Ferrer, a member of the National Unity Party (NUP), said certain changes to the National Internal Revenue Code (NIRC), as amended,  was necessary because the BIR recently issued a regulation  that redefined the technical meaning of “raw cane sugar,”  effectively removing its VAT exemption.

"In what was a clear case of flip-flopping, the BIR initially said 'raw sugar' can only be muscovado. Subsequent to that erroneous definition, the BIR revised its own definition and has now come up with an equally erroneous definition saying that, 'raw cane sugar' is now the one which should be referred to as 'muscovado'," according to Ferrer, who is also the chairman of the House Committee on Public Order and Safety.

In Revenue Regulation 13-2013, the BIR stated that "raw sugar refers to sugar produced by simple process of conversion of sugar cane without need of any mechanical or similar device such as muscovado.”

The BIR further said in its directive that raw sugar refers only to muscovado, and excludes sugar converted via the centrifugal process, which “is not in itself a simple process.”

It later issued RR No. 4-2015, which  draws a distinction between "raw sugar" and "raw cane sugar."

"It is quite apparent from these languages that the BIR focuses on the process involved in the production of 'raw cane sugar or raw sugar.' The BIR's misinterpretation stems from its incorrect understanding of the processes involved in such production,” Ferrer said.

Thus, the  BIR is now saying that "raw sugar" should be subject to VAT, while "raw cane sugar" should not, Ferrer added.

Ferrer said this distinction by the BIR is unwarranted because "raw sugar" and "raw cane sugar" are in fact one and the same. "The legislature did not intend to differentiate between 'raw cane sugar' and 'raw sugar' and neither should the BIR," said Ferrer.

To ensure that the BIR does not resort to invalid amendments of the tax law, Ferrer has filed House Bill 5713, which seeks to amend Section 109 (A) of the NIRC by adding this provision: "For this purpose, raw cane sugar shall mean raw sugar whose content of sucrose by weight in the dry state, corresponds to a Polari meter reading of less than 99.5°, such that but not limited to blanco directo, premium raw, special raw, washed sugar, sweeping and muscovado."

The bill also seeks to amend Section 109 (F) to become "Services by agricultural contract growers and milling for others of palay into rice, corn into grits and sugar cane into raw sugar or raw cane sugar."