RMC No. 93-2026: Royalty and Windfall Profits Tax for Large-Scale Metallic Mining
Revenue Memorandum Circular (RMC) No. 93-2026 circularizes the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 12253, the “Enhanced Fiscal Regime for Large-Scale Metallic Mining Act,” which sets a 5% royalty on gross output within mineral reservations, a margin-based royalty of 1% to 5% outside them, and a windfall profits tax of 1% to 10% of net income. Returns, ring-fencing, and revenue sharing follow.
Keep Your Quarterly BIR Filings in One Place FREE →This post covers the tax provisions the BIR’s digest of the circular summarizes. It is written for mining contractors, operators, and their accountants; it is not a guide to the mining law as a whole. For related excise-tax coverage, see LPG and Kerosene Excise Tax Suspension under RMC No. 100-2026 and the excise tax topic page.
What royalty rates does RMC No. 93-2026 set? #
The royalty under Section 151-A of the National Internal Revenue Code of 1997 (Tax Code) is 5% of gross output within mineral reservations, and a margin-based 1.0% to 5.0% outside them. The BIR digest says RMC No. 93-2026 was issued on August 13, 2026. For operations within mineral reservations, it states:
“Large-scale metallic mining operations within mineral reservations shall be subject to a royalty of five percent (5%) of the gross output of the mineral products extracted or produced.”
Source: RMC No. 93-2026 Digest, summarizing Section 151-A(A) of the Tax Code as amended by RA 12253.
For operations outside mineral reservations, the royalty is margin-based:
| Margin | Royalty rate |
|---|---|
| Over 0% but not over 15% | 1.0% |
| Over 15% but not over 30% | 2.0% |
| Over 30% but not over 45% | 3.0% |
| Over 45% but not over 60% | 4.0% |
| Over 60% | 5.0% |
The digest adds a floor: if the margin outside mineral reservations is less than or equal to zero, “a minimum royalty of one-tenth (1/10) of one percent (1%) of the gross output of the minerals or mineral products extracted or produced shall be imposed.”
What is the windfall profits tax? #
The Section 151-B windfall profits tax is an additional 1.0% to 10.0% tax on net income from metallic mining operations, and it applies only to operations under a mineral agreement or Financial or Technical Assistance Agreement (FTAA). It is imposed “in addition to the taxes imposed under the Code.”
| Margin | Windfall profits tax rate |
|---|---|
| Equal to 30% but not over 40% | 1.0% |
| Over 40% but not over 55% | 3.0% |
| Over 55% but not over 65% | 5.0% |
| Over 65% but not over 75% | 7.0% |
| Over 75% | 10.0% |
Per the digest, “margin” is the ratio of net income from large-scale metallic mining operations to gross output, except that allowable deductions include corporate income tax and the Section 151-A royalty. For computing the margin, the optional standard deduction under Section 34(L) may not be used, and the windfall profits tax is not deductible from taxable income. The table in the digest begins at a 30% margin.
When are the returns due, and how are they filed? #
The royalty return is due within 60 days after each calendar quarter-end; the windfall profits tax return is due by April 15 or the 15th day of the fourth month after a fiscal year closes. Both are filed with and paid to the BIR through any Revenue District Office, via the Revenue Collection Officer, Authorized Agent Bank, or Authorized Tax Software Provider, except as the Commissioner otherwise prescribes.
| Item | Rule in the digest |
|---|---|
| Royalty return and payment | Within 60 days after the end of the calendar quarter when the products were removed |
| Bond | A bond approximating the royalty due on the quarter’s removals, with a final royalty adjustment return for the preceding calendar or fiscal year |
| Year-end true-up | Pay the balance still due, or carry over the excess credit |
| Windfall profits tax return | On or before April 15, or the 15th day of the fourth month after the fiscal year closes |
| Creditable or refundable? | The royalty is not creditable or refundable, even if the minerals are exported |
What are the separate-entity and ring-fencing rules? #
Each mineral agreement or FTAA is treated as a separate taxable entity for royalty and windfall computations, and losses cannot be shifted between projects. The digest states that a metallic mining contractor is a separate taxable entity for each mineral agreement or FTAA it holds or operates, and that where more than one valid mining operator exists under one agreement, each is a separate taxable entity for its own operations. The operator working under an operating agreement with a contractor “is the entity liable to pay the taxes imposed under Chapter VII Title VI of the Tax Code, as amended.”
