BIR Revenue Regulation 4-2015 Clarifies VAT Rules Regarding Sugar

The Bureau of Internal Revenue (BIR) released Revenue Regulation 4-2015 which clarifies value added tax (VAT) rules regarding sugar. This newly issued regulation definitively stated that only “raw cane” sugar, also known as muscovado, is exempt from VAT pursuant to Section 109 of the National Internal Revenue Code.

BIR Commissioner Kim Henares issued RR 4-2015 which defined the meaning of raw cane sugar which is among the exempt goods as mentioned by Section 109 (1) (A) of the Tax Code. In the said regulation, raw cane sugar was defined as sugar produced by simple process of conversion of sugarcane without need of any mechanical or similar device.

RR 4-2015 recognizes that centrifugal process of producing sugar is not in itself a simple process. Therefore, any type of sugar produced therefrom are not exempt from VAT, such as raw sugar and refined sugar.

For this reason, raw sugar and refined sugar, as defined by Revenue Regulation 13-2008, would be subject to advance payment of VAT by the owner or seller before the sugar is withdrawn from any sugar or refinery mill.

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Author: Atty. James Biron
Atty. James S. Biron is a corporate lawyer specializing in foreign investments, trade, mergers and acquisitions, planning and financing of projects and capital raising. Clients served include real estate, construction, energy, information technology, agriculture, education, medical and casino gaming companies.

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