SRA asks BIR to postpone 12% VAT on sugar

MANILA, Philippines - The Sugar Regulatory Administration (SRA) has asked the Bureau of Internal Revenue (BIR) to postpone the implementation of the recently imposed 12 percent advance value-added tax on raw and refined sugar until the start of the next crop year.

SRA administrator Ma. Regina Martin said the issuance of the new regulation in the middle of the milling season is causing confusion among producers and traders as the guidelines for implementation are not clear.

She said traders in Negros Occidental are reluctant to bid on produced sugar because of uncertainties on the implementation of the regulation.

“There is a lot of confusion on the implementation of the regulation. We need to clarify the guidelines and determine the impact on prices,” she said in a phone interview yesterday.

If traders continue to refuse to bid on existing domestic sugar stocks, an artificial shortage may eventually occur and push sugar prices up, Martin noted. 

“But for now, supplies are sufficient and prices are stable,” she said.

The BIR early this week issued a new regulation stating that sellers of refined and raw sugar must pay in advance the 12 percent value-added tax before the sugar is withdrawn from warehouses.

Martin said the SRA is challenging the definition of raw sugar in the new revenue regulation.

“We are also challenging the definition of raw sugar in the order based on a 1989 BIR regulation which states that raw sugar is free from tax,” said Martin.

Under the BIR order, only raw cane sugar, or muscovado sugar, is exempt from the payment of VAT under Section 109 of the Tax Code as it is not produced using the centrifugal process.

The BIR argued that any sugar produced using the centrifugal process is not exempt from VAT.

The next sugarcane cropping season will begin in September 2015 and end in August 2016.