1.

Under RA 9010 the following will be subject to EVAT starting January 1, 2003, except:
a.
b.
c.
d.

Professionals, actors, actresses, talent, singers, etc.

Banks and non-bank financial intermediaries
Services performed as professional athletes
Cabarets, night clubs and racetracks

2. Export of Marikina shoes is subject to:

a.
b.
c.
d.
3.

Assessment is necessary in the following cases, except:

a.
b.
c.
d.

4.

12% VAT
0% VAT
Exempt
Specific Tax

before the preliminary investigation of a fraudulent tax evasion case could prosper
to fix the tax liability of a taxpayer
establish a case for judicial action
for issuance of warrant of distraint or levy

The prescriptive period for collection of taxes is:

a. 10 years from discovery of omission to file return, falsity or fraud if there is no
assessment
b. 3 years from filing of return
c. 5 years from release of assessment
d. a and c are correct

5.

Importation of automobiles is subject to:

a.
b.
c.
d.
e.

6.

The manufacture and importation of the following for local consumption are subject to
excise tax, except:
a.
b.
c.
d.

7.

Graduated Ad valorem tax of 2% to 60%

VAT of 12%
Specific tax
a and b
Exempt

alcohol products
tobacco products
cinematographic films
mineral products

Domestic sale of bagoong is:

a.
b.
c.
d.

exempt from VAT

subject to 12% VAT if gross annual sales exceed P1.5M
subject to 0% VAT
subject to 3% percentage tax if exempt from VAT

e. b and d are correct

8.

The BIR commissioner may_________ payment of internal revenue tax when it appears
to be unjustly or excessively assessed, or that the administrative and collection costs
involved do not justify the collection thereof.
a.
b.
c.
d.

9.

No credit/refund of taxes shall be allowed unless the taxpayer:

a.
b.
c.
d.

10.

A written notice of the tax due

Based on facts and not presumed
Demand for payment of the tax within a prescribed period of time
All of the above

The following are required to keep books of accounts, except:

a.
b.
c.
d.

12.

Files a written claim for credit/refund with the BIR within 2 years from payment
Pays the tax under protest
Appeals to the CTA
Amends his tax return

Assessment is:
a.
b.
c.
d.

11.

compromise
abate
credit
refund

Corporations and partnerships

Persons engaged in trade or business in the Philippines
Persons who earn passive income
None of the above

Requirements in order that retirement benefits may be exempt from income tax:
a. Must be paid to an employee who is at least 50 years old and has served his
employer for at least 10 years
b. Exemption from taxation of retirement benefit must be availed of only once
c. The benefit must be received under an existing Collective Bargaining Agreement
d. a and b only

13.

For purposes of the donors tax, the following are considered strangers:
a.
b.
c.
d.

14.

Brother or sister, whether whole or half-blood

Relatives by consanguinity in the collateral line within the 4th civil degree
Relatives by affinity, except the spouse of the donor
None of the above

The special deductions from the gross estate are the following, except:
a. Judicial expenses in testate or intestate proceedings
b. Standard deduction

c. Family home up to P1,000,000

d. Medical Expenses within one year from the death of the decedent not exceeding
P500,000
15.

Funeral expenses that can be claimed as deduction from the gross estate should be:
a.
b.
c.
d.

16.

The usual modes of avoiding the occurrence of double taxation are:

a.
b.
c.
d.

17.

Actual amount incurred

Not exceeding P200,000
5% of the gross estate
The lowest of the above figures

Reciprocal exemption either by law or treaty

Tax credit for foreign taxes paid
Deduction for foreign taxes paid
All of the above

Jose is a law-abiding citizen who pays his real estate taxes promptly. Due to a series of
typhoons and adverse economic conditions, an ordinance is passed by Quezon City
granting a 50% discount for payment of unpaid real estate taxes for the preceding year and
the condonation of all penalties on fines resulting from the late payment.
Arguing that the ordinance rewards delinquent taxpayers and discriminates against prompt
ones, Jose demands that he be refunded an amount equivalent to one-half of the real estate
taxes he paid. The municipal attorney rendered an opinion that Jose cannot be reimbursed
because the ordinance did not provide for such reimbursement. Jose files suit to declare
the ordinance void on the ground that it is a class legislation.
Will his suit prosper?
a. The suit will prosper because the ordinance is discriminatory in character.
b. The suit will prosper because the ordinance is not based on substantial distinction.
c. The suit will not prosper because taxes are the lifeblood of the government and
should be collected without unnecessary hindrance.
d. The suit will not prosper because the ordinance is based on substantial distinction.
Each set of taxes is a class by itself and the law would be open to attack only if all
the taxpayers belonging to one class were not treated alike.
e. None of the above

18.

