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.UP College of Law FINAL EXAMINATION SPIT Oct. 20, 2011

A. Answer, in not more than three (3) sentences, the following questions: 1. A lessor of GQmmer.dal property has to meet two (2) thresholds - the PI0,000 rent per month per unit and the P1.5 million gross rental for twelve months. Is the statement correct? (3%) Juan Moreno is an insurance broker for Insular life Insurance Company. During the year 2010,

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his gross commissions from the insurance company totaled P2 Million. He dld not register as a V6J__p.er:son because he claimed an insurance broker is not included among the brokers listed in Section 108 of the T!3x Code. Moreover, 3. he sells life insurance policies. Is he correct? (4%)

ABC Corporation is the owner/operator of a lll9viehouse in Quezon City. In 2010, it derived gross receipts in the amount of Pl.O Million from its showing of films, foreign and local. It did not register as a VAT person nor did it pay any value added tax on its gross receipts therefrom. An informer reported to SIR that the corporation does not pay VAT. Can the BIR assess the corporation for deficiency VAT? (4%) A person, who is engaged in build-and-sell of residential house and lot and who in 2010-sold two {2) such houses and lots at P2.5 Million each, shall be subject to 12% varue added tax because his gross sales is more than P1.5 Million. True or false? (3%) James Porneron, a British national residing in London, delivered a five-day lecture to Filipino ....executi~es on leadership in Makati Shangri-la Hotel on December 1-5, 2010. For this lecture, he was paid P!.&_M..illion by the local organizer as his professional fee. Is the sale of service by a non-resident alien subject to 12% value added tax? What is the tax obligation of the organizer who paid the fee? (8%)

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5.

6.

Thegross receipts of the Spouses Jose and Maria Sanchez in 2010 are shown below: a. b. Jose - Barbershop Maria - Beauty Parlor TOTAL P1,800,OOD.OD 200,000.00 P2,000,OOO.OO Are they liable to pay the 12% value added tax?

The spouses did not register as a VAT persoll. (6%)

Once a person registers as a VAT person, he is already liable to pay the 12% value added tax on all his sales of goods or services, even if the gross sales or receipts do not exceed Pl.S M. True or false? (5%) 8. A VAT-registered person who sells taxable goods to the government performing governmental functions shall not pass on the 12% value added tax to the government. True or false? (3%)

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~ a.12 and by deducting the result from the total invoice amount to arrive at the amount of value added tax. A person who sold canned goods (P1.000) in a public market to final consumers in 2010 is liable to pay the 12% value added tax.Smiliion. what kind of business tax is he liable to? (6%) 10. where the gross receipts exceed during the year. Sale of vegeta~es Pi0 million. VAT is imposed in all levels of importation. one. Which statement i~ true? ® ~ VAT iS~im~osed on transactions made in the course oftrade or business.2 Million) and dried fish (P400. X Corporation is a PEZA-registered enterprise in Laguna Technopark engaged in the manufacture of stainless products that are exported abroad. The following statements characterize the Philippine value added tax system~ for one: notebook opposite the a. VAT is impose~n manufacturers and traders of goods sold in the Philippines. although the service Sale of service by a non-resident Pl. The following transactions. VALUE ADDED TAX Answer the following questions by writing the letter in your examination number. VAT is an indirect tax that is presumed to be passed forward to the buyer of the taxable goods or services. Is it correct to pay the VAT? If not. manufacture. d.A ~ perso~ from five (5) residential apartments being leased to tenants. Sale of ~mmerciallo! by a real estate developer at a gross sell'ing ~rice of P2 million. are subject to value added tax: alien in the Philippines. True or false? If your answer is false. and distribution of taxable goods. although he issued non-VAT sales invoices.g. VAT is presumed to be part of the total invoice amount and it may be determined by dividing the total involce amount by 1. ~uf'~ Rental income of PSO. VAT does not cascade because the input taxes are allowed to be credited against output tax for the period. b. ~~M 2 \oq{J) .5% each} 1. VAT is computed through the invoice or tax credit method. 4. for one. Receipt of PS million by a contractor fPom a contr~dke ~ut hMh 'i~'M ® d.i ~ The following transactions. {2. X Corporation paid 12% value added tax on its export sales of finished products and loca I sales of scrap materials.~t a. it has scrap materials that are sold to customers in the customs territory.Wtct" i. regardless of his gross sales for the year. what is its remedy? (8%) B.OOO month derived by a non-VAT-registered per t-t. A VAT-registered person is liable to pay VAT. areSt from value added tax: ~ by a fa. lG~ ~~ Wlqtut ~~o.'.rmer in Ba~uio City whose gross sales during the year amounted to . if 3. d. c. 2. 6. was done and completed in the following year. In the course of its manufacturing the finished products. " b.

