May 7, 2015
Visayan Daily Star by Carla P. Gomez | http://goo.gl/TqP3vD
The Bureau of Internal Revenue will continue collecting advance Value Added Tax on raw sugar until it gets further orders from BIR Commissioner Kim Henares.
This was disclosed by Jose Ric Cabrera, chief of the BIR Regional Office 12 Legal Division in Bacolod City, yesterday following the report that President Benigno Aquino III presided over a Cabinet executive session at Malacañan Palace Tuesday to address the call of the sugar industry for the lifting of VAT on raw sugar.
At the executive session it was agreed that the BIR and the Sugar Regulatory Administration will sit down to come up with a definition of the raw sugar that will be granted exemption from VAT, SRA Administrator Ma. Regina Martin said.
BIR Commissioner Kim Henares agreed to the lifting of the VAT on raw sugar but said a definition of what can be considered as raw sugar should be drawn up, Martin added.
Martin yesterday said Cabrera is correct that the VAT on raw sugar has not been lifted yet, that is why they are hurrying the submission of its technical description to Henares today for her to adapt.
Meanwhile, Henares yesterday issued Revenue Memorandum Circular No. 25-2015 clarifying provisions of Revenue Regulations No. 6-2015 on the imposition of advance business tax (Value-Added Tax or Percentage Tax) on raw cane sugar and refined sugar.
The RMC said the physical inventories of raw sugar and refined sugar covered by Quedans dated before May 1, 2015 are not subject to the imposition of the advance business tax (VAT or percentage tax).
When the taxpayer is engaged in integrated operation of milling and refining of sugar, Henares said the advance business tax prescribed under RR No. 6-2015 will be imposed on raw sugar produced in the milling operations if it is sold to another person or entity.
If the raw sugar is just transferred to the refinery operation of the taxpayer for purpose of refining and converting the same into refined sugar, only the advance business tax on the refined sugar shall be imposed, Henares said,
There is no separate imposition of business tax on raw and refined sugar considering that no sales transactions has transpired since both products are owned by one and the same taxpayer, she added.
Under a tolling/service agreement, XYC corporation shall pay the advance VAT due on the refined sugar, net of the advance VAT paid on the raw sugar, since XYC Corporation is the same owner of the raw sugar and the resulting refined sugar, Henares said.
The answer will not be the same, however, if XYC Corporation sold the raw sugar to ABC Corporation. In that case, the advance VAT on the resulting refined sugar shall be paid by ABC Corporation without the benefit of deduction of the advance VAT paid by XYZ Corporation considering that ownership is already transferred to ABC Corporation, she said.
The advance VAT paid by XYZ Corporation shall be considered as an ordinary input VAT by ABC Corporation, if separately billed, as output VAT, in the sales invoice issued by XYC Corporation, she added.
It shall be understood, however, that advance payments of percentage taxes by non-VAT taxpayers are not allowable as input tax credits in the computation of the VAT liabilities of their clients-customers, Henares said.*CPG