BUSINESS AND TRANSFER TAXES

Chapter 9 PERCENTAGE TAXES 1

I. TRUE OR FALSE
1. The 3% general percentage tax applies to non-VAT registered taxpayers.
2. If the gross annual sales exceeded the threshold of P3,000,000, the value added tax shall begin to
apply.
3. The term “gross revenue” means cash actually or constructively received.
4. Discounts are deducted and allowances are added to the gross receipts to determine the taxable
gross receipts.
5. If a taxpayer did not avail of the Optional VAT registration, he shall be subject to the 3% percentage
tax.
6. The taxpayer, with several branches or place of business, but all subject to the percentage tax, must
file a separate return for each branch or place of business.
7. There may be instances when a taxpayer has two business returns in a month/quarter i.e.,
percentage and VAT returns.

II. MULTIPLE CHOICE/STRAIGHT PROBLEMS

1. Which of the following is not a percentage tax?
a. Tax on banks and non-bank financial intermediaries performing quasi-banking functions
b. Tax on agents of foreign insurance companies
c. 2% tax on persons exempt from the value-added tax
d. Tax on other non-bank financial intermediaries

2. Which of the following is true?

a. A monthly percentage tax return must be filed and the tax paid within 1 month after the end of
the month.
b. An annual percentage tax return must be filed and the tax paid within 1 month after the end of
the last month of the calendar year.
c. A monthly percentage tax return must be filed and the tax paid within 20 days after the end of
the month.
d. An annual percentage tax return must be filed and the tax paid within 20 days after the end of
the last month of the calendar year.

3. Mimi’s gross annual sales did not exceed the P3,000,000 threshold. For the month, she had the
following:
Gross sales P200,000
Sales returns 10,000
Sales discounts 15,000
How much is the percentage tax?

4. The taxpayer began his business in 2017. He did not register as a VAT taxpayer because he did not
anticipate that his gross sales for the year will exceed P3,000,000. He had sales of P1,000,000 and
cost of sales of P400,000 in 2018. How much was his tax on his business for the year?

5. Jaydee had gross sales of P3,000,000 in 2018. In the first month of 2019, his gross sales amounted to
P450,000, any tax not included, with purchases from VAT-registered supplier at 60% of the selling
price, value-added tax not included. For 2018, how much is the VAT/percentage tax of Jaydee?

6. Given the following, determine the net effect of the decision to register as a VAT taxpayer.
Sales P400,000
Purchases from VAT-registered persons P200,000
Expenses, paid to VAT-registered persons P120,000

7. Using the information from number 5, determine the net effect of the decision not to register as a
VAT taxpayer but instead pay the 3% percentage tax.
 BUSINESS AND TRANSFER TAXES
Chapter 10 PERCENTAGE TAXES 2
I. TRUE OR FALSE
1. The sale of water by water utility franchise grantees is subject to VAT.
2. The sale of stocks directly to buyer is subject to percentage tax.
3. The sale of stocks by a dealer through the PSE is subject to percentage tax.
4. There is a 3% franchise tax on a television broadcasting company having annual gross receipts from the
preceding year of P10,000,000.
5. All amusement activities are subject to amusement taxes.
6. The taxes on winnings shall be based on the actual amount paid to him on every winning ticket before
deducting the costs of the ticket.

II. MULTIPLE CHOICE/STRAIGHT PROBLEMS

1. LMCS Co. is a holder of a franchise to operate a television network. Its gross receipts in 2018 was
P9,500,000. In the first month of 2019, it has gross receipts of P650,000 and total payments to VAT
suppliers of goods and services of P170,000, taxes not included. How much is the percentage tax for the
month?

2. Using the information from No.1 and the taxpayer opted to be a value-added taxpayer, how much is the
VAT payable?

3. Aubrey operates a cabaret. Gross receipts were:

Received from patrons dancing on the dance floor P600,000
Received from alcoholic beverages and softdrinks purchased by patrons 300,000
Received for food purchased by patrons 200,000
The percentage tax is?

4. Mrs. Petra hit the trifecta with a pay-out of P58,000 from her P100 ticket. How much will she receive
from her winning?