation, and increased government revenue, while strengthening environmental protections.

Under the new regime, all large-scale metallic mining operations are now subject to a single fiscal framework, removing the previous complexities of varying tax treatments based on contract types.

A key provision of the law includes a five-tier royalty structure for mines outside mineral reservations, ranging from 1 percent to 5 percent, and a minimum 0.1 percent royalty on gross output for marginal mines.

It also introduces a five-tier windfall profits tax ranging from 1 percent to 10 percent, ensuring the government captures a fair share of excess mining profits.

“Titiyakin ng batas na ito na ating mapangalagaan ang kalikasan at ang kita mula sa ating mineral resources ay maibabalik sa taumbayan sa pamamagitan ng dekalidad na trabaho, mas maunlad na komunidad, at mas maayos na serbisyong pampubliko,” Finance Secretary Ralph G. Recto said.

He added, “It is not only pro-investment; it is also pro-future, pro-people, and pro-Filipino.”

The law applies a 2:1 debt-to-equity ratio cap to limit tax deductions from related-party loans, curbing aggressive tax avoidance strategies through thin capitalization.

A ring-fencing rule has also been introduced, requiring each mining project to be taxed separately to prevent companies from using losses in one project to offset profits in another.

To further ensure transparency and accountability, the law mandates public disclosure of mineral sales data and creates a multi-stakeholder mechanism aligned with international extractives governance standards.

“The Department of Finance is committed to implementing this law swiftly, efficiently, and with full transparency. We will also continue to engage with all stakeholders to ensure that the law delivers on its promise,” Recto said.

The legislation earmarks 10 percent of royalties collected from mines within mineral reservations for exploration, research, and the establishment of mineral testing laboratories.

These funds will also help the Bureau of Internal Revenue acquire tools to improve oversight and accurate valuation of mineral exports for taxation purposes.

The Department of Finance projects the new fiscal regime will generate an average annual incremental revenue of PHP 6.26 billion from existing mines.

During the ceremonial signing, Marcos emphasized the importance of using mineral resources responsibly.

“With this law, we send a very clear and powerful message. Progress shall never come at the cost of our people nor our planet,” he said.

“Minerals are finite. Once extracted, they are gone forever. But if we use them wisely, tax them fairly, protect our environment as we mine, and ensure that revenues return to the people, then their value will outlive all of us,” the President added.

The new law, signed on September 4, 2025, is part of the Marcos administration’s broader effort to align natural resource management with inclusive and sustainable economic growth.