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Sample Computation: Illustration 2

Ms. Terry above, failed to signify her intention to be taxed at 8% income
tax rate on gross sales in her initial Quarterly Income Tax Return, and
she incurred cost of sales and operating expenses amounting to
P600,000.00 and P200,000.00, respectively, or a total of P800,000.00,
the income tax shall be
computed as follows:

Gross Sales/Receipts P1,100,000.00

Less: Cost of Sales 600,000.00

Gross Income P500,000.00

Less: Operating Expenses 200,000.00

TAXABLE INCOME P300,000.00

TAX DUE: On excess (P300,000 - P250,000) x 20%) P10,000.00

CONCLUSION: Aside from the income tax due above, Ms. Terry is
likewise liable to pay business tax.