By David Cagahastian
INTERNAL Revenue Commissioner Kim Jacinto-Henares has issued a new regulation defining the types of raw cane sugar to be exempt from the value-added tax (VAT).
Under the new Revenue Regulations (RR) 8-2015, the definition of “raw cane sugar,” which is exempt from VAT and from the advance payment of VAT on sugar, was amended as follows:
“Raw Cane Sugar—the natural sugar extracted from sugarcane through simple mechanical process by pressing for the juice; boiled to crystallize; filtered using centrifuge to separate these crystals, and dried, resulting to crystallize brown sugar [brown color due to natural molasses content present in sugar cane]: Provided, that it shall refer to raw cane sugar produced from conducting only one stage of filtering and centrifugal without any other further process applied thereto, such as but not limited to washing, bleaching, etc.: Provided further, that its color is greater than 800 ICU and that its content by sucrose by weight in dry state corresponds to a polarimeter reading of less than 99.5 degrees.”
Previously, only muscovado sugar was included as raw cane sugar, which is exempt from VAT, but the new definition of raw cane sugar broadens the scope of the tax exemption and prescribes the VAT exemption for the different types of muscovado.
“The above definition includes muscovado which has standard specifications as produced, namely: Powder Class A—polarization of 86 degrees; Powder Class B—polarization of 77 degrees minimum; and, Lump—polarization of 57 degrees minimum.
Those sugar that do not fall under the definition of raw cane sugar shall be subject to the advance payment of VAT, as provided for by RR 6-2015.
The advance payment of VAT shall be collected before any withdrawal of the sugar can be made from sugar mills or refineries.
The new regulations said that to be able to more effectively impose the advance VAT on sugar, and to ensure that the raw cane sugar that are exempt from VAT are, indeed, within the prescribed specifications, the Sugar Regulatory Authority (SRA) will provide the Bureau of Internal Revenue a monthly report of the results of quality tests on sugar samples.
“The SRA represents that it collects on a biweekly basis composite samples from mills for routine quality tests.