The Bureau of Internal Revenue yesterday said it will continue to hold dialogs with sugar industry leaders to thresh out unclear provisions of Revenue Regulation 6-2007 which requires advance payment of Value-Added Tax on the sale of refined sugar.

Commissioner Lilian Hefti, in a press statement, said the BIR will also come up with an improved version of tax regulations that will properly address the problems of the industry and lead to the collection of correct taxes from sugar producers.

RR 6-2007 was suspended on August 28, and on September 14, Revenue Memorandum Circular 59-2007 was issued to clarify policies on VAT for refined sugar sale.

The RMC stated that the suspension of RR 6-2007 effectively reverts the enforcement of policies and procedures on the VAT payment as provided in RR 29-2002, but the rate to be paid shall be at 12 percent.

Such provision shall apply until the BIR issues "a much improved version" of RR 6-2007, the statement said.

Earlier, Hefti said BIR said such VAT is generally paid before refined sugar is withdrawn from any sugar refinery or mill, adding that

BIR was already collecting advance VAT on the commodity before RR 6-2007's issuance. Last week, Jose Ramos, secretary-treasurer of CONFED Sugar Cooperatives, said their group opposes the exemption of refined "D" or World market sugar from advance VAT payment.

This is detrimental both to the tax collection efforts of the BIR and to the interest of sugar producers, Ramos said. 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" or domestic sugar 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 added.*NLG

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