RR No. 29-2003: Prescribes the policies and procedures for the advance payment of VAT on the sale of flour.

Key points

1. When the advance VAT is paid. Because the wheat is entirely imported, the advance VAT is paid at importation by the flour miller, before the wheat is released from Bureau of Customs custody. Millers also pay it before delivery when buying imported wheat from traders. No withdrawal of imported wheat for milling, in full or in part, is allowed until the advance VAT is fully paid.
2. ATRIG for all wheat importers. Wheat importation by traders stays exempt from VAT. Every importer, miller or trader, must still secure an Authority to Release Imported Goods (ATRIG) from the BIR, which the Bureau of Customs requires before release. Wheat importation is an exception to the list of imported articles exempted from ATRIG.
3. Computation for millers’ imports. The VAT rate of 10% applies to 75% of the sum of: the invoice value multiplied by the exchange rate on the date of payment, estimated customs duties and other charges except the advance VAT, and a 5% mark-up on those two amounts.
4. Computation for wheat bought from traders. The VAT rate of 10% applies to 75% of the sum of the invoice value, estimated freight expenses and 5% on the sum of the invoice value and freight.
5. Adjustment and credit. The Commissioner may adjust the tax base after prior consultation with flour milling industry associations and with approval of the Secretary of the Department of Finance. The advance VAT paid is credited against the output tax on the actual gross selling price of the flour sold.

Who is affected

• Flour millers importing wheat
• Flour millers buying imported wheat from traders
• Wheat importers, whether miller or trader

Deadlines and effectivity

• Advance VAT paid before release of wheat from customs custody
• Advance VAT on trader purchases paid before delivery