VAT Ruling No. 021-91

April 2, 1991 VAT RULING NO. 021-91 Mr. Ricardo L. Martinez, Jr. Executive Officer Leyte United Farmers Association, Inc. San Nicolas St., Ormoc City S i r : This refers to your letter dated October 7, 1989 to her Excellency, the President of the Philippines, which was referred to this Office for appropriate action, questioning the wisdom of imposing VAT on refined sugar and molasses. In reply, please be informed that Section 103(b) of the Tax Code, exempts from the value-added tax the sale of raw cane sugar. Revenue Regulations No. 5-89 was promulgated to implement the provision of Section 103(b) of the Tax Code insofar as the exemption of raw cane sugar is concerned. And under these Regulations, "raw cane sugar" refers to crystalized or solidified juice of sugarcane, distinctly brown in color resulting from the simple and primary milling process such as treating the juice with lime to remove impurities, boiling and spinning the syrup to force out the molasses. It does not include cane sugar commonly known as WASHED SUGAR, PLANTATION WHITE SUGAR, and BLANCO DIRECTO SUGAR, which are, for purposes of this exemption, considered as refined sugar. Molasses and bagasse are not also covered by the exemption." The Regulation was issued in pursuance to the provisions of Section 245 of the Tax Code which authorizes the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective enforcement of the provisions of the Tax Code. Regulations promulgated in pursuance of law have the force and effect of a law. (Article 7, New Civil Code) In view of the fact that refined sugar, molasses and bagasse are not covered by the exemption provision of Section 103(b) of the Tax Code, then, the sale of said goods/articles are subject to the Value-Added Tax under Section 100 (a) of the same Code. LibLex Very truly yours, JOSE U. ONG Commissioner of Internal Revenue