Section 2 (a) of Revenue Regulations No. 8-2015 defines Raw Cane Sugar - the natural sugar extracted from sugarcane through simple mechanical process by pressing for the juice; boiled to crystallize; filtered using centrifuge to separate these crystals, and dried, resulting to crystallize brown sugar (brown color due to natural molasses content present in sugar cane): Provided, that is shall never refer to raw cane sugar produced from conducting only one (1) stage of filtering and centrifugal without any other further process applied thereto, such as but not limited to washing, bleaching, etc.: Provided further, that its color is greater than 800 ICU and that its content of sucrose by weight in dry state corresponds to a polarimeter reading of less than 99.5 degree.
The above definition includes muscavado which has standard specifications as produced, namely: Powder Class A - polarization of 86 degree minimum; Powder Class B - polarization of 77 degree minimum; and Lump - polarization of 57 degree minimum.
Thus, only those falling under the above-definition of Raw Cane sugar, including muscovado, are exempt from VAT, or from Percentage Tax, pursuant to Section 109 (1)(A) of the Tax Code.
The Sugar Regulatory Authority represents that it collects on a biweekly basis composite sample from mills for routine quality tests. For further verification that the products produce by mills conform to the definition contained herein, the SRA shall provide the BIR with a copy of the results of said test showing the polarimiter and color reading of the Raw Cane Sugar produced, within 15 days from the end of the calendar month. The SRA shall also insure that they have in place rules and regulations requiring the "RAW CANE SUGAR" be clearly placed on quedans issued for products falling under this definition.
Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%208-2015.pdf of full text of Revenue Regulations No. 8-2015.
