Roxas pushes probe into alleged illegal VAT collection from sugar coops' sales

MANILA, Philippines - Senator Manuel Roxas II on Thursday sought an investigation into an alleged illegal collection of value-added tax (VAT) from the sales of sugar cooperatives in Negros Occidental.

Roxas said he was told by sugar farmers and members of sugar cooperatives in Negros Occidental that the Bureau of Internal Revenue had been requiring them to pay an advance 12 percent VAT on their total production even if the agency had no right to collect VAT from them in the first place.

The senator said this report prompted him to file Senate Resolution No. 645 asking the committee on trade and commerce to conduct an inquiry into the reported unjustified collection of VAT on sugar cooperatives.

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

"There is nothing in our tax law which authorizes the Bureau of Internal Revenue (BIR) to collect advance payment of VAT on the sale of sugar cooperatives," Roxas said, adding the VAT collection is in direct conflict with BIR rules.

The senator said 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 original state or processed form, to their members and non-members.

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

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

The senator believed the BIR's move was based on an erroneous interpretation of the mentioned laws.

"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 low sugar inventory and prices," Roxas said. source - Amita Legaspi, GMANews.TV