QuestionsQuestions (BIR Revenue Memorandum Circular No. 40-2015)
It is exempt from VAT when the agricultural cooperative is duly registered with the CDA and it sells its produce (in original or processed form) to non-members.
Withdrawals of sugar for sale to non-members are subject to payment of advance VAT or percentage tax if the cooperative is not the producer; if it merely purchases sugar (from planters whether members or non-members) or transfers sugar through assignment, VAT/advance taxes apply.
The agricultural cooperative must be the producer of the sugar.
A cooperative is the producer if it is the tiller of the land it owns or leases, and it incurs the cost of agricultural production of the sugar and produces the sugar cane to be refined.
Yes, the requisites must concur. If any one is absent, the cooperative cannot be considered the producer, and its withdrawals for sale to non-members or another cooperative are subject to advance VAT or percentage tax.
It explains that a producer as a cooperative undertakes joint production where members produce raw materials or goods that the cooperative processes into finished or processed products for sale in the name and for the account of the cooperative, including derivatives arising from members’ raw materials.
Only those sales to its members shall be exempt from VAT if the cooperative is not the producer; sales to non-members can only be exempted if the producer is the cooperative itself.
Sales made by a duly registered agricultural cooperative organized and operated by its members for joint production and processing, where members’ raw materials or goods are processed into finished/processed products for sale by the cooperative to both members and non-members—subject to the producer concept.
It means the failure to meet any single producer requirement eliminates the producer status, so the cooperative loses the exemption treatment and must pay advance VAT or percentage tax on withdrawals for covered sales.
To avoid confusion and to ensure full effect of Section 5(b)(c) of RR No. 8-2015 in relation to Section 4(a) of RR No. 13-2008, consistent with the Cooperative Code’s cooperative producer concept and the Joint Rules.
No. If the cooperative is not the producer (i.e., it does not meet the tiller/cost-production requirements), then withdrawals are subject to advance VAT or percentage tax.
It refers to sugar other than raw cane sugar, including sugar with sucrose content by weight corresponding to a polarimeter reading of 99.5 and above and/or color 800 ICU or less.
It takes effect immediately upon issuance.
It enjoins them to give the circular as wide a publicity as possible.
Because producer status requires that the cooperative, through its members, tills the land it owns or leases; without this, the cooperative is not the producer and cannot claim exemption for covered withdrawals.
Records showing the cooperative (through its members) bore/advanced the costs of producing the sugar cane that will be refined—such as accounting records tied to production costs and cane output attributable to the cooperative’s production activities.