An official of the Confederation of Sugar Producers Cooperatives yesterday said CONFED is not against the refining of "D" or World market sugar, but opposes the exemption of refined "D" sugar from advance Value Added Tax payment.

Jose Ramos, secretary-treasurer of CONFED Sugar Cooperatives, said they strongly object a provision in the Bureau of Internal Revenue Regulation 6-2007 that would allow owners of "A" or US sugar quota and "D" sugar to have these stocks refined and allow them to withdraw refined sugar without payment of advance VAT.

If "A" sugar is refined and is exempted from advance VAT, and considering that it cannot be sold in the US, what could happen is that the exporter will divert the sugar to the domestic market where the price of "B" or domestic sugar is higher than that of the "A" sugar, he said in a position paper.

This is detrimental both to the tax collection efforts of the BIR and to the interest of sugar producers, Ramos said. "The government loses its tax and the diversion of "A" sugar to domestic market will depress price of "B" sugar which is the lifeblood of the sugar planters." He added that refining "D" sugar and giving it exemption from payment of advance VAT, will increase the temptation to divert refined "D" sugar to the domestic market, where the price difference between "B" and "D" is about P550 to P600 plus advance VAT exemption of P102 per bag.

This will give more incentive for unscrupulous parties to take advantage of this provision of RR 6-2007 by making their otherwise illegal activities appear legitimate, Ramos said.

Previously, he said, they did not question in court the advance payment of VAT which is of doubtful validity and legality.

"We did not raise objections until BIR issued Revenue Regulation 6-2007. We discovered that some provisions are detrimental not only to the interest of the sugar producers, but also prejudicial to the tax collection efforts of BIR," Ramos said.

Meanwhile, the Sugar Planters Forum, a loose association of sugar planters, said in a statement yesterday it is backing the Sugar Board for denying the request of the Philippine International Trading Corp. to obtain 500 tons of refined "D" sugar for export to Dubai.

SPF convenor Franklin Fuentebella said the Sugar Board made a good move for refusing PITC.

"We agree and support it because it protects our "A" and "B" sugar from possible effects of any diversionary move that could be made from that withdrawal," he said.

SPF member Phillip Khalid questioned the motive of the PITC because Dubai has its own sugar refinery.

"I smell bad in this request. Why to Dubai when they have their own sugar refinery," he said.

Fuentebella said they have made a stand that all "D" sugar must be exported, but even such move must be fully safeguarded and monitored by the Sugar Regulatory Administration and all planters concerned.

This is because "D" sugar has been the object of suspicion by planters as it offers lots of potential for manipulation and diversion by traders and food exporters, he added.

Fuentebella also warned the Sugar Board and SRA chief Rafael Coscolluela not to flip-flop on their stand.

"If they would give in, we will complain and might be compelled to resort to legal remedies," he added.*

back to top