Question & AnswerQ&A (BIR REVENUE MEMORANDUM ORDER NO. 5-2004)
The purpose is to prescribe guidelines and procedures in implementing Revenue Regulations No. 29-2003 on the advance payment of value-added tax on the sale of flour milled from imported wheat.
The flour miller is required to pay the advance VAT on the sale of flour milled from imported wheat in advance.
The importer must have paid the advance VAT due on the transaction and must present the Authority to Release Imported Goods (ATRIG) issued by the BIR.
A 'Flour Miller' is a person engaged in milling imported wheat to produce flour as a finished product, where such wheat may be imported directly or bought from an importer/trader.
A 'Wheat Trader' is a person engaged in importing, buying, and selling imported wheat.
The application for ATRIG should be filed with LTAD II for Large Taxpayers registered with RDO 116, 121, and 122.
The application should include a letter request and supporting documents such as sales invoice/official receipts, estimated freight expenses certified by the seller/buyer, computation of the advance VAT, and a xerox copy of the advance VAT paid (BIR Form 0605).
The LTAD II, LTDO-Cebu, or RDO shall check compliance with requirements, receive the application with proper markings, verify payment of advance VAT, validate with ITS database, and process according to RMO No. 35-2002 guidelines.
Advance VAT = Tax Base x 10%, where Tax Base = 75% x (invoice value x current exchange rate + estimated customs duties + 5% markup on their sum).
No, importations of wheat by traders are exempt from advance VAT payment, but they must still secure ATRIG for monitoring purposes.
Violations are subject to penalties under Sections 254 and 275 and other relevant provisions of the 1997 National Internal Revenue Code, as amended.
The advance VAT is allowed as deduction against the output tax under Section 107 of the 1997 NIRC and should be detailed in the Quarterly VAT Return, reflected in Schedule II of BIR Form 2550Q.
They must comply with report requirements on ATRIG processing as per RMO No. 35-2002 and submit monthly summaries of all issued Certificates of Advance Payment of VAT on Flour to the Regional Office or Large Taxpayers Service.