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BUSINESS TAXATION
3. International air or shipping carriers doing business in the Philippines – 3% of quarterly gross receipts
on transport of goods and services only
4. Franchise
a. Radio and/or television broadcasting companies whose annual gross receipts of the preceding year do
not exceed P10,000,000.00 ----------------------------------------- 3%
b. gas and water utilities ------------------------------------------------ 2%
7. Life insurance
- Non-life insurance companies – subject to VAT
- Premium tax of 2% on the total life insurance premium collected whether in money or notes, credits, or
any substitute for money
Exemptions:
a. premium refunded within six months after payment on account of rejection of risk or returned for
other reasons to a person insured
b. reinsurance premium paid by a company that has already paid the tax
c. premiums collected or received by any branch of a domestic corporation, firm or association doing
business in the Philippines on account of any life insurance of an insured who is a non-resident, if any
tax on such premium is imposed by the foreign country where the branch is established
d. reinsurance premiums, if the insured of personal insurance resides outside the Philippines, if any tax on
such premium is imposed by the foreign country where the original has been issued or perfected;
e. portion of the premium collected or received by insurance companies on variable contracts in excess of
the amount necessary to insure the lives of variable contract owners
9. Amusement tax
Amusement Place Tax
Place of boxing exhibitions 10%
Place for professional basketball games 15%
Cockpits, cabarets, night or day clubs 18%
Jai-alai and race tracks 30%
Coverage: income from gross receipts, including income from television, radio and motion picture rights
Exemption on boxing:
a. World or Oriental Championship (international) titled boxing bout in any division
b. At least one contender is a Filipino Citizen
c. Promoter is a Filipino citizen or corporations which is at least 60% owned by Filipino citizens
10. Winnings
Tax
Winnings in horse races or jai-alai 10%
Double forecast, quinella, and trifecta bets 4%
Owner of winning horse 10%
11. Sale, barter, exchange of shares through the Philippine Stock Exchange
1) On a sale, barter, exchange or other disposition of shares listed and traded through a local stock
exchange, other than by a dealer in securities ------------------
BEFORE TRAIN LAW 1/2 of 1% AFTER: 6/10 of 1%
2) On the sale, barter, exchange or other disposition thru initial public offering (IPO) of shares of stock of
a closely held corporation in accordance with the percentage of shares sold, bartered or exchanged or
otherwise disposed of to the total outstanding shares of stock after the listing in the local stock
exchange:
a. Up to 25% ---------------------------------------------------- 4%
b. Over 25% but not over 33.333% ------------------------- 2%
c. Over 33.333% ------------------------------------------------ 1%
Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or
properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts
exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00).
A person required to register as VAT taxpayer but failed to register
Any person, whether or not made in the course of his trade or business, who imports goods
OUTPUT VAT
What is Output Vat?
It is the VAT due on sale or lease of taxable goods or properties or services by any person registered as
VAT entity.
Transaction Tax Base
Sale of goods Gross Selling Price
Sale of services Gross Receipts
Importation Landed Cost
2. Transactions deemed sales (constructive sales) – 12% of the fair market value as determined by the CIR
a. Consignment of goods which remain unsold within 60 days
b. Transfer, use or consumption not in the ordinary course of business of goods or properties originally intended
for sale or for use in the ordinary course of business
Examples:
a) Withdrawal of goods for personal use
b) Distributions to shareholders or investors as share in the profits
c) Transfers to creditors in payment of debt or obligation
c. Retirement from or cessation of business with respect to all goods on hand, whether capital goods,
stock in trade, supplies or materials, as of the date of such retirement or cessation
a) Change in business ownership – i.e.: incorporation of a sole proprietorship and sale of a business.
b) Dissolution of a partnership and formation of another to take over the business.
d. Cessation of status as VAT taxpayer
The Commissioner of Internal Revenue shall determine the appropriate tax base under the following instances:
a. transactions deemed sales
b. barter or exchange of goods
c. the selling price is unreasonably lower than actual market value (lower by more than 30% of the FMV)
NOTE: Regardless of whether the following are actually exported, the sales of the following are not subject to
zero-rating
1. Automobiles
2. Non-essential goods
a. Jewelry, peal, precious and semi-precious stones and imitations
b. Perfume and toilet waters
c. Yachts and other vessels for pleasure
INPUT VAT
What is Input Vat?
It is the VAT due from or paid by a VAT registered entity in the course of trade or business on purchase,
importation, lease or use of goods, properties or services from a VAT supplier.
*NOTE: For an input tax to be credited, it must be supported by purchases evidenced by VAT invoice from VAT
registered supplier.
2. Transitional input VAT – 2% of BI subject to VAT or actual VAT paid in BI whichever is higher
4. Deferred Input VAT – unamortized balance of input VAT on purchases of depreciable capital goods
5. Withheld final VAT – final VAT of 5% of government withheld by the government, any of its political
subdivisions, instrumentalities, including GOCCs (to be remitted within 10 days following month of
withholding)
6. Input VAT Carry-over – excess of input VAT over output VAT in any period
Advanced Input VAT – applicable for manufacturers or processors of refined sugar, flour and timber
VAT PAYABLE
Output tax minus input tax to arrive at VAT payable on a monthly VAT declaration and the quarterly VAT
returns.
INVOICING REQUIREMENTS
A taxpayer who is in business subject to the VAT should have his invoice and receipts registered with the
BIR clearly indicated there in the taxpayer’s identification number. Such invoices and receipts shall clearly indicate
whether he is subject to VAT or not subject to VAT or if engaged in both non-VAT and VAT transactions two
invoices clearly indicating the nature of the sale.
SUBSTANTIATION REQUIREMENTS
a. Importation – Import Entry
b. Domestic purchases or sale – Invoice
c. Sale of real property – Deed of Sale
d. Sale of services – Official Receipts
B. Percentage Tax
General rule: within 20 days of each taxable month
Exceptions:
1. Overseas communication tax – 20 days end of quarter
2. Amusement tax – 20 days end of quarter
3. Tax on winnings – 20 days from date of withheld
4. ½ of 1% stock transaction tax – 5 banking days from the date withheld by the broker
5. IPO stock transaction tax (4%,2%;1%) – within 30 days from listing in the local stock exchange
Tax Form
BIR Form 2550M - Monthly Value-Added Tax Declaration (February 2007 ENCS)
Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source
(SAWT), if applicable
Procedures
1. Fill-up BIR Form No. 2550M in triplicate copies (two copies for the BIR and one copy for the taxpayer)
2. If there is payment:
File the Monthly VAT declaration, together with the required attachments, and pay the VAT
due thereon with any Authorized Agent Bank (AAB) under the jurisdiction of the Revenue
District Office (RDO)/Large Taxpayers District Office (LTDO) where the taxpayer (head
office of the business establishment) is registered or required to be registered.
The taxpayer must accomplish and submit BIR-prescribed deposit slip, which the bank teller
shall machine validate as evidence that payment was received by the AAB. The AAB receiving
the tax return shall stamp mark the word "Received" on the return and machine validate the
return as proof of filing the return and payment of the tax.
In places where there are no duly accredited agent banks, file the Monthly VAT declaration,
together with the required attachments and pay the VAT due with the Revenue Collection
Officer (RCO) or duly authorized Treasurer of the Municipality where such taxpayer (head
office of the business establishment) is registered or required to be registered.
The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt
upon payment of the tax.
3. If there is no payment:
File the Monthly VAT Declaration, together with the required attachments with the
RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly
authorized Municipal/ City Treasurer of Municipality/City where the taxpayer (head
office of the business establishment) is registered or required to be registered.
Deadline
Manual Filing
Not later than the 20th day following the end of each month
Group B
Manufacture and Repair of Furniture 24 days following the end of the
month
Manufacture of Basic Metals
Manufacture of Chemicals and Chemical Products
Manufacture of Coke, Refined Petroleum & Fuel Products
Manufacture of Electrical Machinery & Apparatus N.E.C.
Manufacture of Fabricated Metal Products
Manufacture of Food, Products & Beverages
Manufacture of Machinery & Equipment NEC
Manufacture of Medical, Precision, Optical Instruments
Manufacture of Motor Vehicles, Trailer & Semi-Trailers
Manufacture of Office, Accounting & Computing
Machinery
Manufacture of Other Non-Metallic Mineral Products
Manufacture of Other Transport Equipment
Manufacture of Other Wearing Apparel
Manufacture of Paper and Paper Products
Manufacture of Radio, TV & Communication
Equipment/ Apparatus
Manufacture of Rubber & Plastic Products
Manufacture of Textiles
Manufacture of Tobacco Products
Manufacture of Wood & Wood Products
Manufacturing N.E.C.
