RR No. 02-2004: Further enhances the rules on the advance payment of VAT on the sale of refined sugar

Summary

RR No. 2-2004 amends RR Nos. 7-89 and 29-2002 by further enhancing the rules on advance payment of VAT on the sale of refined sugar.

Key points

1. Definition of refined sugar. Refined sugar is sugar whose sucrose content by weight, in the dry state, corresponds to a polarimeter reading of 99.5 degrees and above. Sugar from production lines accredited by the BIR as capable of producing that reading is prima facie presumed to be refined sugar.
2. Advance VAT payment. The owner or seller pays the advance VAT to the BIR through an Authorized Agent Bank (AAB), or to the Revenue Collection Officer or deputized City or Municipal Treasurers where there are no AABs. This is done before any refined sugar leaves a sugar refinery or mill.
3. Mill or refinery duty. The proprietor or operator of a mill or refinery allows no withdrawal of refined sugar without advance payment of VAT and proof of payment. The exception is refined sugar owned and withdrawn by a duly accredited and registered agricultural cooperative of good standing.
4. Cooperatives. A cooperative that earlier removed refined sugar without advance VAT cannot transfer ownership unless the transferee or buyer pays the advance VAT and proof of payment is submitted. Failure is a ground for revoking the cooperative’s BIR registration, and the BIR further recommends revoking its Cooperative Development Authority accreditation.
5. Monitoring at withdrawal. The Revenue Regional Director, on the recommendation of the Revenue District Officer, may direct an internal revenue officer to be present during withdrawal of refined sugar to verify compliance.
6. Computation. The VAT rate of 10% applies to the base price of P 850.00 per 50 kg. bag for sugar produced by a refinery, and P 760.00 per 50 kg. bag for sugar produced by a mill.

Who is affected

• Owners and sellers of refined sugar
• Sugar mills and refineries
• Accredited and registered agricultural cooperatives of good standing

Deadlines and effectivity

• Advance VAT paid before refined sugar is withdrawn from the mill or refinery

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.