QuestionsQuestions (BIR Revenue Regulations No. 8-2015)
RR No. 8-2015 was issued pursuant to Sections 6 and 244, in relation to Sections 106, 109, 110, 111(B), and 116 of the National Internal Revenue Code of 1997 (Tax Code), as amended.
It is natural sugar extracted from sugarcane through simple mechanical processes (pressing for juice; boiling to crystallize; centrifuge filtering; and drying) resulting in crystallized brown sugar, produced through only one stage of filtering/centrifugal without further processes like washing/bleaching. It must have color greater than 800 ICU and sucrose content (in dry state) corresponding to a polarimeter reading of less than 99.5A.
Yes. The RR states that the definition includes muscovado and provides standard specifications: Powder Class A (polarization 86A minimum), Powder Class B (77A minimum), and Lump (57A minimum).
“Sugar” refers to sugar other than Raw Cane Sugar—i.e., sugar with sucrose content corresponding to polarimeter reading of 99.5A and above and/or whose color is 800 ICU or less. The RR also presumes certain products as refined sugar (and thus treated as not exempt like raw cane sugar).
Cane sugar is presumed refined sugar if it is (1) the product of a refining process; (2) a product of a Sugar Refinery; or (3) a product from a sugar mill accredited by the Bureau as capable of producing sugar with polarimeter reading of 99.5A and above, with quedans issued verified by the Sugar Regulatory Administration (SRA).
“Sugar owners” may refer to persons who have legal title over the sugar. The RR includes sugar planters, traders, sugar millers, cooperatives, and associations.
In general, business tax (VAT or percentage tax) on the sale of sugar must be paid in advance by the owner/seller before warehouse receipts/quedans are issued or before sugar is withdrawn from any sugar refinery/mill.
They must pay an advance percentage tax equivalent to 3% of gross monthly sales or receipts of sugar.
Advance VAT is computed by applying the 12% VAT rate on the applicable base price of P1,400.00 per 50 kg bag for sugar.
The base price used for advance VAT computation may be adjusted when deemed necessary by the Commissioner, depending on prevailing market prices of sugar.
Sale/withdrawal of raw cane sugar (including muscovado) is always exempt from VAT regardless of seller and buyer, pursuant to Section 109(1)(A) of the Tax Code.
If sugar is owned and withdrawn from the refinery/mill by an accredited and registered agricultural cooperative of good standing (with a valid, current, subsisting Certificate of Tax Exemption issued per RMO 76-2010), and the withdrawal is for sale to members, it is not subject to advance VAT (and also not subject to advance percentage tax).
Withdrawal of sugar for sale to non-members is subject to payment of advance VAT or percentage tax if the agricultural cooperative is not the producer of the sugar.
Any quedan or evidence of ownership showing the name of the cooperative together with another entity is not considered sales by the cooperative; it is treated as sales by the other entity named. Thus, the transaction is not covered by the cooperative exemption from advance business taxes.
The mill/proprietor shall not allow issuance of quedans/warehouse receipts or allow withdrawal of sugar without proof of payment of required advance VAT/percentage taxes, or proof of exemption from payment. The withdrawing/transfer party must submit proof.
Advance payments made by sellers are allowed as credit against output tax based on actual gross selling price, in addition to input tax credits under Section 110. Supporting documents include the Certificate of Advance Payment of VAT/Percentage Tax and a copy of the payment form attached to the monthly/quarterly return.
Unutilized advance payments that remain at year-end (tantamount to excess) may, at the option of the owner/seller, be used for issuance of a TCC upon application filed with the BIR within two years from the filing of the 4th quarter VAT return (or, if filed out of time, from the last day prescribed for filing the return). They cannot be carried over nor credited against succeeding periods’ output tax/percentage tax.