NATIONAL TEACHERS COLLEGE

SCHOOL OF BUSINESS & ACCOUNTANCY

Quiapo, Manila

Taxation Special Topics – Final Examination

February 26, 2021 5:00 – 7:00 PM

Name: ________________________________ Raw Score: ________ Rating: _____________

Student #:_____________ Section: _________ Date:_________________________________

Test I: Multiple Choice Questions

1. To encourage investments in desirable areas of activity, EO 226 provides incentives to the

following:
MNCs establishing their regional
warehouses in the Philippines. False False False True
Enterprises locating in export processing zones. True False True True
Enterprises registered with the BOI. True True True True
Enterprise locating in less developed
areas (LDA) False True True True
MNCs establishing their RHQs/ROHQs
in the Philippines. False False False True

2. Statement 1: RA 7916 of the Special Economic Zone Act of 1995 (February 24, 1995)
provides the framework for the transformation, formation and monitoring of certain
designated areas in the country called special economic zone (ecozones) where companies
and industries establishing their operations therein are given incentives and privileges.
Statement 2: Enterprises locating or operating within the ecozones shall register with the
Philippines Economic Zone Authority (PEZA) and are entitled to similar incentives granted
as provided for under PD 66 or those provided under EO 226 (Omnibus Investment Code).
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement 1 is correct.
d. Only statement 2 is correct.

3. _________ are registered enterprises engaged in the manufacture, processing or production

of commodities or raw materials that are not yet being produced in the Philippines on a
commercial scale.
a. Export-oriented enterprises
b. Non-pioneer enterprises
c. Pioneer enterprises
d. Multi-national companies

4. For BMBE purposes, the concerned officer shall cancel the registration of a BMBE for the
following cause, except
a. When the BMBE voluntarily surrenders its certificate to the issuing authority
b. When the BMBE established warehouse outside the locality
c. When the BMBE transfers its place of business to another locality
d. When the value of its total assets as determined exceeds P3,000,000.

5. Statement 1: The office of the Treasurer of each city or municipality shall register the
BMBEs and issue a Certificate of Authority (effective for a period of 2 years, renewable for a
period of 2 years for every renewal) to enable the BMBE to avail of the benefits under the
law. Statement 2: LGUs shall issue the Certificate of Authority promptly and free of charge.

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 However, to defray the administrative costs of registering and monitoring BMBEs, the LGUs
may charge a fee not exceeding P1,000.
a. Both statements are correct
b. Both statements are incorrect
c. Only statement 1 is correct
d. Only statement 2 is correct

6. Which of the following statements is not a requirement in order for private establishments
employing senior citizens to be entitled to additional deduction from gross income equivalent
to 15% of the total amount paid as salaries and wages to senior citizens?
a. The employment shall have to continue for a period of at least o ne year
b. The annual taxable income of the senior citizen does not exceed the poverty level
as determined by the NEDA.
c. Both statements “a” and “b”
d. Neither “a” nor “b”

7. Which of the following statements is correct?

a. New registered firms under the Board of Investments enjoys income tax holiday
for 6 years from commercial operations for pioneer firms and 4 years for non-
pioneer firms.
b. The income tax holiday may be further extended not to exceed 8 years (maximum
ITH) upon meeting certain conditions.
c. For PEZA registered enterprises, the income tax holiday is same with BOI
registered companies in general.
d. All of the above

8. Which of the following statements is incorrect?

a. BOI registered companies are subject to 5% gross income tax in lieu of national
and local taxes.
b. After income tax holiday period, BOI registered companies are treated as ordinary
corporations.
c. BOI registered companies are subject to zero rated (0%) VAT.
d. None pof the above

9. Statement 1: The PEZA law specifically provides that the Ecozone shall be managed and
operated by PEZA (not by any other government entity) as a separate custom territory.
Statement 2: In keeping the status of Ecozone as separate custom territory, the PEZA is
conferred the power and function to operate, administer, manage and develop the Ecozone,
and to register, regulate and supervise the enterprises in Ecozones.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement 1 is correct.
d. Only statement 2 is correct.

