Press Release
September 18, 2008


Sen. Mar Roxas pushed for the scrapping of the unjustified value-added tax (VAT) on sugar cooperatives' sales in the country. Roxas, Chairman of the Senate Committee on Trade and Commerce, filed this week Senate Resolution No. 645 seeking an inquiry into the reported BIR collection of a 12% VAT on sugar co-ops, which he insisted was based on an erroneous interpretation of the law.

The Ilonggo senator stressed that "the collection of VAT from sugar cooperatives constitutes an unnecessary and undue burden on them and adds injury to an already wounded and hurting sugar industry affected by sugar smuggling, as can be seen from the low sugar inventory and prices."

"Hindi kasi maabot ng gobyerno natin ang revenue targets nito kaya dinadaan nila sa santong paspasan ang mga sektor na hindi naman dapat buwisan. Pigang-piga na nga gaya ng tubo pag ginagawang asukal, lalo pang pipigain. Maasim tuloy ang dating sa taumbayan," he said.

Roxas filed the resolution as fulfillment of a commitment he gave to sugar farmers and members of sugar coops in Negros Occidental over the weekend.

The Ilonggo senator pointed out that the National Internal Revenue Code of 1997 exempted agricultural cooperatives duly registered with the Cooperative Development Authority from paying VAT for the sale of their products, whether in their original state or processed form, to their members and non-members.

The Cooperative Code of the Philippines, on the other hand, mandated the government to provide technical guidance and financial assistance, like tax exemptions, to cooperatives to help them develop into viable economic enterprises.

To justify its collection of the 12% VAT, the BIR in Negros Island promulgated Revenue Regulation Nos. 29-2002, 2-2004 and 4-2004 giving the agency the authority to collect VAT from sugar cooperatives.

But Roxas stressed: "There is nothing in our tax law which authorizes the BIR to collect advance payment of VAT on the sale of sugar cooperatives, which is in direct conflict with the BIR rules."

In his trip to Sagay City, Negros Occidental where he met with representatives of sugar cooperatives in the area to discuss the condition of the sugar industry in the region, coop leaders complained that the BIR had been requiring them to pay an advance 12% VAT on their total production even if the agency had no right to collect VAT from them in the first place.

Roxas said the Senate inquiry would help senators determine remedial measures to correct the BIR's wrong interpretation of the law.

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