Republic Act No. 12253 takes effect on 20 September 2025, affecting large-scale metallic mining contractors 150 days later, with implementing rules to be issued within 90 days.

The Philippines has published Republic Act No. 12253, an Act Enhancing the Fiscal Regime for the Large-Scale Metallic Mining Industry, in the Official Gazette on 5 September 2025, which introduces tax reforms targeting large-scale metallic mining activities.

The key measures of the Act are as follows:

Interest deduction restriction

A new rule limits the deductibility of interest on loans from related parties for contractors and operators in the metallic mining industry. If their related party debt goes beyond a 2-to-1 debt-to-equity ratio at any point in the taxable year, the excess interest can no longer be claimed as a tax deduction.

Royalty rates

The new rules outline revised royalty rates for large-scale metallic mining in the Philippines, encompassing both operations within mineral reservations and those outside them.

  • For projects located inside mineral reservations (areas specifically designated by the government under the Philippine Mining Act of 1995), a fixed royalty of 5% on the gross output of extracted minerals will apply.
  • For operations outside these reservations, the royalty is now based on profitability. If the mining margin is zero or negative, a royalty of at least 0.1% on gross output is charged. When profits are positive, the rate increases with the margin:
    • 1.0% – if the margin is above 0% but not more than 15%;
    • 2.0% –  if over 15% but not more than 30%;
    • 3.0% –  if over 30% but not more than 45%;
    • 4.0% – if over 45% but not more than 60%;
    • 5.0% – if over 60%;
  • Large-scale metallic mining operations outside mineral reservations are subject to a royalty system based on a margin. If the margin is zero or below, a 0.1% royalty is applied to the gross value of the minerals. For positive margins, the rates increase step by step:
    • 1.0% – if the margin is above 0% but not more than 15%;
    • 2.0% –  if over 15% but not more than 30%;
    • 3.0% –  if over 30% but not more than 45%;
    • 4.0% – if over 45% but not more than 60%;
    • 5.0% – if over 60%.
  • Mining contractors or operators must submit a return and pay royalties on locally produced or extracted metallic minerals, whether inside or outside mineral reservations, within 60 days after the close of each calendar quarter when the minerals are removed.

Windfall profit tax

A new windfall profits tax has been introduced for large-scale mining projects covered by a mineral agreement or financial/technical assistance agreement. The tax is non-deductible and applies to net mining income based on profit margins. Rates increase as margins rise:

  • 30% to 40% margin: 1.0%;
  • Over 40% up to 55% margin: 3.0%;
  • Over 55% up to 65% margin: 5.0%;
  • Over 65% up to 75% margin: 7.0%;
  • Over 75% margin: 10.0%.

Ring-fencing rules

New rules require metallic mining contractors to treat each mineral agreement or financial/technical assistance agreement they hold as a separate taxable entity.

Republic Act No. 12253 will officially take effect 15 days after its publication, which is scheduled for 20 September 2025. Its provisions will specifically impact large-scale metallic mining contractors and operators starting 150 days after this effective date. Additionally, the implementing rules and regulations for the law are expected to be released within 90 days.