Question & AnswerQ&A (BIR Revenue Regulations No. 8-2015)
The scope covers amending Revenue Regulations No. 6-2015 on the definition of Raw Cane Sugar for purposes of imposing advance business tax (VAT or Percentage Tax) pursuant to the National Internal Revenue Code, and other related purposes.
Raw Cane Sugar is natural sugar extracted from sugarcane by mechanical process, boiled to crystallize, filtered using centrifuge only once, and dried resulting in crystallized brown sugar with color greater than 800 ICU and sucrose polarimeter reading less than 99.5A. It includes muscovado with specific polarization standards.
Only Raw Cane Sugar, including muscovado as defined, is exempt from VAT or Percentage Tax pursuant to Section 109 (1)(A) of the Tax Code.
Sugar Owners may include sugar planters, traders, sugar millers, cooperatives, and associations who have legal title over the sugar.
The advance business tax must be paid by the owner/seller before any warehouse receipt or quedan is issued or before sugar is withdrawn from any sugar refinery/mill.
The base price is set at One Thousand Four Hundred Pesos (₱1,400.00) per 50 kg bag of sugar, on which 12% VAT is applied to compute the advance VAT payment.
Agricultural cooperatives of good standing accredited by the Cooperative Development Authority are exempt from advance VAT or Percentage Tax on withdrawal of sugar for sale to members. However, sales to non-members or if the cooperative is not the producer are subject to advance tax.
They must ensure proof of payment of the required advance VAT or Percentage Tax is submitted before issuing any warehouse receipt, quedan, or allowing withdrawal of sugar.
Advance VAT payment may be credited against output tax based on the actual gross selling price of sugar upon submission of the Certificate of Advance Payment and payment form attached to the Monthly or Quarterly VAT return.
Violations are subject to penalties under Sections 254 and 275, and other pertinent provisions of the National Internal Revenue Code, as amended.