Metallic Ore Mining
Non-Metallic Mining & Quarrying
Group C
Retail Sale 23 days following the end of the
month
Wholesale Trade and Commission Trade
Sale, Maintenance, Repair of Motor Vehicle, Sale of
Automotive Fuel
Collection, Purification and Distribution of Water
Computer and Related Activities
Real Estate Activities
Group D
Air Transport 22 days following the end of the
month
Electricity, Gas, Steam & Hot Water Supply
Postal & Telecommunications
Publishing, Printing & Reproduction of Recorded Media
Recreational, Cultural & Sporting Activities
Recycling
Renting of Goods & Equipment
Supporting & Auxiliary Transport Services
Group E
Activities of Membership Organizations, Inc. 21 days following the end of the
month
Health and Social Work
Public Admin & Defense Compulsory Social Security
Research and Development
Agricultural, Hunting, and Forestry
Farming of Animals
Fishing
Other Service Activities
Miscellaneous Business Activities
Unclassified
Tax Form
BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS)
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source
(SAWT), if applicable
Procedures
1. Fill-up BIR Form 2550Q in triplicate copies (two copies for the BIR and one copy for the taxpayer)
2. If there is payment:
File the Quarterly VAT Return, together with the required attachments, and pay the VAT due
thereon with any AAB under the jurisdiction of the RDO/LTDO where the taxpayer (head
office of the business establishment) is registered or required to be registered.
The taxpayer must accomplish and submit BIR- prescribed deposit slip, which the bank teller
shall machine validate as evidence that payment was received by the AAB. The AAB receiving
the tax return shall stamp mark the word "Received" on the return and machine validate that
return as proof of filing the return and payment of the tax.
In places where there are no duly accredited agent banks, file the Quarterly VAT Return,
together with the required attachments and pay the VAT due with the Revenue Collection
Officer (RCO) or duly authorized Treasurer of the Municipality where such taxpayer (head
office of the business establishment) is registered or required to be registered.
The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon payment of the
tax.
3. If there is no payment:
File the Quarterly VAT Return, together with the required attachments with the
RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly
authorized Municipal/City Treasurer of Municipality/City where the taxpayer (head
office of the business establishment) is registered or required to be registered.
Reminders:
1. Only one consolidated Monthly VAT Declaration/Quarterly VAT Return shall be filed covering the results of
operation of the head office as well as the branches for all lines of business subject to VAT.
2. The Quarterly List of Sales and Purchases shall be submitted in magnetic form using 3.5-inch floppy diskette
following the format provided under Section 4.114-3(g) of RR No. 16-2005.
3. The Quarterly List of Sales and Purchases shall be submitted through electronic filing facility for taxpayers under
the jurisdiction of the Large Taxpayers Service (LTS) and those enrolled under the eFPS.
Deadline
Within twenty five (25) days following the close of taxable quarter.
Documentary Requirements
1. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
2. Duly approved Tax Debit Memo, if applicable
3. For amended return, proof of payment and the return previously filed
4. Authorization letter, if filed by an authorized representative
Procedures
Proceed to any Authorized Agent Bank (AAB) located within the territorial jurisdiction of
the Revenue District Office (RDO) where the taxpayer is registered and present the duly
accomplished BIR Form 2551M, together with the required attachments and payment. The
Percentage Tax shall be paid at the time the return is filed by the taxpayer.
In places where there are no AABs, the duly accomplished BIR Form 2551M, together with
the required attachments and payment, shall be filed/paid with the Revenue Collection
Officer (RCO) or duly authorized Treasurer of the city or municipality where said business
or principal place is located.
Receive the taxpayer's copy of BIR Form 2551M duly validated/stamp-received by the
AAB/RCO/authorized City or Municipal Treasurer.
For eFPS filers, you may click this Job Aid in filling and payment thru said system.
1. If there is no payment:
Proceed to the RDO where the taxpayer is registered or with the concerned RCO and
present the duly accomplished BIR Form 2551M, together with the required attachments.
Receive the taxpayer's copy of BIR Form 2551M duly stamp-received by the RDO
representative.
Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid
at the concerned AAB.
When to File/Pay
Manual Filing
Electronic Filing
For taxpayers enrolled with the Electronic Filing and Payment System (eFPS), in accordance with the schedule set
forth in RR No. 26-2002 as follows:
Group A : Twenty five (25) days following the end of the month
Group B : Twenty four (24) days following the end of the month
Group C : Twenty three (23) days following the end of the month
Group D : Twenty two (22) days following end the of the month
Group E : Twenty one (21) days following the end of the month
Tax Form
BIR Form 2551Q - Quarterly Percentage Tax Return
Documentary Requirements
1. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
2. Duly approved Tax Debit Memo, if applicable
3. For amended return, proof of payment and the return previously filed
4. Authorization letter, if filed by an authorized representative
Procedures
Receive the taxpayer's copy of BIR Form 2551Q duly validated/stamp-received by the
AAB/RCO/authorized City or Municipal Treasurer.
For eFPS filers, you may click this Job Aid in filing and payment thru said system
3. If there is no payment:
Proceed to the Revenue District Office where the taxpayer is registered or with the
concerned RCO and present the duly accomplished BIR Form 2551Q, together with the
required attachments.
Receive the taxpayer's copy of BIR Form 2551Q duly stamp-received by the RDO representative.
Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid at
the concerned AAB.
When to File/Pay
Manual Filing
Within twenty (20) days after the end of each taxable quarter
Electronic Filing
Within twenty (20) days after the end of each taxable quarter
8. Free Company, a resident business, renders services to Mr. Erlwin, a resident person who is not engaged in
business.
9. Heidenberg Corporation, a resident business, purchased P 100,000 goods from Kiwi Company, a non-resident
business. Which of the following pay consumption tax on this transaction?
a. Heidenberg Company
b. Kiwi Corporation
c. Both A and B
d. Neither A nor B
EXEMPT CONSUMPTION
1. First statement: “VAT-exempt transactions” refer to the sale of goods or properties and/or services and the
use or lease of properties that is not subject to VAT (output tax) and the seller is not allowed any tax credit of
VAT (input tax) on purchases.
Second statement: The person making the exempt sale of goods, properties or services shall not bill any
output tax to his customers because the said transaction is not subject ot VAT.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
2. Which of the following goods when sold or imported shall not be exempt from VAT?
a. agricultural and marine foods products in their original state
b. livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption
c. breeding stock and genetic materials therefore
d. processed or manufactured agricultural and marined food products
3. Which of the following shall be considered livestock for VAT-exempt transactions purposes?
I – cows II – bulls and calves III – pigs IV – sheep V – goats VI – rabbits
a. all of the above c. all of the above except VI
b. none of the above d. I, II and III only
4. Which of the following shall not be considered as poultry for VAT-exempt transactions purposes?
a. Fowls b. ducks and geese c. fighting cocks d. turkey
5. Which of the following are not considered livestock or poultry for VAT-exempt transactions purposes?
I – fighting cocks II – race horses III – zoo animals IV – other animals generally
considered as pets
a. I, II, III and IV b. I, II, and III only c. I and II Only d. II, III and IV only
6. Marine food products shall include fish and crustaceans, such as, but not limited to which of the following?
I – eels II – trout III – lobster IV – shrimps V – prawns VI – oysters
VII – mussels VIII – clams
a. All of the above c. III, IV and V only
b. None of the above d. VI, VII and VIII only
10. Meat, fruit, fish, vegetables and other agricultural and marine food products shall be considered in their original
state even if they have undergone the simple process of preparation or preservation for the market. Which of
the following shall be considered as simple processes of preparation or preservation for the market?
I – freezing II – drying III – salting IV – broiling V – roasting VI – smoking VII – stripping
a. all of the above c. I, II, III, and IV only
b. None of the above d. All of the above except IV and V
11. Meat, fruit, fish and vegetables and other agricultural and marine food products shall be considered in their
original state even if they have undergone advanced technological means of packaging. Which of the following
shall not be considered as advanced technological means of packing?
a. shrink wrapping in plastics c. tetra-pack
b. vacuum packing d. freezing
12. Which of the following shall be considered as agricultural products in their original state and shall be exempt
from VAT?
