DOJ backs bill exempting raw sugar from VAT

Workers load harvested sugarcane onto a truck. AFP FILE PHOTO

MANILA — The Department of Justice has expressed support for the passage of a congressional measure clarifying the definition of raw sugar for the purpose of exempting it from the value added taxes being collected by the Bureau of Internal Revenue.

In a one-page legal opinion dated May 24 and sent to deputy executive secretary for legal affairs Mildred Yovela Umali-Hermoneges, the DOJ through undersecretary Zabedin Azis expressed support for the passage of Senate Bill No. 2987 and House Bill No. 5713.

“This Department generally manifests no constitutional or legal objection to the approval by the President of the above-mentioned consolidated enrolled bill into law. The consolidated enrolled bill will clarify the definition of raw sugar for the purpose of exempting the said raw sugar from the VAT collected by the BIR, thereby amending Section 109 of the National Internal Revenue Code,” Azis said.

The DOJ official said that VAT exemptions for the agricultural sector would be helpful to the farmers and would encourage agricultural production in the country.

The BIR defines raw sugar and exempts it from VAT. Both raw sugar and raw cane sugar are popularly known as “brown sugar” or “unrefined sugar.”

The consolidated bill included detailed technical definitions of raw sugar and raw cane sugar,

“[T]he term ‘raw sugar’ means sugar whose content of sucrose by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5 degrees and the term ‘raw cane sugar’ refers to partially purified sucrose, which is crystallized from partially purified cane juice, without further purification, which does not preclude centrifugation or drying, and which is characterized by sucrose crystals covered with a film of cane molasses,” the proposed measure stated.

SB 2987 was authored by Sen. Sergio Osmena III while HB 5713 was authored by Negros Occidental 1st District Rep. Jeffrey Ferrer.

In previous congressional hearings, the BIR estimated a foregone revenue of P1.4 billion should the measure be passed into law.

Data from the Philippine Sugar Miller’s Association, Inc. show that sales of unrefined sugar account for about 30 percent of the total market for sugar in the country.  SFM