BIR Ruling No. 343-2021

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

QUEZON CITY

DT- 343-2021

SEP 3 0 2021 ANSI CORPORATION No. 32 Lot 3B &3C Arty 1 Street Barangay Talipapa, Quezon City

Attention: Emie Mandia VP-Accounting

Madam:

This refers to your letter dated October 22, 2020 requesting on behalf of Ansi Corporation for a Iegal opinion on whether MONK FRUIT and ERYTHRITOL, which you claim are natural sweeteners, are exempt from excise tax.

In response, please be informed that Sectio! 150-B (A), (B), and (C) of the National Internal Revenue Code of 1997, as amended, states:

"Sec. 150-B. Sweetened Beverages -

(A) Rate and Base of Tax. - Effective January 1, 2018:

sweeteners, and purely_non-caloric sweeteners, or a mix of caloric and non- (1) A tax of Six pesos (P6.00) per liter of volume capacity shall be levied. assessed. caloric sweeteners: Provided, That this tax rate shall not apply to sweetened beverages using high fructose corn syrup: Provided, further beverages using purely coconut sap sugar and purely steviol glycosides shall andcollectedon sweetened beverages using purelycaloric hat sweetened

be exempt from this tax; and

corn syrup or in combination with any caloric Or non-caloric sweetener. (2) A tax of Twelve pesos (P 12.00) per liter of volume capacity shall be levied, assessed, and collected on sweetened beverages using.purely high fructose

(B) Definition of Terms. - As used in this Act:

(1) Sweetened beverages (SBs) refer to non-alcoholic beverages ,of any and shall include, but not be limited to the following, as described in the Food constitution (liquid, powder, or concentrates) that are pre-packaged and sealed in accordance with'the Food and Drug Administration (FDA) standards, that contain caloric and/or non-caloric sweeteners added by the manufacturers. (Codex Stan 192-1995,Rev 2017 or the latest) as adopted by the FDA: Category System from Codex Alimentarius Food Category Descriptors

(R) Other non-alcoholic beverages that contain added sugar. (g) Cereal and grain beverages; and 3 Other powdered drinks not classified as milk, juice, tea, and coffee; Sweetened tea; ) Aii carbonated beverages; Sweetened juice drinks; Flavored water Energy and sports drinks:

(2) Caloric sweetener refers to a substance that is sweet and includes sucrose, fructose, and glucose that produces a certain sweetness:

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SEP 3 0 202 343-2021

sweetness to beverages, and which includes other similar fructose syrup (3 High fructose corn syrup refers to a sweet saccharide mixture containing fructose and glucose which is derived from corn and added to provide

preparations; and

nutritive sweeteners approved by the Codex Alimentarius and adopted by the saccharin, acesulfame, potassium, neotame.. (4) Non-caloric sweetener reiers to a substance that are artificially or chemically processed that produces a certain sweetness. These are substances which can be directly added to beverages, such as aspartame, sucralose, FDA cyclamates and other, non-

2017 or the latest) as adopted by the FDA,are excluded from the scope of this Act from Codex Alimentarius FoodCategory Descriptors (Codex Stan 192-i995,Rev (C Exclusions. - The following products, as described in the food category system

milk, growing up milk,powdered milk, ready-to-drink milk and flavored milk. 1) All milk products, including plain milk, infant formula milk, follow-on fermented milk,soymilk, and flavored soymilk;

resulting from the pressing of fruit, the liquid resulting from the reconstitution of natural fruit juice concentrate, or the liquid resulting from the restoration of water to dehydrated natural fruit juice that do not have added sugar or caloric 2One Hundred Percent100% Natural Fruit Juices -Original liquid

sweetener;

resulting from the pressing of vegetables, the liquid resulting from the reconstitution of natural vegetable juice concentrate, or the liquid resulting (3) One Hundred Percent (100%) Natural Vegetable Juices - Original liquid from the restoration of water to dehydrated natural vegetable juice that do not have added sugar or caloric sweetener;

of necessary nutrition used due to a medical condition and an oral electrolyte solution for infants and children formulated to prevent dehydration due to 4 Meal Replacement and Medically Indicated Beverages - Any liquid or powder drink/product for oral nutritional therapy for persons who cannot absorb or metabolize dietary nutrients from foodor beverages, or as a source illness; and (5) Ground coffee, instant soluble coffee, and pre-packaged powdered coffee products. XXX XXX xxx(Emphasis and underscoring provided)

A close scrutiny of the above-quoted provision shows that only sweetened beverages using purely coconut sap sugar and purely steviol glycosides are exempt from excise tax Only coconut sap sugar and steviol glycosides were singled out and indicated as exempt. There are no such words as "includes"shall include, but not be limited, or"such as that can make the provision ambiguous. A cardinal rule in statutory construction is that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. There is only room for application.

considered non-caloric sweeteners, by definition, they can still fall under caloric sweetener which refers to a substance that is sweet.The enumeration after the word includes is not ERYTHRITOL is neither artificial nor include chemicals,and they should therefore not be Moreover, while one can argue that the processing of MONK FRUIT and

1 Bolos v. Bolos, G.R.No. 186400, October 20, 2010 citing Amores v. House of Representatives Electoral Tribunal, G.R. No. 189600, June 29,2010, and Twin Ace Holdings Corporation v. Rufina and Company, G.R. No. 160191,

June8,2006,490SCRA 368,376

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SEP 3 0 292 213-202

limited to the ones listed, which are just examples. Neither does the definition qualify

sweeteners that are natural, as the term is "caloric sweetener", and not "caloric natural

sweetener"

Furthermore, neither MONK FRUIT nor ERYTHRITOL is included under Section

150-B (C) of the Tax Code.

The Supreme Court has laid down the rule that as the power of taxation is a high

prerogative of sovereignty, the relinquishment is never presumed and any reduction or

diminution thereof with respect to its mode or its rate, must be strictly construed, and the same

must be couched in clear and unmistakable terms in order that it may be applied.2

More specifically stated, the general rule is that any claim for exemption from the tax

statute should be strictly construed against the taxpayer.3 Tax exemptions must be shown to

exist clearly and categorically, and supported by clear legal provisions.4

Evidently, a tax exemption may only be granted if there is clear legal basis for providing

it. In this instant case, MONK FRUIT and ERYTHRITOL may arguably be in the same

classification as stevia and coco sugar, in the sense that they are "natural" sweeteners;

unfortunately, the law is clear -- only stevia and coco sugar were singled out as exempt. Thus

MONK FRUIT and ERYTHRITOL are not exempt from excise tax and are therefore taxable.

Piease be guided accordingly

u

CAESAR R. DULAY Commissioner of Internal Revenue

K- 045833 A

2 Floro Cement v. Gorospe, G.R. No. L-46787 [1991]. 3 Acting Commissioner of Customs v. Manila Etectric Co., et al., 69 SCRA 469 [1977] and Commissioner of Internal

4 National Power Corporation v. Albay, G.R. No. 87479 (1990). Revenue v. P.J. Kiener Co. Ltd., et al., 65 SCRA 142 [1975]

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