I – polished and/or husked rice III – raw cane sugar and molasses V – copra
II – corn grits IV – ordinary salt VI – bagasse
a. I, II, III, IV, V and VI c. I and II only
b. I, II, III, IV and V only d. III and IV only
13. Which of the following sale or importation of goods shall not be exempt from VAT?
a. fertilizers
b. seeds, seedlings and fingerlings
c. fish, prawns, livestock and poultry feeds, including ingredients, whether locally produced or imported, used
in the manufacture of finished feeds
d. specialty feeds
14. This refers to non-agricultural feeds and foods for race horses, fighting cocks, aquarium fish, zoo animals and
other animals generally considered as pets
a. Fertilizers c. specialty feeds
b. fish, prawn, livestock and poultry feeds d. pet feeds
15. First statement: Services subject to (other) percentage taxes shall not be subject to VAT.
Second statement: services by agricultural contract growers and milling for others of palay into rice, corn into
grits, and sugar cane into raw sugar are exempt from VAT
a. both I and II are correct c. Only I is correct
b. neither I nor II is correct d. Only II is correct
16. This refers to those persons producing for others poultry, livestock or other agricultural and marine foods
products in their original state
a. agricultural contract growers c. agricultural operators
b. millers d. fishpond operators
17. First statement: Medical, dental, hospital and veterinary services, including laboratory services, except those
rendered by professionals are exempt from VAT
Second statement: if the hospital or clinic operates a pharmacy or drug store, the sale of drugs and medicine is
subject to VAT
a. both I and II are correct c. Only I is correct
b. neither I nor II is correct d. Only II is correct
19. The exemption from VAT of educational services does not include:
I – seminars II – in-service trainings III – review classes
IV – other services rendered by persons who are not accredited by DepEd, the CHED and/or the TESDA
a. I, II , III and IV b. I, II, III only c. I and II only d. IV only
22. The importation of farm machineries and equipment is exempt when imported by
a. a member of a cooperative.
b. a trader engaged in business.
c. an agricultural cooperative.
d. A or C
23. Who has the burden of proving exemption from VAT on importation?
a. The government c. The seller
b. The importer-buyer d. Both A and C
24. A farm supply dealer made the following sales during a month:
Fertilizer P 45,000
Hybrid corn and rice seeds 65,000
Pesticides 120,000
Water pumps and hand tractors 240,000
Total P 470,000
In January 2015, Mang Andrew purchased 12 live hogs for P180,000 from Mang Manso and sold these to
customers for P320,000.
27. A restaurant reported the following revenues and receipt in May 2016:
28. 888 Canning Company produces canned sardines but sells raw excess fish during peak fishing seasons or
preserves them by sun-drying and sells them to the local market.
29. Rodel Masipag is a vegetable trader. He buys raw vegetables from farmers and sells them to consumers.
30. A small “sari-sari” store has annual receipts of P80,000 on the average. It had a sales of P3,000 from sales of
candies and P5,000 from the sales of cigarettes.
32. Rovin Store made the following sales during the month:
33. Mr. Kwon imports Korean vegetables and sells them in the domestic market for Korean residents in the
Philippines. The following data relates to his operations during the period:
35. Mr. Louisville, an Australian foreign student, sold his cellphone for P50,000. What is the business tax payable?
a. None.
b. P1,500 percentage tax
c. P6,000 VAT
d. Excise tax plus P6,000 VAT
36. A printing press had the following revenues and collections during the month:
Revenue Collection
Books P 200,000 P 180,000
Advertising magazines 250,000 150,000
Election campaign materials 700,000 400,000
Tarp 80,000 80,000
Total P 1,230,000 P 810,000
37. Mr. Panzer is both employed and self-employed. He had the following income receipts during the month:
38. An insurance agent had the following receipts during the month:
40. Mr. Dobbie has a pet shop. In April 2016, he made a sales of P300,000 from sales of pets, P120,000 for pet
feeds, and P20,000 for pet toys. Mr. Dobbie is also a practicing veterinarian. He derived additional P80,000
professional fees.
41. Don Chicken is a food franchise with most food menus offering chicken as an ingredient. Don Chicken
contracted Mr. Barako to produce the chicken needs of its entire food franchise. To control quality, Don
Chicken gives Mr. Barako the chicks. Mr. Barako raises the chicks for 40 days, then delivers them to Don
Chicken. Don Chicken paid Mr. Barako P400,000 for the first delivery of chickens.
42. Camiguin is a realty development company. It bought an agricultural lot from Panay Realty Corporation for
P1,000,000 and contracted Aliling Construction Company to construct a residential house on the lot. Camiguin
paid Aliling P1,500,000. Camiguin sold the house and lot to a buyer for P3,000,000.
43. Quezon Review School, a non-VAT professional review school, provides preparatory courses to accountancy
graduates who will take the CPA Exam. During the month, it collected a total receipt of P300,000.
44. Malakas Shipping Company leases two of its ferry boats to Mactan Superferries, a domestic transport company.
Which is the correct statement?
a. The rental income of Malakas Shipping is exempt from business tax.
b. The gross receipt of Mactan Superferries on transport of passengers is exempt from business tax.
c. The gross receipt of Mactan Superferries on transport of cargoes is exempt from business tax.
d. Both Malakas Shipping Company and Mactan Superferries are vatable.
45. Assuming that Malakas Shipping Company in the immediately preceding problem is a non-resident lessor,
which is a correct statement?
a. The rental income of Malakas Shipping Company is subject to final withholding VAT.
b. The gross receipt of Mactan Superferries on transport of passengers is exempt.
c. The gross receipt of Mactan Superferries on transport of cargoes is exempt.
d. Both Malakas Shipping Company and Mactan Superferries will be required to pay VAT.
46. St. Louis Elementary School, a non-profit religious educational institution, collected P2,000,000 tuition fees
from students in June 2015. Which statement is correct?
a. The tuition fee is subject to percentage tax.
b. The tuition fee is subject to VAT.
c. The tuition fee is exempt from both percentage tax and VAT.
d. The tuition fee is subject to both percentage tax and VAT.
47. Theresita’s High School (THS), a public school, collected a total of P3,000,000 tuition fees on October 2014.
48. Centermall leases commercial spaces to various businesses on its mall. Receipts for the month are as follows:
49. Mariz Leasing Company leases residential houses with the following rentals for each unit per month:
50. In the immediately preceding problem, what is the business tax liability of Mariz Leasing Company?
a. Percentage tax c. Percentage tax and VAT
b. VAT d. Excise tax
51. Excel Realty made the following sales of properties during the year:
52. Mr. Alabang owns a 400-unit dormitory near a university. Each boarder pays a rental of P4,000 each month.
53. Mr. Dauz is a dealer of cars. In June 2015, he sold two cars for P1,700,000 and sold his principal residence for
P5,000,000.
Green residence and Blue residence are adjacent and were sold to two unrelated buyers.
55. Gold Realty Corporation sold two adjacent commercial lots to the same buyer. The first lot is worth P1,000,000
while the second lot is worth P800,000.
56. A private hospital admitted a senior citizen. Total amount due before discharge was P112,000.
VAT ON IMPORTATION
57. Mr. Beer, a VAT-registered trader, imported equipment with a dutiable value of $40,000 from abroad. The
importation was subject to P100,000 BOC charges before 10% customs duties on dutiable value. The exchange
rate to the Peso was P43.00: $1.
58. If an importer paid 15% customs duties in the amount of P24,000 plus P134,000 charges to the Bureau of
Customs, what is the VAT on importation?
a. P 0 c. P 35,280
b. P 18,960 d. P 38,160
59. Shanum Company had the following data regarding its importation:
60. Mr. Dolinger imported various merchandise from abroad. The importation was invoiced at $ 5,000. Mr.
Dolinger also incurred the following costs of importation:
Insurance P 4,000
Freight 15,000
Wharfage fee 4,000
Arrastre charge 7,000
Brokerage fee 8,000
Facilitation fee 5,000
Mr. Dolinger was also assessed P 24,000 and P 18,000, respectively, for customs duties and excise tax. The
applicable exchange rate was P42.50:$1.
10. Don Pepito imported a harvester from the United States with a total cost of P1,100,000 before Customs duties.
The importation is subject to 10% Customs duties. What is the VAT on importation?
a. P 158,400 c. P 129,600
b. P 145,200 d. P 0
11. In the immediately preceding problem, assuming that the importation is made by an agricultural cooperative,
what is the VAT on importation?
a. P 158,400 c. P 129,600
b. P 144,000 d. P 0
13. Mr. Juan Manuel Marquez arrived in the Philippines with an immigration visa. He had with him the following:
14. Mr. Xhi, a non-VAT taxpayer, made the following domestic purchases of goods:
15. Atlantis Shipping Company imported P 3,000,000 worth of vessel fuels and supplies for domestic use. The
company earmarked 60% of this for domestic use while 40% was reserved for its international operations.
