September 15, 2015
Business Mirror (Mary Grace Padin) | http://goo.gl/47X1jK
THE Sugar Regulatory Administration (SRA) has ordered sugar millers to submit composite samples of their sugar output every weekend for crop year (CY) 2015 to 2016 to undergo laboratory analysis.
The SRA issued Sugar Order (SO) 2 authorizing the withdrawal of raw cane sugar from mill warehouses, after the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 8-2015 in June.
According to the SO, part of the composite samples taken shall be sent to the SRA for laboratory analysis, while the mills shall conduct laboratory analysis on the remaining composite samples.
“If the results of the analysis conducted by the mill on its composite sample show the sugar has a color that is greater than 800 ICU and with content of sucrose by weight in the dry state corresponding to a polarimeter reading of less than 99.5 degrees, the mills shall print or stamp ‘Raw Cane Sugar’ on the quedan of the sugar produced during that weekend,” the SO read.
According to the SRA, production represented by quedans considered as raw cane sugar based on the BIR’s definition will be exempt from the value-added tax (VAT) or from percentage tax upon withdrawal from the mill warehouses.
The SRA will also conduct its own analysis to verify if the quedans are, indeed, raw cane sugar, and shall submit copies of the results to the BIR.
“It was agreed by the SRA and the BIR that if the results of analysis conducted by the SRA on the same sugar product does not conform with the aforementioned definition of raw cane sugar, the sugar production of the mill for the week where the sample was taken shall be subject to VAT on postaudit by the BIR,” the SO read.
The BIR issued RR 8-2015 in May this year, amending RR 6-2015 on the “definition of raw cane sugar for purposes of the imposition of advance business tax [VAT or percentage tax] and for other related purposes.”
According to RR 8-2015, raw cane sugar with color that is greater than 800 ICU and with content of sucrose by weight in the dry state corresponds to a polarimeter reading of less than 99.5°, including muscovado, shall be exempt from VAT or percentage tax, pursuant to Section 109 (1) (A) of the Tax Code.
“The amount of advance VAT payment shall be determined by applying the VAT rate of 12 percent on the applicable base price of P1,400 per 50-kilogram bag of sugar,” the RR read.
For taxpayers exempted from the payment of VAT who are not a VAT-registered person, the amount of advance percentage tax shall be determined by applying the percentage tax rate equivalent to 3 percent of the gross sales or receipts.