BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 115

SUGGESTED ANSWERS
Chapter 15: EXCISE TAXES

CHAPTER 15
EXCISE TAXES
Problem 15 – 1
1. False – excise tax is also imposed on luxurious goods and mineral products.
2. False – excise tax imposed to vehicles is based on the value of the vehicles, hence, an
example of advalorem tax.
3. True
4. False – The primary purpose of excise tax is for regulation and protection.
5. True
6. False – P1 per kilo
7. False – 20% of the wholesale price.
8. True – It is the same as distilled spirits.
9. False – Excise tax is a business tax.
10. False – Excise tax is an indirect tax.
11. True
12. False – P10 per ton means based on measure, hence, specific excise tax.
13. False – subject to excise tax of P0.79 per kilo.

Problem 15 – 2
1. True
2. False – Excise tax is also imposed on imported goods.
3. False – Excise tax is paid upon transfer or release from the Bureau of Customs.
4. True
5. False – net retail price or retail price basically excludes VAT and excise tax.
6. False – LPG is a separate and distinct product from processed gas.
7. True
8. False – Alcohol products for medicinal purposes are exempt from excise tax.
9. False – The excise taxes imposed on imported articles are paid to the Bureau of Customs.
10. False – Subject to excise tax upon production or importation.
11. True
12. True

Problem 15 – 3
1. D 6. A 11. C
2. D 7. D 12. B
3. B 8. A 13. C
4. B 9. D 14. B
5. D 10. D

Problem 15 – 4 C
Total sales P 1,200,000
Divided by net retail price per cigar 600
Number of cigar sold at P600 each 2,000
Multiplied by excise tax on cigar sold at P600 each [P50 + (15% x 65
100)]
Total excise tax P 130,000

Problem 15 – 5
1. Not in the choices
Total sales excluding VAT (P159,500/1.12) P142,411
Divided by net retail price per liter 14.50
Number of liters produced 9,821
Multiplied by applicable excise tax per liter P 12.30
Excise tax P120,798
2. Not in the choices
Total sales including VAT P159,500
Add: Excise tax 120,798
Total amount of sales including VAT and excise tax P280,298

Problem 15 – 6 A
Excise tax (P11.65 x 200) P 2,330

Problem 15 – 7 D
Tax-exempt

Problem 15 – 8 A
Excise tax per proof liter P 11.65
Multiplied by proof liters (200 x 12 x 750/1,000) 1,800
Excise tax payable P20,970

Problem 15 – 9 B
First P2,100,000 P 512,000
Excess (P1,900,000 x 60%) 1,140,000
Excise tax P1,652,000

Problem 15 – 10 A
Exempt from excise tax, hence, P 0.

Problem 15 – 11 B
Local wholesale price P150,000
Multiplied by percent of excise tax 20%
Excise tax P 30,000

Problem 15 – 12 A
None

Problem 15 – 13 B
Excise tax on:
Bunker oils (20,000 liters x P0.30) P 6,000
Grease (2,000 x P4.50) 9,000
Lubricating oil (8,000 x P4.50) 36,000
Total P51,000
Less: Creditable excise tax on bunker oils 6,000
Excise tax P45,000

Problem 15 – 14 A
Zero

Problem 15 – 15
Excise tax per metric ton of coal P 10
Multiplied by metric tons of coal produced 1,000
Excise tax P10,000

Problem 15 – 16
Excise taxes:
For year 2005 and 2006: (100 x 50 x 10 x P25) P1,250,000

For year 2007 and 2008: (100 x 50 x 10 x P26.06) P1,303,000

For year 2009 and 2010: (100 x 50 x 10 x P27.16) P1,358,000

For year 2011: (100 x 50 x 10 x P28.30) P1,415,000

Problem 15 – 17
Excise tax:
(1,000 x 12 x .750 x P11.65) P 104,850
(1,000 x 12 x 1 x P252) 3,024,000
P3,128,850

Problem 15 – 18
a. (15,000,000/1,000) x P1 P 15,000
b. (1,000,000 x P0.79) 790,000
c. (50,000 x P2) 100,000
d. (100,000 x P6.35) 635,000
e. (5,000 x 500 x 10%) 250,000
Total excise tax P1,790,000

Problem 15 – 19
First P600,000 P 12,000
Excess (P200,00 x 20%) 40,000
Excise tax P 52,000

Problem 15 – 20
Purchase price per car P1,500,000
Custom duties 600,000
Mark-up (P2,100,000 x 30%) 630,000
Total P2,730,000
Add: Excise tax on P2,100,000 P512,000
Excess (P630,000 x 60%) 378,000 890,000
Total sales price inclusive of excise tax and VAT P3,620,000

Problem 15 – 21
Total kilograms of copper (1,000 tons x 25% x 1,000 kg.) 250,000
Multiply by world price per kilogram $0.60
Total in US dollars $ 150,000
Multiply by exchange rate of peso per dollar P50
Total P 7,500,000
Multiply by excise tax rate 2%
Excise tax P 150,000

Problem 15 – 22
Gold Copper Total
Quantity (tons of concentrate) 100 100
Multiplied by kilogram per ton 1,000 1,000
Total kilogram 100,000 100,000
Multiplied by gram per kilogram 1,000 1,000
Total grams 100,000,000 100,000,000
Multiplied by percent of metal content 0.02% 3.00%
Actual grams of metals 20,000 3,000,000
Multiplied by market price per gram $8 $0.01
Total in dollars $160,000 $30,000
Multiplied by peso rate per dollar P60 P60
Totals in pesos P9,600,000 P1,800,000
Multiplied by applicable excise tax rate 2% 1%
Excise tax P192,000 P18,000 P210,000