What is the VAT on importation?
a. P 0 c. P 216,000
b. P 144,000 d. P 360,000
BUSINESS TAXATION
1. A VAT-taxpayer made the following sales during the month:
3. Mrs. Bote sells cakes to jeepney drivers who patronize her hot and sweet cakes. During the month, Mrs. Bote
sold P 300,000 worth of cakes and collected P280,000. What is the amount to be reported for business tax
purposes?
a. None c. P 300,000
b. P 280,000 d. Indeterminable
6. Statement 1: Both the husband and the wife are subject to either VAT or percentage tax.
Statement 2: The husband may pay VAT while the wife may pay percentage tax.
11. When the receipts from services specifically subject to percentage tax exceeds the VAT threshold, future
receipts from these services are
a. exempt from percentage tax.
a. still subject to the same percentage tax.
b. subject to VAT.
c. Subject to 3% percentage tax.
12. A non-VAT person with exempt sales exceeding the VAT threshold is still
a. Exempt from business tax on exempt sales
b. Exempt from VAT on all its sales
c. Exempt from percentage tax on all sales
d. A and B
13. A VAT-registered person who exceeded the VAT threshold will pay
a. VAT
b. Percentage tax
c. Both A and B
d. Either A or B at his discretion
14. The mandatory or voluntary registration as VAT taxpayers under the special threshold is
a. revocable anytime.
b. revocable after the lapse of three years.
c. revocable within a year.
d. perpetually irrevocable.
15. Mandatory or voluntary registration as a VAT taxpayer under the general threshold is
a. revocable anytime.
b. revocable after the lapse of three years.
c. revocable within a year.
d. perpetually irrevocable.
16. Mrs. Belle, self-employed, generated the following receipts during the year:
18. Mr. Julio, employed, received the following from his employer:
Proceeds of property insurance P 200,000
Proceeds of bank loan 300,000
Compensation income 500,000
19. Mr. Jun Kim, a security broker, effected the sales of several securities of Kim Jong-un. The following relates to
the sale:
Sales Commission
Sale of stocks P 120,000 P 1,200
Sale of bonds 280,000 2,800
Total P 400,000 P 4,000
Compute the amount of receipts or sales of Mr. Jun Kim subject to business tax.
a. P 0 c. P 400,000
b. P 4,000 d. P 404,000
20. Assuming Kim Jong-un is an investor in stocks, what is the amount subject to business tax?
a. P 0 c. P 400,000
b. P 4,000 d. P 404,000
21. Mr. Masipag had annual gross receipts not exceeding P100,000. During the month, he made the following sales:
22. Mr. Kim Jong, a security dealer, sold the following during the month:
23. JDC Corporation, a merchandiser, had the following sales during the month:
24. Mang Indio has a sari-sari store with P500,000 annual sales. He had the following sales during the month:
25. Mr. McCullot is a consultant. During the month, he had only one client from which he derived the following
receipt:
26. Mang Pandong is a farmer. He sold his agricultural land costing P200,000 for P1,000,000 to start a palay trading
business. What is the amount subject to business tax?
a. P 0 c. P 800,000
b. P 200,000 d. P1,000,000
27. Ms. Cumacaliua is concurrently employed at Cumanan Corporation and Paatras Company. She received the
following during the month:
Cumanan Paatras
Professional fees P 50,000 P 40,000
Less:
Creditable withholding tax 7,000 6,000
Loan repayment - 12,000
SSS, PhilHealth, HDMF 3,000 -
Net pay P 40,000 P 22,000
28. Effective 2015, Kanlaon Corporation, a VAT-taxpayer, changed its accounting period to a fiscal year ending
every August 30. What is the deadline for the first quarter VAT return under the new accounting period?
a. September 25, 2015 c. November 25, 2015
b. January 25, 2016 d. December 25, 2015
29. In the immediately preceding problem, the third quarterly VAT return shall be filed on or before
a. May 20, 2016. c. June 20, 2016.
b. May 25, 2016. d. June 25, 2016.
30. Atty. Saturday Sabado and Atty. Sunday Domingo formed a general professional partnership for the exercise of
their legal profession. Their partnership Sabado-Domingo Law Office started operation on July 1, 2015 as a
VAT taxpayer. The partnership adopted the calendar year basis.
The professional partnership shall file its first monthly VAT return on
a. July 20, 2015 c. August 20, 2015
b. July 10, 2015 d. August 30, 2015
31. In the immediately preceding problem, what is the deadline of the first quarterly VAT return?
a. July 30, 2015. c. August 25, 2015.
b. August 30, 2015. d. October 25, 2015.
32. A service provider had the following income during the month:
Which of these properly reflect the monthly reporting of a non-VAT service provider?
January February March
a. P 170,000 P 240,000 P 640,000
b. P 200,000 P 250,000 P 220,000
c. P 180,000 P 240,000 P 220,000
d. P 200,000 P 250,000 P 670,000
34. Which of these properly reflect the monthly reporting of a non-VAT seller of goods?
January February March
a. P 170,000 P 240,000 P 230,000
b. P 200,000 P 250,000 P 220,000
c. P 170,000 P 240,000 P 640,000
d. P 200,000 P 240,000 P 230,000
35. Which of these properly reflect the monthly reporting of a VAT service provider?
January February March
a. P 180,000 P 240,000 P 640,000
b. P 200,000 P 250,000 P 220,000
c. P 170,000 P 240,000 P 640,000
d. P 200,000 P 250,000 P 670,000
36. Which of these properly reflect the monthly reporting of a VAT seller of goods?
January February March
a. P 170,000 P 240,000 P 230,000
b. P 200,000 P 240,000 P 670,000
c. P 170,000 P 250,000 P 640,000
d. P 200,000 P 250,000 P 230,000
37. Chemrex Company, a non-VAT taxpayer paying 3% percentage tax, exceeded the VAT threshold on September
2014. Chremrex generated P300,000 and P400,000 sales in October and November and paid respectively P
12,000 and P28,000 input VAT in these months. Chemrex immediately registered to the VAT system at the start
of November 2014.
Compute the business tax payable in October, assuming no claim for tax credit was filed.
a. P 9,000 c. P 27,000
b. P 24,000 d. P 36,000
38. Compute the business tax payable in October, assuming Chemrex claimed for tax credit and was approved by
the BIR.
a. P 9,000 c. P 27,000
b. P 24,000 d. P 36,000
39. Compute the business tax payable in October, assuming Chemrex filed a claim for tax refund.
a. P 9,000 c. P 27,000
b. P 24,000 d. P 36,000
41. A non-VAT taxpayer paying 3% percentage tax received P104,000 cash and P6,000 CWT from the sale of
services. Compute the percentage tax.
a. P 3,000 c. P 3,204
b. P 3,120 d. P 3,300
42. A VAT-taxpayer received a P52,000 plus P4,000 creditable withholding tax certificate. What is the output VAT?
a. P 5,571 c. P 5,820
b. P 5,760 d. P 6,000
43. A restaurant sold to a senior citizen who was accompanied by adult persons. The total price of their order
totaled P3,360. Compute the amount to be billed.
a. P 3,240 c. P 3,040
b. P 3,136 d. P 3,000
VAT ON SALES
1. Value Added Tax is a/an
a. Indirect Tax b. Direct Tax c. Local Tax d. Personal Tax
2. One of the following is not a major business internal revenue tax in the Tax Code
a. VAT b. Excise Tax c. Income Tax d. Percentage Tax
3. The value – added tax due on the sale of taxable goods, property and services by any person whether or not he
has taken the necessary steps to be registered
a. Input Tax b. Output Tax c. Excise Tax d. Sales Tax
4. It means the VAT due or paid by a VAT-registered person on importation of goods or local purchases of
goods, properties or services, including lease or use of properties, in the course of trade or business
a. Output tax b. Input tax c. Deferred input tax d. VAT payable
6. 1st Statement: The term “in the course of trade or business” means the regular conduct of pursuit of a commercial or
economic activity, excluding transactions incidental thereto, by person who operate business solely for profit
2nd Statement: Non – resident persons who perform services in the Philippines are deemed to be making
sales in the course of trade or business, even if the performance of service is not regular
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
OUTPUT VAT
9. Which of the following input taxes can be refunded, converted into tax credit certificates or carried over to the
next quarter at the option of the VAT registered taxpayer
a. Input tax on purchase of raw materialsc. Input tax on zero – rated sales of goods or services
b. Input tax on importation of supplies d. Input tax on purchase of services
10. 1st Statement – Any person who, in the course of his trade or business, sells, barters, exchanges or leases goods
or properties, or renders service, and any person who import goods, shall be liable to VAT
2nd Statement - In the case of importation of taxable goods, the importer, whether an individual corporation
and whether or not made in the course of his trade or business, shall be liable to VAT
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
11. 1st Statement – For VAT purposes, a taxable person is any person liable for the payment of VAT, whether
registrable in accordance with the tax code.
