Taxability of Crude Coconut Oil and Sugar Quedan and Raw Sugar Delivered to a Sugar Refinery

July 1, 1987 BIR RULING NO. 184-87 168 000-00 184-87 Gentlemen : In reply to your letter dated October 3, 1986, please be informed that 1. A taxpayer who operates a copra crushing mill and produces crude coconut oil is subject to 3% miller's tax based on the actual selling price or market value of such crude coconut oil at the time it leaves the factory mill warehouse, pursuant to Section 168 of the Tax Code, as amended. He is not liable to pay the 3% miller's tax if the crude coconut oil is removed for exportation and is actually exported by him without returning to the Philippines, whether in its original state or as ingredient or part of any manufactured article or product. The taxpayer is subject to the 3% miller's tax on edible cooking oil which is derived from the process of refining by removing from crude coconut oil certain impurities and is actually pure coconut oil with copra as basic raw material. (BIR Ruling No. 098-83). In such case, the tax is based on the actual selling price or market value of the edible cooking oil at the time it leaves the factory or mill warehouse. The crude coconut oil milled by the taxpayer and utilized in the refining process is not subject to tax. On the other hand, if the taxpayer buys the crude coconut oil and refines the same into edible cooking oil, the latter is subject to the 3% miller's tax based on the actual selling price or market value thereof at the time it leaves the factory or mill warehouse. For lack of legal basis, the 3% miller's tax previously paid on the crude coconut oil cannot be credited against the tax due on the edible cooking oil. 2. A taxpayer who buys sugar quedans from sugar producers, withdraws raw sugar and delivers the same to a refinery for refining, pays the tolling fee and thereafter withdraws the refined sugar and sells the same to wholesalers/distributors is not subject to any business tax. In such case, the proprietor or operator of the refined sugar factory is subject to the 3% miller's tax imposed by Section 168 of the Tax Code, but any miller's tax paid on the raw sugar shall be credited against the tax due on the refined sugar. A taxpayer who simply buys and sells refined sugar is subject to the P200.00 annual fixed tax and to the 1.5% tax on subsequent sale imposed by Sections 161(1) and 164 of the Tax Code, as amended by Executive Order No. 36. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner