Choose the letter of the correct answer.

Principles

1Value added tax

a. Is an indirect national tax levied on the value added in the production. od (or

service) as it moves through the various stages of production.

D. ls ad valorem tax.

C. Is preferred in place of a personal income tax by many economists becauiea

taxes are a disincentive to work, whereas a VAT discourages unn essary

consumption.

d. All of the above.

Answer: D

2. Which of the following is incorect?

a. An article exempt from vat may be exempt from percentage tax

b. An article subjected to excise tax may be subjected to vat

C. An article subjected to vat may be subjected to percentage tax

d. None of the above

Answer: C

If an article is exempt from vat and at the same time not in the list of transactons

Subject to Percentage Taxes (sections 116-127), such article is exempt business

tax such as but not limited to:

sale of agricuitural marine food products at its original state

sale of fertilizers, poultry feeds

sale of books

Excise tax is in addition to vat or Percentage Tax

An article may be subjected to either vat or percentage tax, but same article cand

be subjected to both vat and percentage tax. A taxpayer (individual or corporalior

however, may be engaged in transactions that are subject to vat and transaios

subject to percentage taxes (mixed transactions). What is prohibited 5

transacton or article" is subjected to vat and percentage tax