10. Incentive to enterprises located in export processing zones

a. BOI-registered enterprises incentives.
b. Exemption from local taxes and licenses except real estate taxes.
c. Foreign merchandise, raw materials, equipment, spare parts, etc., brought into the
zone shall not be subject to customs and internal revenue laws and regulations nor
to local tax ordinances.
d. All of the above.

11. Statement 1: Any person, cooperative, or association owning an enterprise that fits the
description of a BMBE may register for the first time or renew its registration with the Office
of the Treasurer of the city or municipality where the business is located. Statement 2: For
BMBEs, registration as a business entity or enterprise from the appropriate government
agency such as SEC, CDA, DTI as well as securing business permit from city/municipality is

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 still required. Statement 3: Local government units (LGUs) are encourage to either reduce the
amount of local taxes, fees, and charges imposed or exempt BMBEs from local taxes, fees or
charges.
a. All statements are correct
b. All statements are incorrect
c. Only statements 1 and 2 are correct
d. Only statements 1 and 3 are correct

12. _________ is a selected area with highly developed enterprises or which have the potential to
be developed into agro-industrial, industrial, tourist/recreational, commercial, banking,
investment and financial centers.
a. Investment Priorities Plan (IPP)
b. Pioneer enterprises
c. Special economic zones (Ecozones)
d. Less developed areas (LDA)

13. _________ refers to the most recent list of the thirty (30) poorest provinces of the Philippines
at the time of application, as determined by the National Economic Development Authority
(NEDA).
a. Less Develop Areas (LDA)
b. Investment Priorities Plan (IPP)
c. Special Economic Zones (Ecozones)
d. Pioneer Enterprises

14. Which of the following statements pertaining to Pioneer Enterpeises under EO 226 is
correct?
a. Pioneer enterprises are also engaged in the pursuit of agricultural, forestry and
mining activities and/or services and energy sectors.
b. Pioneer enterprises also involves the use of a design, formula, method, process or
system of production or transformation of any element, substance or raw material
into another raw material or finished goods which is new and untried in the
Philippines.
c. Pioneer enterprises are registered enterprises engaged in the manufacturing,
processing or production of commodities or raw materials that are not yet being
produced in the Philippines on a commercial scale.
d. All of the above.

15. Which of the following incentives may be granted to BMBEs?

a. Income tax exemption from income arising from the operations of the enterprises
b. Technology transfer, production and management training and marketing
assistance programs for BMBE beneficiaries
c. Exemption from the coverage of the Minimum Wage Law
d. All of the above

16. ________ is defined as any business enterprise engage in production, processing, or

manufacturing of products, including agro-processing as well as trading and services, with
total assets of not more than P3,000,000. Such assets shall include those arising from loans
but not the land on which the plant and equipment are located.
a. Ecozones
b. Barangay Micro Business Enterprises
c. PEZA registered enterprises
d. RHQs/ROHQs of MNCs

17. Statement 1: Any donation, bequest, subsidy or financial aid which may be made to
government agencies engaged in the rehabilitation. Statement 2. The 20% discount on
purchase of food and drinks, beverages, dessert and other consumable items served by

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 establishments includes value meals and other similar food counters, fast food and short
orders including take outs.
a. Both statements are correct
b. Both statements are incorrect
c. Only statement 1 is correct
d. Only statement 2 is correct

18. Statement 1. While the 20% senior citizen discount and vat exemption shall not apply to
“children’s meals” as these are primarily prepared and intentionally marketed for children, if
the PWD is a child, the 20% PWD discount will be applicable as long as it is for his personal
consumption. Statement 2. The 20% discount on purchases of food and drinks, beverages,
dessert and other consumable items served by establishments includes value meals and other
similar food counters, fast food, cooked food and short orders including takeouts.
a. Both statements are correct
b. Both statements are incorrect
c. Only statement 1 is correct
d. Only statement 2 is correct

19. Statement 1: BOI registered enterprises are subject to 5% gross income tax in lieu of national
and local taxes, except real property tax. Statement 2. PEZA registered enterprises are subject
to 5% gross income tax in lieu of national and local taxes, except real property tax.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement 1 is correct.
d. Only statement 2 is correct.