provided he issues non-VAT invoices or receipts on these exempt sales.2 million during the year and rental income from lease of residential house and lot in Makati at PIOO. V~ ~ (~~ .2 mitMon. PI million. the year amounted to P5 ttr~ r09W 5. b. loqC~1 J and gross receipts from the operation of a barbershop. A VAT-registered person is liable for VAT on his taxable sales of goods and services.. d J~ Bata~gas whose ~ross sales during . A lawyer who receives retainer fees from clients in the amount of PI million during the year \9 7e / ~tM bf~ Br-te. term "gross receipts" includes the following ite rns. Delivery charges collected from the customer. buyer. d! a. income on sales on installments of the assets.OOO. A non-VAT-registered person who issues a VAT sales invoice for his exempt transaction is liable to pay VAT on that otherwise exempt sale. once he exceeds the PI. d. .llv'\ .'~tJ-M . Amount of compe~OIti8F1 or fee paid by the customer to the real estate broker. by the lessee.S million. d.@ Sale of . term "gross selling price" includes the following items. Security deposit made by the lessee to answer for possible damages on the leased property. t V (cu loq toll \ W 'Vl41 ~ ~ Lu) "M'n 6.qOOper month.S million threshold prescribed by law. One of the following statements iSS ® a. Non-registrationas a VAT person does not exempt a taxpayer from VAT. 3 . except one: t \. Sale of coffee beans by a farmer in Cavite whose gross sales during the year amounted to P1. fc\ 9. E@j?osits made by the contractee to the contractor for the construction work to be done. b. except one: .Gvt:fittU The practice of law is subject to VAT in the following a. Advance renta~paid & Interest a.1111> tJ\ ~'-J added tax passed on by the seller to the Value the a.~s PI. / tax shall be made in the following case: The 5% final withholding Purchase of a residential lot by an individual-buyer P. / / b. ~ agency from a gas station operator. \ •'dJV\ -\'" \ . Sale of cows by a farmer million. A lawyer who practices his profession has gross receipts of Pl.IJ \09(:ii) by a farmer in Baguio City whose gross sales during the year amounted to .6mlll~ c. A general professional partnership of lawyers whose gross receipts during the year amounted to P2. P550.8 million andl from the practice of his profession.government from a developer. but is not liable for VAT on his exempt transactions. The amount of the consideration for the sale of the goods.!] iqput tax on that transaction. MV\ A lawyer who is employed by a I&al company with a salary and bonus of Pl.urchase of gasoline by a. A VAT-registered person who purchased agricultural food products in their original state but was issued a VAT sales invoice !_:Iyhe seller is entitled to clai.~C\AXJt1AA. ~t in one instance: ~Q/'f'Not - r..~.Cl. d. cases. (Q'1(A)c.

Services of a bar review center for enrolled bar reviewees. Purchase taxable goods or services in the Philippines from another VAT-registered b. 15. ~ --~--~~~~~~~~--- ay file a written claim for tax credit within c. ~ . Not sell VAT-exempt goods or services. Purchase of appliance by an individual from an appliance dealer. ~lJW ~ Admission fees for showing movies in theaters and movie h~.~o customers. regardless of his gross sales for the preceding 12-months. Make a sale of taxable goods or services in the Philippines at a profit. 12.5 million.yan employee to his employer. b. fxce§one: ~ 10. A VAT-registered corporationthat shortens its corporate life may file a written claim for tax credit or refund within two years from the date of its dissolution. Personal services b. rf he does not issue a VAT invoice and his gross sales for the preceding 12d. Subject to VAT. One of the statements ~1J~Gl ') IO~{jl below is correct. b. Importation to VAT. if his gross sales for the preceding 12-months do not exceed Pl. d. Purchase of services by a local corporation from a non-resident alien. ~ c. vailable to a taxpayer that has ~used 14. Medical and laboratory services by a hospital or clinic to its customers. Which statement <t. d. whether it is for business or personal use in the Philippines.5 million for the preceding 12 months is entitled to the following input taxes excep one: 4 . 13. transactions are exempt from VAT. Importation d. Issue VAT invoice or receipt for his sales of taxable goods or services. b. A VAT-registered exporter may file a written claim for refund within two years from the close of his taxable quarter.1 r~al estate developer that becomes liable to value added tax upon e eeding th eshold of /jP1. The follo~ing a. To be subject to VAT.' ~ c. \ ) 11. even if he did not register as a VAT person. 'a.-. Im-portation of cows with a value of PS million by a food processing company is liable to VAT. a.S million and he did not register as a VAT person. if his gross sales for the preceding 12-months exceeded P1.arepa!!. ~ of sQ. a VAT-registered person must: person. Exempt from VAT.c. r X. Exempt from VAT. X fC) b. of roses from the Netherlands valued at Pl million by a flower dealer is not liable ~ i~ ~ c.S of automobiles by a car dealer is not subject to VAT. Which statement e is correct? Importation of taxable goods is8sUbject to VAT. A VAT-registered person may carry over his excess input taxes to the following quarter{s}. One of the remedies here is at excess input taxes: two years uarter. months amounted to Pi million.1~ ~ The sale of canned goods by a public market vendor is: ~ Always subject to VAT.

