BIR maintains advance tax payment scheme for sugar

Despite warnings from sugar millers that additional taxes and their respective documentation requirements could lead to a supply shortage, the Bureau of Internal Revenue (BIR) will proceed with the collection of advance tax payments on sugar.

Under Revenue Regulations (RR) No. 6-2015 signed by Commissioner Kim S. Jacinto-Henares and Finance Secretary Cesar V. Purisima, the BIR maintained that the value-added tax (VAT) as well as percentage tax on the sale of both raw and refined sugar “shall be paid in advance by the owner/seller before any warehouse receipts or quedans are issued, or before the sugar is withdrawn from any sugar refinery/mill.”

But for raw sugar classified by the Sugar Regulatory Administration and covered by quedans as “A” or for export exclusively to the United States, RR 6-2015 dated March 31 said “no advance VAT shall be collected” in order to “lessen the administrative burden of processing refunds.”

However, if an audit showed that the designated sugar had not been exported to the US and there were no receipts of payments, “the deficiency VAT together with the surcharge and interest thereon computed from when it should have been due and paid for shall be collected.”

The BIR also clarified that the exemption “shall not include liability from the advance 3-percent percentage tax for non-VAT taxpayer.”

For “D” and “E” raw sugar, which are also for export or to be used by firms operating within export zones, respectively, these will be subjected to advance VAT payments refundable only when the sale and actual shipment were evidenced by official receipts and sales invoices, among other documents, as well as payments in acceptable foreign currency or its equivalent in goods or services, the BIR said.

Also, “any person whose sales or receipts are exempt… from the payment of VAT and who is not a VAT-registered person shall pay an advance percentage tax equivalent to 3 percent of the gross monthly sales or receipts of sugar, whether raw or refined,” the BIR added.

Separately, RR 7-2015 issued by both Henares and Purisima also on March 31 ordered slapping the 1-percent gross payments on sugar purchases to a base price of P1,000 per 50-kilogram bag or actual selling price, whichever is higher, in the case of locally produced raw cane sugar as well as raw sugar.

As for molasses, the base price would be P4,000 per metric ton or actual selling price, also whichever is higher, the BIR said.

“Buyers of refined sugar, whether locally produced or imported, shall withhold the creditable income tax based on the actual selling price,” according to the BIR.