2nd Statement – The status of a “VAT – registered person” as a VAT – registered person shall continue until
the cancellation of such registration
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
12. Which of the following shall be included in the term “goods or properties”?
I – Real properties whether or not held primarily for sale to customers or held for lease in the ordinary course
of trade or business
II – The right or the privilege to use patent, copyright, design or model, plan, secret formula or process,
goodwill, trademark, trade brand or other like property or right
III – The right or the privilege to use any industrial, commercial or scientific equipment
IV – The right or the privilege to use motion picture film, films, tapes and discs; and
V – Radio, television, satellite transmission and cable television time.
a. I, II, III, IV and V c. II, III, IV and V only
b. I, III, and V only d. I only
13. In the case of sale of real properties on the installment plan, the real estate dealer shall be subject to VAT on
the:
a. Selling price;
b. Selling price or fair market value whichever is lower
c. Selling price of fair market value whichever is higher
d. Installment payments, including interest and penalties, actually or constructively received by the seller
14. 1st statement – In the case of sale of real property on the deferred payment basis, not on installment plan
(initial payments exceed 25% of the gross selling price), the transaction shall be treated as cash which makes the
entire selling price taxable in the month of sale.
2nd statement – Transmission of property to a trustee shall not be subject to VAT if the property is to be
merely held in trust for the trustor and/or beneficiary.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
15. Mr. Andres, VAT-registered real estate dealer, transferred a parcel of land held for sale to his son as gift on
account on his graduation. For VAT purposes, the transfer is:
a. not subject to VAT because it is a gift
b. subject to VAT because it is a deemed sale transaction
c. not subject to VAT because it is subject to gift tax
d. subject to VAT because it is considered an actual sale
16. Which of the following is not included in the term “gross selling price”?
a. Total amount of money or its equivalent paid by the purchaser
b. Delivery, freight and insurance paid by the purchaser
c. Value-added tax passed on by the seller to the buyer
d. Excise tax
17. In case of sale, barter or exchange or real property subject to VAT, the term “fair market value” shall mean:
a. the fair market value as determined by the Commissioner of Internal Revenue (zonal value)
b. the fair market value as shown in the schedule of values of the Provincial and City Assessor (real property
tax declaration)
c. whichever is lower between the zonal value and the value per real property tax declaration
d. whichever is higher between the zonal value and the value per real property tax declaration
18. 1st statement: If the gross selling price is based on the zonal value or market value of the property, the zonal or
market value shall be deemed inclusive of VAT.
2nd statement: If the VAT is not billed separately, the selling price stated in the sales document shall be deemed
to be inclusive of VAT
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
19. Taxpayer operates a Grocery Store and is not – VAT registered. His annual gross sales amounted to P1,919,500
for the year although his operations resulted to net loss for the year 2016. He is subject to
a. 3% OPT b. VAT c. MCIT - 2% d. None, operation is a loss
2. A VAT-taxpayer sold goods for P40,000 which excludes a P1,000 delivery charge and VAT. The buyer paid
P30,000 downpayment and promised to pay the P11,000 balance plus the VAT in 30 days.
3. A VAT-taxpayer compiled the following for the purpose of filing his BIR Form 2550M:
7. A non-VAT taxpayer prepared the following summary of sales for the purpose of filing his BIR Form 2551M:
9. A VAT-registered service provider prepared the following list of cash collections during a month:
10. A VAT-registered seller indicated the following in a VAT invoice evidencing the sale of vegetables:
11. In the immediately preceding problem, compute the output VAT assuming the sale is made by a non-VAT
seller.
a. P 0 c. P 6,520
b. P 600 d. P 6,720
12. A VAT-registered building contractor who reports under the calendar year basis had the following billings and
collections(inclusive of VAT) regarding its construction contracts:
Bill Collection
June P 448,000 P 403,200
July 504,000 453,600
August 336,000 302,400
13. In the immediately preceding problem, what is the output VAT in August?
a. P 138,000 c. P 36,000
b. P 124,200 d. P 32,400
14. In June 2014, a realty dealer sold a residential lot for P2,000,000. The lot had a fair value of P2,500,000 at the
date of sale. The buyer agreed to pay in P 100,000 monthly installments starting June 2014.
What is the output VAT respectively in June 2014 and July 2014?
a. P300,000; P 0 c. P 15,000; P 15,000
b. P 240,000; P 0 d. P 12000; P 12,000
15. On April, 2015, a VAT-registered realty developer sold a condominium unit at a selling price of P3,600,000. The
buyer agreed to pay in 36 monthly installments. The property had a zonal value of P4,000,000 and assessed
value of P3,000,000 at the date of sale.
What is the output VAT on every installment?
a. P 13,333 c. P 10,000
b. P 12,000 d. P 0
17. A VAT-registered seller received the following statement from its consignees:
18. A VAT-registered seller had the following summary of sales and consignments in April:
Assuming that the rules on deemed sale was properly applied in prior months, what is the output VAT for
April?
a. P 42,000 c. P 78,000
b. P 75,600 d. P 81,600
19. Mr. Yaobang is a VAT-registered professional. He also owns a hotel and has a professional practice. He
instructed his accounting staff to indicate zero-rated sales in hotel receipts.
During the month, he had the following receipts from his business and exercise of profession:
20. Mang Juan applied for the cancellation of his VAT registration. His application was granted by the BIR. At that
time, he had the following inventories of vatable goods:
21. A VAT-registered farm supply dealer sold the following during a month:
Fertilizers P 200,000
Corn seeds 250,000
Farm equipment 1,200,000
Pesticides 300,000
Total P 1,950,000
23. A VAT taxpayer made the following sales during the quarter:
Domestic sales:
Sales of VAT-exempt goods P 1,200,000
Sales of vatable goods 900,000
24. King Bank presented the following gross receipts during the quarter:
25. Phil-Air is a domestic air carrier with both domestic and international operations. During a month, it had the
following gross receipts:
Domestic operations
Transport of passengers P40,000,000
Transport of cargoes 12,000,000
International operations
Transport of passengers P30,000,000
Transport of cargoes 8,000,000
26. Cebu Ferries has a fleet of ships traversing the islands of Bohol and Cebu. It reported the following total
receipts during a month:
27. Victor Lines is a VAT-registered operator of buses. During the month, it had the following total receipts:
28. Mr. Asuncion is a non-VAT registered operator of 40 taxis. During a month, he collected a total receipt of
P1,300,000 under the “boundary” system.
29. A non-VAT registered radio broadcasting company collected a total of P800,000 during a month. Compute the
output VAT.
a. P 0 c. P 85,714
b. P 48,000 d. P 96,000
30. A VAT-registered real property dealer sold the following during a quarter:
31. A VAT-registered dealer sold two residential units to the same buyer with the following separate prices:
32. A VAT-registered realty dealer sold the following adjacent residential lots to the same buyer. The separate deeds
of sale had the following respective prices:
33. An insurance company had the following gross receipts during a month:
22. Which of the following export sales require payment in acceptable foreign currency and accounting in
accordance with the rules and regulations of the Bangko ng Sentral ng Pilipinas (BSP).