Ring-fencing “shall restrict the large-scale metallic mining contractor or operator from consolidating income and costs across different mining projects, and offsetting losses or deductions from one project against profits from another,” only for computing the royalty and windfall tax. Treatment as a separate taxable entity “shall entail registration with the BIR under a distinct branch Taxpayer Identification Number (TIN) extension, but it does not create a separate juridical person.”
How are collections shared? #
Local government units (LGUs) get a 40% share, the Mines and Geosciences Bureau (MGB) gets 10% of the in-reservation royalty, and local business tax is capped.
- LGU share: 40% of the gross collection derived by the national government from excise taxes on mineral products, royalties, and related taxes, fees, or charges, in addition to the internal revenue allotment.
- MGB share: 10% of the royalty from operations within mineral reservations under Sections 151-A(A)(I) and 151-A(E), for special projects and other expenses tied to exploration and development of other mineral reservations.
- Local business tax: for mining contractors, not more than fifty percent (50%) of one percent (1%) of the gross output.
Worked example: classifying a project #
A worked example shows how to read the tables. The figures are fictional and only illustrate bracket selection.
Assume a contractor holds a mineral agreement for a project located within a mineral reservation and removes minerals with a gross output of ₱500,000,000 in a quarter.
- Royalty: 5% × ₱500,000,000 = ₱25,000,000, due within 60 days after quarter-end.
- MGB share: 10% of that in-reservation royalty accrues to the MGB, or ₱2,500,000.
- Separate project: a second project under a different mineral agreement is computed on its own; a loss there cannot reduce this project’s royalty or windfall base.
For a project outside a reservation with a margin of 24%, the royalty bracket is “over 15% but not over 30%,” or 2.0%. The digest does not state the peso base for this margin-based rate beyond “income from metallic mining operations,” so confirm the computation base against the full IRR before filing.
What should mining taxpayers do now? #
Read the full IRR, then set up separate entity treatment and a quarterly calendar. The BIR file reviewed here is a digest, not the full circular or IRR, and it does not state an effectivity date.
- Obtain the full RMC No. 93-2026 and the IRR of RA 12253 and compare them with the digest.
- List each mineral agreement and FTAA and confirm a branch TIN extension for each.
- Calendar the 60-day royalty deadline after each quarter and the April 15 windfall deadline.
- Plan the bond and the year-end royalty adjustment return.
- Consult a tax professional on margin computation, since the digest’s definitions are summaries.
Frequently asked questions #
What royalty applies to large-scale metallic mining within mineral reservations? #
Under Section 151-A of the Tax Code as amended by RA 12253, as summarized in RMC No. 93-2026, large-scale metallic mining operations within mineral reservations are subject to a royalty of five percent (5%) of the gross output of the mineral products extracted or produced.
What royalty applies outside mineral reservations? #
Operations outside mineral reservations are subject to a margin-based royalty on income from metallic mining operations, at rates from 1.0% (margin over 0% but not over 15%) up to 5.0% (margin over 60%). If the margin is zero or negative, a minimum royalty of one-tenth of one percent (1/10 of 1%) of the gross output of the minerals or mineral products extracted or produced is imposed.
What is the windfall profits tax under Section 151-B? #
Large-scale metallic mining operations subject to a mineral agreement or FTAA pay, in addition to the taxes in the Tax Code, a windfall profits tax on net income from metallic mining operations at rates from 1.0% (margin equal to 30% but not over 40%) to 10.0% (margin over 75%).
When are the royalty and windfall profits tax returns due? #
The royalty return and payment are due within sixty (60) days after the end of the calendar quarter in which the products were removed. The windfall profits tax return and payment are due on or before the fifteenth (15th) day of April, or the fifteenth day of the fourth month following the close of the fiscal year.
Can the royalty be credited or refunded if the minerals are exported? #
No. RMC No. 93-2026 states that, similar to the excise tax on mineral products under Section 151, the royalty on mineral products shall not be creditable or refundable even if the mineral products duly paid under that section are actually exported.
Summary #
RMC No. 93-2026 summarizes the IRR of RA 12253: a 5% royalty on gross output within mineral reservations, a 1% to 5% margin-based royalty outside them, a 1% to 10% windfall profits tax for mineral agreement and FTAA operations, quarterly royalty and annual windfall returns, project-by-project ring-fencing with branch TIN extensions, and revenue sharing with LGUs and the MGB. This post relies on the BIR’s digest, and no law-firm or audit-firm commentary was found at the time of writing.
Source: RMC No. 93-2026 Digest, Bureau of Internal Revenue.