Registration for Mining Companies in the Philippines
The mining industry in the Philippines is regulated by the government and subject to foreign equity restrictions because of the Constitutional policy that mineral resources are owned by the State and their exploration, development, utilization, and processing are under its full control and supervision. The State may however directly undertake such activities or it may enter into mineral agreements with contractors, enter into co-production, joint venture, or production sharing agreements with Filipino citizens, or corporations or associations at least 60% of whose capital is owned by Filipinos with the other 40% foreign-owned. These agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty five years, and under such terms and conditions as may be provided by Philippine law.
K&C will assist local and foreign companies with the requirements and registration process to register a mining company with the SEC, DENR, and BIR. We will draft all contracts and consolidate all required documentation. K&C works directly with its clients and DENR to ensure an efficient registration process and compliance with Philippine law.
Foreign-Owned Mining Company in the Philippines
The State is permitted to enter into agreements with foreign-owned corporations involving either technical or financial assistance for large scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by Philippine law.
The terms and conditions of the financial or technical assistance agreements are contained in The Philippine Mining Act. Under this law, only “qualified persons” may engage in the exploration, utilization, and development of mineral resources in the Philippines. These are:
- Any citizen of the Philippines with capacity to contract and
- Corporations, Partnerships, Associations, or Cooperatives organized or authorized for the purpose of engaging in mining, with technical and financial capability to undertake mineral resources development and duly registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines.
A legally organized foreign-owned corporation may be deemed a qualified person for purposes of granting an exploration permit, financial or technical assistance agreement, or mineral processing permit. A financial or technical assistance agreement means a contract involving financial or technical assistance for large-scale exploration, development, and utilization of mineral resources.
Registration with the Department of Environment and Natural Resources (DENR)
After registering with the SEC, companies engaging in mining in the Philippines must also register their company with the Department of Environment and Natural Resources (DENR) of the Philippines.
If the company is involved in exploration, development, or utilization of mineral resources, you may need to do business in the Philippines through a 60-40 Philippine-owned corporation. Branches and companies without the required foreign equity may enter into a financial or technical assistance agreement under the terms and conditions of the Philippine Mining Act.
Exporting and Trading Minerals from the Philippines
Companies not involved in exploration, utilization, and development, but which are in related mining business do not fall under the foreign equity restriction of the Philippine Mining Act and depending on the scope of their activities may do business in the Philippines as a fully foreign-owned branch or domestic subsidiary.
Tax Holidays and Incentives for Mining Companies
The contractors in mineral agreements and financial or technical assistance agreements are entitled to fiscal and non-fiscal incentives under the Omnibus Investments Code of 1987. Holders of exploration permits may register with the Board of Investments and be entitled to the fiscal incentives for the duration of the permits or extensions thereof. The Mining Act requires that mining shall always be included in the investment priorities plan.
Additional incentives granted to those with mineral agreements and those involved in financial and/or technical assistance agreements under the Philippine Mining Act include exemption from real property taxes, net operating loss carry over for 10 years, and accelerated depreciation.