I – The sale an actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping
arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods
exported
II – The sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident local
export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of
the said buyer’s goods
III – The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales
exceed 70% of the total annual production
IV – Sale of gold to the BSP
V – Transactions considered export sales under Executive Order No. 226, otherwise known as Onmibus
Investments Code of 1987, and other special laws
VI – The sales of goods, supplies, equipment and fuel to persons engaged in international shipping or
international air transport operations
a. I, II, III, IV, V, and VI b. I and II only c. II, IV and V only d. V only
23. “Considered export sales under Executive Order NO. 226” shall mean:
I – the Philippine port F.O.B value determined from invoices, bills of lading, inward letters of credit, landing
certificates and other commercial documents of export products exported directly by registered export producer
II – the net selling price of export products sold by a registered export producer to another export producer, or
to an export trader that subsequently exports the same
a. Only I is correct b. Only II is correct c. Both I and II are correct d. Neither I nor II is
correct
24. Without actual exportation, which of these shall be considered constructively exported for purposes of VAT?
I – sales to bonded manufacturing warehouses of export-oriented manufacturers
II – Sales to export processing zones
III – Sales to registered export traders operating bonded trading warehouses supplying raw materials in the
manufacture of export products under guidelines to be set by the Board of Investment (BOI) in consultation
with the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC)
IV – Sales to diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally
manufactured, assembled or repacked products whether paid for in foreign currency or not
a. I, II, III, and IV b. I, II and III only c. I and II only c. IV only
25. It means the sale to a non-resident of goods, except automobiles and non-essential goods, assembled or
manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign
currency and accounted for in accordance with the rules and regulations of the BSP.
a. Export sale c. Effectively zero-rated sale
b. Foreign currency denominated sale d. Transaction deemed sale
27. Which of the following local sales of goods or property will not be effectively subject to VAT at zero-rate?
a. Sales to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority (SBMA)
b. Sales to enterprises duly registered and accredited with the Philippine Economic Zone Authority (PEZA)
c. Sales to Development Bank of the Philippines (DBP)
d. Sales to International Rice Research Institute (IRRI)
28. 1st statement – The term “effectively zero-rated sale of goods and properties” shall refer to the export sale of
goods and properties by a VAT-registered person to a person or entity who was granted indirect tax exemption
under special laws or international agreement
2nd statement – Except for export sales and foreign currency denominated sale, other cases of zero-rated sales
shall require prior application with the appropriate BIR office for effective zero-rating and without and
approved application for effective zero-rating, the transaction otherwise entitled to zero-rating shall be
considered exempt
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
29. Which of the following sales requires price application with the appropriate BIR office for zero rating?
a. Export sales c. Sales to Asian Development Bank
b. Foreign currency denominated sales d. None of the choices
30. Which of the following shall not be considered “deemed sale” pursuant to the Tax Code?
a. Transfer use or consumption not in the course of business of goods or properties originally intended for
sale or for use in the course of business
b. Distribution or transfer to shareholders or investors in the profits of VAT-registered person or creditors in
payment of debt or obligation
c. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned
d. Retirement from or cessation of business with respect to all goods on hand, whether capital goods, stock-in-
trade, supplies or materials as of the date of such retirement or cessation whether or not the business is
continued by the new owner or successor
31. 1st statement: Transfer of goods or properties not in the course of business can take place when VAT-registered
person withdraws goods from his business for his personal use
2nd statement: Property dividends which constitute stocks in trade or properties primarily held for sale or lease
declared our of retained earnings on or after January 1, 1996 and distributed by the company to its shareholders
shall be subject to VAT based on the zonal value or fair market value at the time of distribution, whichever is
applicable
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
32. Which of the following circumstance shall give rise to transactions “deemed sale” for purposes of VAT?
I – Change of ownership of the business (i.e., single proprietorship incorporates; or the proprietor of a sole
proprietorship sells his entire business)
II – Dissolution of a partnership and creation of a new partnership which takes over the business
a. Both I and II b. Neither I nor II c. I only d. II only
33. 1st statement: The Commissioner shall determine the appropriate tax base in cases where a transaction is
deemed a sale, barter or exchange of goods or properties or where the gross selling price is unreasonably lower
than the actual market value
2nd statement: The gross selling price is unreasonably lower than the actual market value if it is lower by more
than 30% of the actual market value of the same goods of the same quantity and quality sold in the immediate
locality on or nearest the dale of sale
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
34. For transactions deemed sale, other than retirement or cessation of business, the output tax shall be based on
the:
a. Selling price of the goods deemed sold as of the time of occurrence of the transaction
b. market value of the goods deemed sold as of the time of the occurrence of the transaction
c. acquisition cost of the goods deemed sold
d. acquisition cost or the current market price of the goods whichever is lower
35. The VAT shall apply to goods or properties originally intended for sale or use in business, and capital goods
which are existing as of which of the following occurrences?
I – Change of business activity from VAT taxable status to VAT-exempt status
II – Approval of request for cancellation of registration due to reversion to exempt status
III – Approval of request for cancellation of registration due to a desire to revert to exempt status after the
lapse of three (3) consecutive years from the time of registration by a person who voluntarily registered despite
being VAT-exempt.
IV – Approval of request for cancellation of registration of one who commenced business with the expectation
of gross sales or receipts exceeding 1,919,500, but who failed to exceed this expectation during the first twelve
months of operation.
a. I, II, III, and IV b. I, II, and III only c. I and II only d. III and IV only
37. Janina Corporation is a merchandising concern and has an inventory of goods, for sale amounting to 1,000,000.
Nelloso Corporation, a real estate developer, exchanged its real estate properties for the shares of stock of
Janina resulting to the acquisition of corporate control. What is the tax consequence of the transaction to Janina
Corporation involving its inventory of goods?
a. Not subject to output tax despite the change in corporate control because the same corporation still owns
them
b. Subject to output tax because VAT applies not only to actual sales but also to transfers, barters or exchanges
of goods
c. Not subject to output tax because VAT to actual sales only
d. Tax consequence cannot be determined because the information is not complete
38. Using the same data in the immediately preceding number, what is the tax consequence on the real properties
held for sale or for lease exchanged by Nelloso Corporation for the shares of stock of Janina Corporation?
a. Subject to VAT, whether the exchange resulted to corporate control or not
b. Subject to VAT, when the exchange resulted to corporate control only
c. Not subject to VAT, whether the exchange resulted to corporate control or not
d. Not subject to VAT because the corporation still owned the real properties
39. Which of the following is not deductible from Gross Selling Price?
a. Discounts determined and granted at the time of sale, which are expressly indicated in the invoice, the
amount thereof forming part of the gross sales duly recorded in the books of accounts
b. Discount determined and granted after the agreed sales quota is met by the buyer
c. Sales discount indicated in the invoice at the time of sale, the grant of which is not dependent upon the
happening of a future event, deductible within the same month or quarter given
d. Sales returns and allowances for which a proper credit or refund was made during the month or quarter to
the buyer for sales previously recorded as taxable sales
11. Which of these entities is subject to zero-rating on the sale of renewable sources of energy?
a. Generation companies
b. Transmission companies
c. Distribution companies
d. All of these
12. Which of the following power generation plants is qualified to a zero-rating treatment on the sale of electricity?
a. Geothermal power plant
b. Hydro power plant
c. Solar power plant
d. Coal power plant
Compute the zero-rated sales assuming the seller is respectively a VAT taxpayer and a non-VAT taxpayer?
a. P 600,000; P 0 c. P 600,000; P 300,000
b. P 300,000; P 0 d. P 300,000; P 300,000
35. An export trader purchased and sold an equipment. The details of the purchase and sale are as follows:
38. An exporter entered into the following transactions during the month:
39. Johnny Company, a maintenance contractor, had the following receipts from the following clients in June 2015:
Receipt from Development Bank of the Philippines P 1,000,000
Receipts from Oceania, an international carrier 1,200,000
Receipts from International Rice Research Institute 800,000
40. A VAT-registered service provider had the following receipts from services rendered in the Philippines in
February 2015:
40% of the sale to the export-oriented enterprise was eventually exported. The sale to the BOI enterprise was
eventually exported.
