University of Makati

Midterm Examination
Taxation
January 28, 2019
Name: Score:

MULTIPLE CHOICE QUESTIONS:

1. The following except one, are basic principles of a sound tax system:
a. It should be capable of being effectively enforced.
b. It must be progressive.
c. Sources of revenue must be sufficient to meet government expenditures and other public needs.
d. It should be exercised to promote public welfare.
2. Statement 1- The point on which tax is originally imposed is impact of taxation.
Statement 2- Eminent domain is inferior to non-impairment clause of the constitution.
Statement 3- As a rule, taxes are subject to set-off or compensation.
Statement 4- As a rule, provisions on the validity of tax exemptions are resolved liberally in favor of the
taxpayer.

Statement 1 Statement 2 Statement 3 Statement 4

a. True False False True
b. False True True False
c. True True False False
d. False False True True
3. One of the characteristic of a tax is that it is generally:
a. Based on contract
b. Payable in money
c. Assignable
d. No Answer
4. Which one of the following is not among the basic principles of a sound tax system?
a. Theoretical Justice
b. Fiscal Adequacy
c. Administrative Feasibility
d. Assessment and collection of taxes
5. Which of the following statements is not correct?
a. Tax burdens shall neither be imposed nor presumed to be imposed beyond what the statute
expressly and clearly states because tax statutes should be construed strictly against the government.
b. Tax exemptions, tax amnesty, tax condonations, and their equivalent provisions are not presumed
and, when granted are strictly construed against the tax payer because such provisions are highly
disfavored by the government.
c. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able
to justify his claim or right.
d. The House of Representatives has the duty and exclusive power of constructing and interpreting tax
laws.
6. One of the following has no power to tax:
a. Province
b. City
c. Barangay
d. Government Corporation
7. Tax as distinguished from license fees:
a. Limited to cover cost of regulation

“Education is the passport to the future, for tomorrow belongs to those who prepare it for today.” ~
Malcolm X
 University of Makati
Midterm Examination
Taxation
January 28, 2019
b. A regulatory measure
c. Non-payment does not necessarily render the business illegal
d. Imposed in the exercise of police power
8. The power of taxation is exercised by:
a. The President
b. The Supreme Court
c. Bureau of Internal Revenue
d. Congress
9. When to file the individual income tax return of a fixed earner (employee)?
a. On or before April 15 of the current taxable year
b. On or before April 15 of the following taxable year
c. On or before May 15 of the current taxable year
d. On or before May 15 of the following taxable year
10. For filing a false and fraudulent tax return, a surcharge is imposed. Which of the following is correct?
a. 50% as administrative penalty
b. 50% as criminal penalty
c. 25% as administrative penalty
d. 25% as criminal penalty
11. The Bureau of Internal Revenue shall have a chief and four (4) assistant chiefs to be known as
a. Secretary and Assistant Secretaries
b. Secretary and Undersecretaries
c. Commissioner and Assistant Commissioners
d. Commissioners and Deputy Commissioners
12. Which of the following is not a source of tax laws?
a. Internal Agreement or Treaty
b. BIR Revenue Regulations
c. Supreme Court’s Decision
d. No given answer
13. Which of the following powers of the BIR Commissioner shall not be delegated?
a. The power to compromise or abate any tax liability.
b. The power to recommend the promulgation of rules and regulations by the Secretary of Finance.
c. The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the
Bureau.
d. All of the above.
14. 1st statement: All taxes imposed and collected by the Bureau of Internal Revenue are internal revenue
taxes.
2nd statement: The real estate tax is a local tax.
a. True, False
b. False, True
c. True, True
d. False, False
15. The sole owner of a business manufacturing company is known as:
a. Stockholder
b. Self- Employed
c. Fixed Earner
d. No Answer

“Education is the passport to the future, for tomorrow belongs to those who prepare it for today.” ~
Malcolm X
 University of Makati
Midterm Examination
Taxation
January 28, 2019
16. A fundamental law in taxation that prohibits a country from imposing taxes on the properties of a foreign
government/country.
a. International Law
b. Reciprocity
c. International Inhibition
d. International Comity
17. An individual got married but was legally separated, after two years from her spouse. Currently she lives
in a house, co-habiting with her boyfriend, living together as common law husband and wife. For income
tax purposes, her civil status is:
a. Head of Family
b. Married
c. Single
d. No answer
18. Which of the following is a source of national taxes?
a. Local tax code
b. Family code of the Philippines
c. National Internal Revenue Code
d. None of the above
19. Who is classified as resident citizen?
a. A foreigner who is residing in the Philippines.
b. A Filipino whose residence is in a foreign country.
c. A Filipino whose residence is in the Philippines.
d. None of the above
20. Under the following cases, except one, a working wife may claim the additional personal exemption for
dependent children, which is the exemption?
a. The husband has no income of his own.
b. The husband has no compensation income but has business income.
c. The husband waived the additional exemption in favor of the wife.
d. The husband is a non-resident citizen and his income is derived from abroad.
21. Which of the following dependent will qualify a single taxpayer to claim additional exemption?
a. Taxpayer’s brother, 22 years old, unemployed, unmarried, living with him and dependent upon him
for support.
b. Taxpayer’s sister, 18 years of age, unemployed, unmarried, living with his parents, but dependent
upon him for her studies.
c. Taxpayer’s illegitimate son, 12 years old, unemployed, single, living with him and dependent upon
him for support.
d. Answer not given.
22. For income tax purposes, who of the following can claim additional personal exemption?
a. Married individual who has a dependent minor child.
b. Married but legally separated individual with a dependent mother and brother.
c. Single individual with a nephew dependent.
d. Married individual even if he has no children.
23. Who among the following is a non-resident alien?
a. An alien who comes to the Philippines for a definite purpose which in its nature maybe promptly
accomplish.
b. An alien who comes to the Philippines for a definite purpose which in its nature would require an
extended stay.

“Education is the passport to the future, for tomorrow belongs to those who prepare it for today.” ~
Malcolm X
 University of Makati
Midterm Examination
Taxation
January 28, 2019
c. An alien who has acquired residence in the Philippines.
d. An alien who lives in the Philippines with no definite intention as to his stay.
24. Which of the enumerated tax payers can claim allowed personal exemption only if there exist a
reciprocity clause/law between the Philippines and his country?
a. Non-resident citizen
b. Resident Alien
c. Non-resident alien not engaged in business in Philippines
d. Non-resident alien engaged in business in Philippines

PROBLEM SOLVING:

a. 500,000

“Education is the passport to the future, for tomorrow belongs to those who prepare it for today.” ~
Malcolm X