Value Added Tax on Raw Sugar in Philippines

By: Tax and Accounting Center Philippines

Revenue Regulations No. 13-2013 (RR 13-2013) dated September 20, 2013 entitled “Amending Section 2(b) of Revenue Regulations No. 13-08, Relative to the Definition of Raw Sugar for Value Added Tax Purposes” was issued by the Bureau of Internal Revenue (BIR) to take effect within fifteen days from publication in newspaper of general circulation (Manila Bulletin) last September 24, 2013.

Old Raw Sugar definition under RR 13-2008

Under RR 13-2008 dated September 19, 2008, raw sugar was defined as follows:

“Raw Sugar” – refers to sugar whose content of sucrose by weight in dry state, corresponds to a polarimeter reading of less than 99.5 degrees. Cane sugar produced each production year shall be classified, for internal revenue purposes, as follows:

1. “A” is raw sugar which is intended for export to the United States market;
2. “B” is raw sugar which is intended for the Domestic Market;
3. “C” is raw sugar which is reserved for, but have not yet matured for release to the Domestic Market;
4. “D” is raw sugar which is intended for export to the World Market;
5. “E” is reclassified “D” sugar for sale to Food Processors/ Exporters operating Customs Bonded Warehouse (CBW) or to an enterprise located within special export processing zone.

X x x

The above definition of “raw sugar” under RR 13-2008 concentrates on the output with polarimeter reading of less than 99.5 degrees and not on the process.

New Raw Sugar definition under RR 13-2013

Under RR 13-2013, “raw sugar” defined in Section (2) of Revenue Regulations No. 13-2008 (RR 13-2008) is re defined as follows:

“Raw Sugar” – refers to sugar produced by simple process of conversion of  sugar cane without need of any of mechanical or similar device such as muscovado. For this purpose, raw sugar refers only to muscovado.

This new definition changes the criteria from the output to the process or manner of conversion sugar cane to raw sugar.

Implication of RR 13-2013

As an effect, centrifugal process of producing sugar is not in itself a simple process. Therefore, any type of sugar produced therefrom is not exempt from value added tax in the Philippines. Only raw sugar contained in the new definition under RR 13-2013 shall be exempted from value added tax in the Philippines. Other provisions of RR 13-2008 consistent with the new definition of raw sugar would remain to be applicable.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may please send mail at 

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