July 20, 2015
Sun Star Cebu | http://goo.gl/zmt5cT
REVENUE Regulation (RR) No. 6-2015 consolidates the imposition and manner of collection of the advance value-added tax or percentage tax on raw sugar and refined sugar.
It previously defined raw cane sugar as sugar produced by simple process of conversion of sugar cane without a need of any of mechanical or similar device. In the said RR, raw cane sugar refers only to muscovado sugar. Thus, only raw cane sugar such as muscovado are exempt from VAT under Section 109 (1) (A) of the Tax Code.
RR No. 8-2015, dated May 22, 2015, amended the definition of raw cane sugar as the natural sugar extracted from sugarcane through simple mechanical process by pressing, boiling, filtering and drying resulting to crystallized brown sugar due to natural molasses content present in sugar cane. It shall be produced from conducting only one stage of filtering and centrifugal without any other further process. Its color should be greater than 800 ICU and that its sucrose content by weight in dry state corresponds to a polarimeter reading of less than 99.5°. It includes muscovado, which has standard specifications as produced, namely: (1) powder class A – polarization of 86°minimum; (2) powder class B – polarization of 77° minimum; and (3) Lump - polarization of 57° minimum.
This amendment broadened the definition of raw cane sugar. Thus, those falling under the above-definition of raw cane sugar, including muscovado, are exempt from VAT, or from Percentage Tax, pursuant to Section 109 (1)(A) of the Tax Code.
In general, VAT or percentage tax on the sale of sugar shall be paid in advance by the owner or seller before any warehouse receipt or quedans are issued or before the sugar is withdrawn from any sugar refinery/mill.
The base price for the advance VAT payment is P1,400 per 50-kilogram bag of sugar and shall be adjusted when deemed necessary by the Commissioner, depending on the prevailing market price of sugar.
For taxpayers exempted under Section 109(1)(V) of the NIRC from the payment of VAT who are not VAT-registered persons, the advance percentage tax shall be three percent of the gross sales or receipts except for cooperatives.
The following withdrawals shall be exempt from the payment of the advance VAT or percentage tax: (1) withdrawal of raw cane sugar, including muscovado; (2) withdrawal of sugar by duly accredited and registered agricultural cooperative of good standing for sale to members; and (3) withdrawal of sugar by duly accredited and registered agricultural cooperative which is sold to another agricultural cooperative.
The advance VAT payment made by sellers of sugar is allowed as credit against the output tax based on the actual gross selling price of sugar. The certificate of advance payment of the VAT or percentage tax and a copy of the payment form shall be attached to the monthly or quarterly return to support the claim for credit of advance VAT or percentage tax payment.
The remaining unutilized advance tax payments made by the seller or owner of sugar at the end of the taxable year where the advance payment was made, may be applied for a tax credit certificate (TCC) with the BIR within two years from actual filing or the due date for filing of the 4th quarter VAT return of the year such advance payments were made, whichever is later.
(Source: Punongbayan & Araullo)
Published in the Sun.Star Cebu newspaper on July 21, 2015.