INPUT VAT
1. Any input tax on the purchases or importation of goods shall be creditable against the out tax if:
I – evidenced by a Vat invoice or official receipt
II – issued by a VAT-registered person
III – in the course of trade of business
a. I, II and III are correct b. Only I and II are correct c. Only I is correct d. Only III is correct
2. Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income tax
purposes, the aggregate acquisition costs of which (exclusive of VAT) in a calendar month exceeds 1,000,000
regardless of the acquisition cost of each capital good, shall claimed as credit:
a. over a period of 60 months in all cases
b. over a period of 60 months unless the estimated life is less than 5 years in which case over the actual
number of months comprising the estimated life
c. in full in the month acquired
d. in full in the quarter acquired
3. The aggregate acquisition cost of a depreciable asset in any calendar month refers to the:
a. total price agreed upon for one or more assets acquired during the calendar month
b. payments actually made during the calendar month
c. total price agreed upon for one asset only acquired during the calendar month
d. initial payments made if purchased on installment plan
4. If the depreciable capital good is sold or transferred within a period of 5 years or prior to the exhaustion of the
amortizable input tax thereon the unamortized input tax on the capital goods sold or transferred can be
a. claimed as input tax credit in its entirety during the month or quarter when the sale or transfer was made
b. amortized over the remaining life of the capital good
c. claimed as input tax credit in its entirety or amortized over the remaining life of the capital good at the
option of the taxpayer
d. expensed outright in the month or quarter the sale or transfer was made
5. Which of the following input taxes shall not be credited against output taxes arising from sales to non-
Government entities?
a. Input tax on purchase or real properties for which VAT has actually been paid
b. Input tax on purchase of service in which VAT has actually been paid
c. Transitional and presumptive input taxes
d. Input taxes that can be directly attributable to VAT taxable sales of goods and services to the Government
or any of its political subdivisions, instrumentalities or agencies including GOCCs
6. 1st statement – The input tax attributable to VAT-exempt sales shall not be allowed as credit against the output
tax but should be treated as part of cost or expense
2nd statement – For persons engaged in both zero-rated sales under the Tax Code and non-zero rated sales, the
aggregate input taxes shall be allocated ratably between the zero-rated sale and non-zero rated sale
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
7. Which of the following shall be entitled to transitional input tax credits on beginning inventories?
I – taxpayers who became VAT-registered persons upon exceeding the minimum turnover of 1,919,500 in any
12-month period
II – Taxpayers who voluntarily register even if their turnover does not exceed 1,919,500 (except franchise
grantees of radio and television broadcasting whose threshold is 10,000,000)
a. Both I and II b. Neither I nor II c. I only d. II only
9. 1st statement: Presumptive input tax is equivalent to 4% of the gross value in money of the purchases of primary
agricultural products used as inputs to the production.
2nd statement: The term processing shall mean pasteurization, canning and activities which through physical or
chemical process alter the exterior texture or form of inner substance of a product in such a manner as to
prepare it for special use to which it could not have been put it its original form or condition
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
10. 1st statement: The transitional input tax shall be 2% of the value of the beginning inventory on hand or actual
VAT paid on such goods, materials and supplies, whichever is higher, which amount shall be creditable against
the output tax of VAT-registered person
2nd statement: The value allowed for income tax purposes on inventories shall be basis for computation of the
2% transitional input tax, excluding goods that are exempt from VAT under Sec 109 of the tax code
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
12. “A” at the time of retirement, had 1,000 pieces of merchandise which was deemed sold a value of 20,000 with
an output tax of 2,400. After retirement, “A” sold to “B”, 500 pieces for P12,000. In the contract of sale or
invoice, “A” stated the sales invoice number wherein the output tax on “deemed sale” was imposed. The
corresponding tax paid on the 500 pieced was 1,200, which was included in the P12,000.
How much input tax would “B” entitled to?
a. 2,400 b. 1,200 c. 1,000 d. none
13. 1st statement: The government or any of its political subdivisions, instrumentalities or agencies, including
government owned or controlled corporations (GOCCs) shall, before making payment on account of each
purchase of goods and/or services subject to VAT, deduct and withhold a final VAT due at the rate of 5% of
the gross payment thereof.
2nd statement: The 5% final VAT withholding rate shall represent the net VAT payable of the seller
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
14. 1st statement: Standard input VAT is allowed for sales of goods or services to government or any of its political
subdivisions, instrumentalities or agencies including GOCC.
2nd statement: Standard input VAT is in lieu of the actual input VAT directly attributable or ratably apportioned
to sales to government or any of its political subdivisions, instrumentalities or agencies including GOCCs.
a. Both statements are correct c. Only the firs statement is correct
b. Both statements are incorrect d. Only the second statement is correct
15. In case of sales to government or its political subdivisions, instrumentalities or agencies including GOCCs
which of the following is correct?
I – Should actual input VAT exceed five percent of gross payments, the excess may form part of the seller’s
expenses or cost
II – If the actual input VAT is less than five percent of the gross payment, the difference must be closed to
expensive or cost
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
16. 1st statement: VAT withheld and paid for the non-resident recipient which VAT is passed on to the resident
withholding agent by the non-resident recipient of the income, may be claimed as input tax by said VAT-
registered withholding agent upon filling his own VAT Return
2nd statement: If the resident withholding agent is a non-VAT, said passed-on VAT by the non-resident recipient
of the income, evidenced by duly filed BIR form no. 1600, shall form part of the cost of purchased services,
which may be treated either as an asset of expense, whichever is applicable of the resident withholding agent.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
2. A VAT-taxpayer purchased services from a non-VAT-registered person in which he paid a total of P56,000 on
the purchase. The claimable input VAT shall be
a. P 0 c. P6,720
b. P 6,000 d. P7,200
3. A VAT-taxpayer imported vatable goods from a non-resident person who is not engaged in trade or business.
The goods which were intended to be re-sold in the Philippines had a landed cost of P150,000. What is the
claimable input VAT?
a. P 0 c. P18,000
b. P 16,071 d. P19,758
4. A non-VAT registered person purchased goods invoiced at P112,000 from a VAT-registered person. The
claimable input VAT shall be
a. P 0 c. P13,440
b. P 12,000 d. P15,000
3. A, a VAT – registered, made the following purchased during the month of January 2014
5. Mr. Alarcon is a percentage taxpayer. He bought goods billed at an invoice price of P20,160 from a VAT-
registered taxpayer. Mr. Alarcon sold the goods in the same month at a price of P42,000.
6. Ms. Kibungan, a VAT-taxpayer, made the following purchases (net of VAT) of vatable goods during the month:
7. A VAT-taxpayer received and paid the following billings for vatable goods purchased:
8. A VAT taxpayer had the following transactions during a first calendar quarter of 2015:
a. Purchases of goods in January but were paid in February - P50,000
b. Purchase of services rendered in January but was paid in February - P80,000
c. Importation of goods which arrived in the last week of February but was released upon payment of VAT on
March – P250,000
10. What is the creditable input VAT for the 1st quarter of 2015?
a. P 6,000 c. P 39,600
b. P 15,600 d. P 45,600
11. A VAT taxpayer had the following input VAT during the year:
1. Dino Rado, opted to be registered as a VAT taxpayer effective the third quarter of 2015. He had the following
analysis of beginning inventory for the month of July 2015:
2. A taxpayer who is transitioning to the VAT system had the following inventories upon exceeding the VAT
threshold:
Inventory of unprocessed
agricultural food products P 30,000
Inventory of processed goods 170,000
Inventory of non-food goods 210,000
Total P 410,000
3. Miss Beauty Fooled became subject to VAT effective the month of September. She had the following beginning
inventory in September:
4. The vatable sales of an agricultural supplier exceeded the VAT threshold. Prior to his VAT-registration, an
inventory of his goods was prepared below:
Fertilizers P 400,000
Seeds 300,000
Farm equipment 98,000
Pesticides 18,000
Total P 816,000
Assuming all amounts are inclusive of VAT when applicable, what is the transitional input VAT?
a. P 1,928.57 c. P13,920
b. P 12,429 d. P16,320
5. A realty development company is commencing business. Because of the large scale of its projected operations, it
decided to register as a VAT taxpayer. It had the following inventories of properties before commencement of
operations:
6. A VAT registered taxpayer purchased equipment which is expected to last 10 years in January 2015. The
purchase price was P1,000,000, exclusive of P120,000 VAT.
What is the input VAT claimable respectively in January 2015 and February 2015?
a. P 1,000; P1,000 c. P120,000; P 0
b. P 2,000; P2,000 d. P 0; P120,000
The capital goods pertain to several equipment with estimated useful life of 3 years.