Which of the following statements are true?

a. Resident Filipino citizens with income from foreign sources only are allowed personal
and additional exemptions
b. Non-resident aliens not engaged in trade/business in the Philippines are not allowed
any personal exemptions
c. Non-resident aliens engaged in trade/business in the Philippines are allowed
personal exemptions based on reciprocity
d. All of the above

19.

The periodic decrease in the value of a fixed asset due to wear and tear, obsolescence
or inadequacy
a.
b.
c.
d.

20.

The following cases may not be compromised:

a.
b.
c.
d.

21.

depletion
depreciation
capital loss
special loss

Criminal tax fraud cases

Withholding tax cases
Delinquent accounts with duly approved schedule of payments
All of the above

Citing Section 10, Article VIII of the 1987 Constitution which provides that salaries of
judges shall be fixed by law and that during their continuance in office their salary shall not
be decreased, a judge of a Regional Trial Court questioned the deduction of withholding
taxes from his salary since it results into a net deduction of his pay.
Is the contention of the judge correct?
a. No. The contention is incorrect because taxes are enforced contributions.
b. No. The contention is incorrect because taxes must be collected in order to support
the government.
c. No. The contention is not correct because deduction of withholding taxes is not a
dimunition contemplated by the fundamental law.
d. No. The contention is incorrect because deduction of withholding taxes is required
by law.
e. None of the above.

22.

The following conditions shall be observed when there is a net capital loss carry over:
a. The loss carried over is for a holding period not exceeding 12 months
b. The amount of the loss should not exceed the income before exemptions in the year
when the loss was sustained
c. The taxpayer should not be a corporation
d. All of the above

23.

What is the minimum compromise rate in cases of doubtful validity of assessment?

a.
b.
c.
d.

24.

40% of the basic assessed tax

10% of the basic assessed tax
No limitation
P1,000,000

Which of the following VAT transactions are not considered zero-rated?

a. Export sales of goods
b. Domestic sale of goods in the regular course of trade or business
c. Foreign currency denominated sale

d. Sale of gold to Bangko Sentral ng Pilipinas

25.

Barbaran municipality has an ordinance which requires that all stores, restaurants, and
other establishments selling liquor should pay a fixed annual fee of P20,000. Subsequently,
the municipal board proposed an ordinance imposing a sales tax equivalent to 5% of the
amount paid for the purchase or consumption of liquor in stores, restaurants, and other
establishments. The municipal mayor refused to sign the ordinance on the ground that it
would constitute double taxation.
Is the refusal of the mayor justified?
a. No. The refusal of the mayor is unjustified because double taxation is allowed in our
jurisdiction.
b. No. The refusal of the mayor is not justified because the impositions are of different
nature and character.
c. No. The refusal of the mayor is unjustified because it is not within his power.
d. No. The refusal of the mayor is not justified because double taxation will generate
more revenues.
e. None of the above.

26.

This is a summary administrative remedy, seizure of real property to enforce payment of

tax due:
a.
b.
c.
d.

27.

Which of the following cannot be considered as tax avoidance?

a.
b.
c.
d.

28.

Splitting of donation
Survivorship agreement
Holding period for capital asset transactions
None of the above

Tony has inadvertently omitted P100,000 income in his 2004 Income Tax Return. Upon
discovery in 2005, the BIR issued an assessment for deficiency income tax for P100,000
plus 50% fraud surcharge. Meanwhile, Tony included the omitted P100,000 income in his
2005 Income Tax Return. What advice will you give Tony?
a.
b.
c.
d.

29.

Levy
Distraint
Forfeiture
Tax lien

Amend his 2004 Income Tax return to reflect the correct amount of income
Pay the assessed tax plus surcharge, and thereafter , ask for refund
Protest the assessment
Any of the above

Tino is engaged in buying and selling of fresh fruits at the Q-Mart and Aranque Markets.
He is also exporting canned and preserved fruits to Japan. In 2004, he made a gross sales
of P2,000,000. He is liable for VAT registration fee of :
a. P500
b. P1,000

c. P1,500
d. Exempt
30.

Shirley was allowed to deduct P200,000 bad debts written off in 2003, where she had a
net income before bad debts of P180,000 and a net loss of P20,000. IN 2004, she was able
to recover the bad debts written off in full. The bad debts recovery is:
a.
b.
c.
d.

Taxable to the extent of P180,000

Taxable to the extent of P20,000
Taxable to the extent of P200,000
Not taxable

ANSWERS
1. D
2. B
3. A
4. D
5. A
6. C
7. A
8. B
9. A
10. D
11. D
12. D
13. C
14. A
15. D
16. D
17. D
18. D
19. B
20. D
21. C
22. D
23. A
24. B
25. B
26. A
27. D
28. C
29. A
30. C