Whoamongthe following taxpayersi8to VAn M. Representing the amount of the security agency fees. 18.') 12% input tax credit on machinery and equipment . In Hle'~mount 10) residential houses and lots at P2 million ~ and fiv!a_(5) commercial lots at PJ50. (d. Transitional input tax of 2% of the value of inventory of lands._) magiZlnes LtAf R" . a bookstore sold~ana lO'lC. or 12% of such value. A five-star hotel that offers its luxurious vehicles to its hotel customers is: 5 I .) ~fl~' rcJ During sUDplies!_Pl million.a.. roads. without any VAT invoice or receipt. A bookstore owner who did not register as a '(JATpe~on with the BIR and whose gross sales during the year amounted to Pi million. ( b. Representing the amount of salaries to be paid to the security agency's guards: c. with a VAT invoice or receipt. without any VAT invoice or receipt. .u:tpatients. net of the amount for the salaries of the ur. b. or 12% of such value. b. 116 of the Tax Code but is exempt from VAT? a. During the year. without any VAT invoice or receipt. the year.ity guards of the agency. . is" 0 lo~Ot) 1 nql~) L7'1 D9 ( r) 17. of P2 mill1. building. A dealer of raweggs who did not register as a VAT person with the BIR and whose gross sales during the year amounted to Pi million. loqUj ro A repair shop owner who did not register as a VAT person with the BIR and whose gross ~ceipts during the year amounted to Pi million. inclusive of the value added tax. During the year.electric post. drainage. During the year..P2 million and from teQ (10) commercial stalls at PiO. with a VAT invoice or receipt. with a VAT invoice or receipt. a real estate developer sold ten \oq(j) '-. b. xcJusive 0 U frl'\ the value added tax. Pi million. t~ qCPt) . or 12% of such value.2 million. provided that it is properly segregated in the invoice or bill.OOOper stallP1. net of the amount for the salaries of the security guards of the agency.OOO per room or unit . A vegetable dealer who did not register as a VAT person with the BIR and whose gross sales of during the year amounted to Pi million. Representing the amount of the security agency fees. \dntr~ctor ~D~ ~ located abroad purchased from a foreign 16. c. a real estate lessor received rental income from leases of twenty (20) residential houses at Pl0. 19. etc). a hospital sold medicines to in~patients in ~ount o. Transitional input tax of 2% of the value of inventory of construction materials and supplies..g. Representing the total amount received from the client. provided that it is properly segregated in the invoice or bill. Who among the following taxpayers is liable to pay the 3% percentage tax under Sec. A security agency is liable to 12% VAT on gross receipts: a. Transitional input tax of 2% of the value of inventory of improvements (e.Qnand to of P5 million and s~ a..QQQ_gach loS d. \_()q l-(Z) d.

\E)Not d. c. V .'~ the generation charges and companies. r. . .a. 12% VA~ on its gros~ receipts from customers~ generation companies. 5% franchise tax on its gross receipts. END 6 . Liable to the 3% common carrier's tax and 12% VAT on its gross receipts. liable to the 3% common carrier's tax but liable to 12% VAT on its gross receipts.::''\12% the generation charges paid to . Liable to the 3% common carrier's tax on its gross receipts. d. 12% VAT on its entire gross receipts from customers~g transmission charges collected for the generation an~ission b. Liable to the 2% franchise tax on its gross receipts. distribution company granted by Congress a franchise to operate in the Metro Manila o~power a(~ is liable to: a. V generation VAT on its gross receipts from customers. 2. xcludin the generation charges paid to companies and transmission charges pal to a transmission company.

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