20. Which of the following incentives, in addition to tax exemptions, is/are granted to BOI
registered enterprises?
I. Tax credit on tax and duty portion of domestic breeding stocks and generic materials.
II. Tax credits on raw materials and supplies.
III. Additional deductions for labor and expenses (ADLE)
a. I only
b. I and II only
c. II and III only
d. I, II and III

21. Statement 1. If a taxpayer I, classified as PWD, is unable to make his own return, the return
may be made by his duly authorized agent or representative or by the guardian or other
person charged with the care of his person or property. Statement 2. The principal (PWD)
and his representative or guardian shall assume the responsibility of making the return and
incurring penalties provided for erroneous, false, fraudulent returns. Statement 3. The
privilege in Statement 1 and transfer of responsibility in Statement 2 is likewise available to a
senior citizen taxpayer.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Only statement 3 is correct
d. None of the statements is correct

22. Private entities that employ disabled persons who meet the required skills or qualifications,
either as a regular employee or learner, shall be entitled to an additional deduction from gross
income equivalent to:
a. 15% of the total amount paid as salaries and wages to PWDs
b. 50% of the total amount paid as salaries and wages to PWDs
c. 100% of the total amount paid as salaries and wages to PWDs
d. 25% of the total amount paid as salaries and wages to PWDs

23. Which of the following incentives is/are granted to BOI registered enterprises?

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 I. Income Tax Holiday (ITH)
II. Exemption from taxes and duties on imported spare parts.
III. Exemption from wharfage dues and export tax, duty, impost and fees.
IV. Tax exemption from breeding stocks and genetic materials.
a. I and II only
b. III and IV only
c. I, II, and III only
d. I, II, III, and IV

24. Which of the following incentives is/are granted to BOI registered enterprises?
I. Tax exemptions
II. II. Tax credits
III. Additional deductions from taxable income
a. I only
b. I and II only
c. II and III only
d. I, II and III

25. Which of the following is/are a non-fiscal incentives granted to BOI registered enterprises?
I. Employment of foreign nationals
II. Simplification of customs procedures
III. Unrestricted use of consigned equipment and multiple entry visa
a. I only
b. I and II only
c. II and III only
d. I, II and III

26. Statement 1: To attract foreign and domestic investors into the country, the government
usually offers various tax incentives, principally through the Board of Investments (BOI)
pursuant to EO 226 as amended, otherwise known as the Omnibus Investments Code of
1987. Statement 2: The overall declaration of government policy on investment initiatives
under EO 226 includes investments made by foreign and local investors, providing for
incentives, fiscal and non-fiscal, to preferred areas of investments, pioneer or non-pioneer,
export production as well as rehabilitation or expansion of existing operation. Statement 3:
Non-fiscal incentives include, among others, employment of foreign nations, simplification
of customs procedure, unrestricted use of consigned equipment and multiple entry visa.
a. Only statements 1 and 2 are correct
b. Only statements 1 and 3 are correct
c. All statements are correct
d. All statements are incorrect

27. Statement 1. New registered firms may avail of bonus year. Statement 2. I no case shall the
registered pioneer firm avail of the ITH for a period exceeding eight (8) years.
a. Both statements are correct
b. Both statements are incorrect
c. Only statement 1 is correct
d. Only statement 2 is correct.

28. Income Tax Holiday (ITH) for BOI registered enterprises presupposes that it shall be exempt
from the payment of income taxes reckoned from the scheduled start of commercial
operations until the period given by the BOI has lapsed. Which of the following ITH period
is correct?
I. Six (6) years for new projects with pioneer status
II. Four (4) years for new projects with non-pioneer status
III. Three (3) years for expansion projects
a. I and II only
b. II and III only

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 c. I and III only
d. I, II and III

29. Statement 1: EO 226 otherwise known as the Omnibus Investment Code of 1987, is a
relatively focused and systematic grant of incentives based on an Investment Priorities Plan
(IPP). Statement 2: The IPP is an annual listing of activities/undertakings considered critical
to the attainment of the country’s overall economic growth and development.
a. Both Statements are correct
b. Both statemets are incorrect
c. Only statement 1 is correct
d. Only statement 2 is correct

30. BONUS