RR No. 8-2015: Amends RR No. 6-2015 on the definition of raw cane sugar for purposes of the imposition of advance business tax (Value-Added Tax or Percentage Tax) and for other related purposes

Key points

1. Raw cane sugar. Raw cane sugar is natural sugar extracted by simple mechanical pressing, boiled to crystallize, filtered by centrifuge and dried, giving brown crystallized sugar. It must come from only one (1) stage of filtering and centrifugal, with no further process such as washing or bleaching, have color greater than 800 ICU, and have a polarimeter reading of less than 99.5°. It includes muscovado, with minimum polarization of 86° for Powder Class A, 77° for Powder Class B and 57° for Lump.
2. Exemption. Only sugar falling within this definition, including muscovado, is exempt from VAT or Percentage Tax under Section 109 (1)(A) of the Tax Code.
3. Sugar and presumption of refined sugar. Sugar means sugar other than raw cane sugar, including sugar with a polarimeter reading of 99.5° and above and/or color of 800 ICU or less. Cane sugar from a refining process, from a sugar refinery, or from a BIR-accredited mill production line capable of producing 99.5° and above (with a quedan verified by the Sugar Regulatory Administration showing that reading) is presumed refined sugar.
4. Advance payment. The owner or seller pays the business tax on sugar in advance, before quedans or warehouse receipts are issued or before withdrawal from a refinery or mill. Advance VAT is computed at 12% on a base price of P1,400.00 per 50 kg. bag, and non-VAT persons exempt under Section 109(1)(V) of the NIRC pay advance Percentage Tax of 3% of gross sales or receipts. Cooperatives are exempt from the 3%.
5. Exempt withdrawals. Exempt from advance VAT are withdrawal of raw cane sugar, withdrawal by a duly accredited and registered agricultural cooperative of good standing, and such a cooperative’s withdrawal of sugar sold to another agricultural cooperative.
6. Credit and TCC. Advance VAT payments are creditable against output tax based on the actual gross selling price. Unutilized advance payments at year end may be issued a Tax Credit Certificate on application within two (2) years from the date of filing the 4th quarter VAT return of the year the payments were made, or from the last day prescribed by law if filed out of time. Such payments cannot be carried over or credited against later output tax or Percentage Tax, and the TCC excludes excess input tax.

Who is affected

• Sugar owners and sellers
• Sugar refinery and mill proprietors
• Agricultural cooperatives
• Non-VAT persons exempt under Section 109(1)(V) of the NIRC

Deadlines and effectivity

• TCC application: within two (2) years from filing of the 4th quarter VAT return of the year the advance payments were made