BIR suspends implementation of new VAT rules on refined sugar

The Bureau of Internal Revenue (BIR) has suspended the implementation of new guidelines on the payment of value added tax (VAT) for  the sale of refined sugar to give the sugar industry more time to adjust to the new scheme, the agency’s top official said.

BIR Commissioner Lilian Hefti said there is a need to issue an improved version of a previous regulation issued last May. As such, she issued Revenue Regulation 11-2007 which suspends the implementation of the regulation issued last May. She said this is to align the policies and procedures for the advance payment of VAT on the sale of refined sugar.

The issuance of the new rules is to “give both the BIR and representatives of the sugar industry ample time to thresh out unclear provisions embodied therein and to introduce a more improved version of the regulations.”

Hefti said the agency would bring together sugar industry participants to hear their concerns on the taxes governing their industry.

Under the BIR guidelines, the owner or seller of refined sugar should pay in advance the VAT before the sugar is withdrawn from any refinery or miller. No refined sugar could be released from the refinery or miller unless the owner or the seller shows a certificate of advance payment of VAT from the BIR revenue district Office (RDO) or large taxpayer service (LTS), the guidelines stipulate.

The directive also requires sugar refiners and millers to submit a monthly report on the quantity of refined sugar milled or produced as well as the amount of advance VAT paid and duly remitted to the national coffers.

The guidelines pointed out refined sugar withdrawn from the refinery or mill by a duly accredited agricultural cooperative of good standing registered with the Cooperative Development Authority (CDA) is exempted from VAT as long as it is produced by the cooperative. Otherwise, the sale would be subject to VAT.

If the owner of the refined sugar is an agricultural cooperative which is a producer of sugar, the transaction is not subject to VAT. If the seller-cooperative merely purchases the sugar cane from planter-members, the sale to another agricultural cooperative is also not subject to VAT.

However, the refiner or the miller should make sure that there is an authorization allowing the release of refined sugar and at the same time should notify the BIR about the names and plate numbers of the sugar-carrying vehicles or trucks so that the release could be properly supervised.