8. Popogirin Corporation purchased a commercial lot with an old warehouse in April 2015. The lot and the
building were separately priced by the seller as follows:
Lot P 1,000,000
Building (estimated useful life of 7 years) 600,000
Total P 1,600,000
9. Master Pogi, a VAT-registered real property dealer, purchased a residential property as his residence in February
2015. The purchase price was to be paid in 36 monthly installments of P60,000 plus P7,200 VAT.
What is the creditable input VAT in the February VAT return and in the quarterly VAT return of March 2015?
a. P0; P0 c. P7,200; P14,400
b. P7,200; P7,200 d. P259,200; P259,200
10. A VAT-registered individual purchased the following from various suppliers in November 2015:
Purchased from
VAT suppliers Non-VAT Suppliers
Machineries P 800,000 P 300,000
Useful life 6 years 3 years
What is the creditable input VAT in November?
a. P 0 c. P 2,200
b. P 1,600 d. P 96,000
11. In the preceding problem, what is the creditable input VAT in the December quarterly VAT return?
a. P 96,000 c. P 3,200
b. P 4,400 d. P 1,600
12. A VAT-registered corporation reports on a fiscal year. It made the following purchases of depreciable capital
goods in the quarter ending August 31, 2015 from VAT suppliers:
June 2015
Truck, estimated 10-year useful life P 700,000
Office equipment, estimated 4-year useful life 500,000
August 2015
Office furniture, estimated 5-year useful life 600,000
13. In the preceding problem, what is the creditable input VAT in July 2015?
a. P 0 c. P2,200
b. P1,950 d. P2,650
14. In the preceding problem, what is the creditable input VAT for the quarter ending August 2015?
a. P79,950 c. P145,200
b. P81,150 d. P216,000
15. A VAT-registered individual purchased the following capital goods in the third calendar quarter of 2015 from
VAT suppliers:
July 2015
Machine, estimated 10-year useful life P 1,680,000
August 2015
Factory equipment, estimated 4-year useful life 1,232,000
16. In the preceding problem, what is the creditable input VAT in August 2015?
a. P2,750 c. P5,750
b. P4,250 d. P6,110
17. Still on the same problem, what is the creditable input VAT for the quarter ending September 2015?
a. P 5,500 c. P14,500
b. P 9,000 d. P15,220
18. Thor Corporation is reporting on a calendar year. Thor Corporation purchased the following capital goods in
the second quarter of 2015:
Equipment is depreciated over a 4-year useful life while Machineries are depreciated over a 10-year useful life.
All amounts are exclusive of VAT.
Compute the creditable input VAT in April 2015.
a. P 144,000 c. P2,400
b. P 3,000 d. P 0
19. In the preceding problem, what is the creditable input VAT for May 2015?
a. P 123,000 c. P 4,600
b. P 122,400 d. P 5,300
20. In the preceding problem, what is the creditable input VAT for the quarter ended June 30, 2015?
a. P 151,200 c. P 24,000
b. P 148,800 d. P 16,400
21. Lupao Corporation purchased equipment at a cost of P2,000,000 in October of 2012 exclusive of a P240,000
input VAT. Lupao Corporation sold the equipment in May 2015. The equipment was depreciated over a period
of 8 years. What is the claimable input VAT in May 2015?
a. P 116,000 c. P 108,000
b. P 112,000 d. P 104,000
22. In the immediately preceding problem, what is the claimable input VAT in the second calendar quarter of 2015?
a. P 116,000 c. P 108,000
b. P 112,000 d. P 104,000
23. Sardinia, a sardines canning company, had the following purchases as inputs for its manufacturing operations
during a month:
24. What is the total creditable input VAT of Sardinia for the month?
a. P 6,000 c. P15,600
b. P 14,000 d. P18,000
25. Mayon Corporation had the following summary of output and input VAT for the 1st quarter and second quarter
of 2015:
There was an excess of input taxes over output taxes of P50,000 for the quarter ending September 2014.
Determine the VAT due for October, November and for the quarter.
2. The following data are taken from the books of accounts of a VAT-registered taxpayer:
Third quarter: Sales P 1,000,000
Purchases 800,000
Excess input VAT as of end of second quarter 25,000
Fourth quarter: Sales 1,500,000
Purchases 1,100,000
How much is the VAT payable for the third and fourth quarters?
How much is the VAT payable for the third and fourth quarters?
4. Off Pring Corporation is Value-Added Tax registered dealer of appliances. The following data are for the last
quarter of 2016 (CPA Exam Modified):
How much is the value-added tax due for the last quarter of 2014?
5. A VAT subject real estate dealer sold a residential lot on January 15, 2016. The following information made
available on the terms of the sale:
Gross selling price 3,000,000
Initial payments in 2016 (consisting of down
payments and installments in the year of sales) 900,000
Balance to be paid in equal annual installments starting Feb 15, 20172,100,000
Required:
1. How much was the output tax on January 15, 2016?
2. How much is the output tax on February 15, 2017?
6. The following information taken form the books of a VAT-registered enterprise was provided to you:
Domestic sales of goods P 3,000,000
Sales of packaging materials to an export oriented enterprise whose
export sales exceeds 70% of the total annual production 2,000,000
Local sales of goods to Asian Development Bank (ADB) 500,000
Consignment of goods (not returned within 60 days
following the date of consignment) 200,000
Goods transferred for the personal use of the owner 100,000
Required:
1. Compute the total taxable sales.
2. Compute the output tax.
7. A, a CPA had the following data for the month (VAT not included):
a. On Professional
Services
Collections P280,000
Receivables 120,000
b. Amounts received from clients as reimbursements for expenses chargeable to
clients
Billed to clients by VAT suppliers 30,000
Billed to A by VAT supplier 20,000
c. Payments to:
VAT
suppliers 60,000
Non VAT suppliers 20,000
d. Salaries of office personnel 18,000
e. Purchase of office equipment (6 years
life) 1,200,000
8. Sweet Tooth, Inc. manufactures refined sugar. The following selected data are taken form its books:
Required:
1. How much is the withholding VAT?
2. How much is the standard input tax?
3. What is the treatment of the excess actual input VAT attributable so sales to GOCC?
4. How much is the creditable input tax on sale to private entities?
5. How much is the VAT payable?
10. A VAT-registered taxpayer engaged the services of a non-resident service provider. The contract price was
P500,000 which was paid by the VAT-registered taxpayer in full.
Required:
1. How much was the amount of withholding VAT to be withheld by the VAT – registered taxpayer?
2. How much input tax could be claimed as credit by the VAT-registered taxpayer?
20. K imported a car from USA for her personal use. Total landed cost is P250,000, including customs duties of
P50,000, VAT on importation is
a. P0 b. P20,000 c. P36,000 d. P30,000
21. An importer wishes to withdraw its importation from the Bureau of Customs. The imported goods were
subjected to 10% customs duty in the amount of P12,500 and other charges in the amount of P9,500. The VAT
due is
a. P12,500 b. P17,640 c. P13,364 d. P14,700
22. The A Bakers sells cakes and pastry to well known hotels in Metro Manila area. The hotels are allowed credit
based on the track record of the hotels. The sale by the store in April 2014 was P224,000, including the VAT.
75% of the sales are normally account. How much is the output tax for the month of April 2014?
a. P22,000 b. P20,000 c. P16,500 d. P24,000
23. A, trader, made the following sales of goods during the month of June 2014, exclusive of VAT:
Cash sales P200,000
Open Account Sales 100,000
Installment Sales 100,000
PERCENTAGE TAX
1. A tax on business is –
a. Direct tax b. Indirect tax c. Property tax d. None of the above
2. A is the owner of a small variety store. His gross sales in any one year do not exceed P1,919,500. He is not VAT
registered. The following data are taken from the books of the variety store for the quarter ending March 31,
2007:
Merchandise inventory, December 31, 2006 P100,000
Gross sales 450,000
Purchase from VAT-registered supplies 350,000
3. In the third quarter of 2007, a tax payers engaged in the sale of services whose annual gross receipts do not
exceed P1,919,500 has the following data
Accounts receivable, beginning of the quarter P 50,000
Sales during the quarter 100,000
Accounts receivables, end of the quarter 75,000
Purchase of supplies, total invoice amount 11,200
5. Which of the following taxes is not replaced by the value added tax law?
a. Common carrier’s tax b. compensating tax c. Contractor’s tax d. Sales tax on original sales
6. Grace is a proprietor of a mini-store with sales in any 12-month period not exceeding P1,900,000. She shall pay
e. Percentage tax c. Excise tax
f. VAT d. Percentage tax and Excise tax
7. Tony, a VAT-registered taxpayer, reported P200,000 sales in the month of May. Tony’s annual sales never
exceeded P1,800,000. Compute Tony’s percentage tax.
a. P 0 c. P24,000
b. P 6,000 d. P54,000
8. Donnel, a non-VAT-registered operator of jeepney, reported a total receipt of P200,000 during a month,
including P20,000 rentals for cargo transport. Compute the percentage tax.
a. P 0 c. P6,000
b. P5,400 d. P6,600
9. Mr. Ngina owns and operates a taxi unit. He also teaches as an accounting professor the University of Baguio
and renders taxation advisory services to various clients. Mr. Ngina is registered as a VAT-taxpayer. In March
2015, He had the following receipts:
Compute the percentage tax payable of Mr. Ngina for March 2015.
a. P 0 c. P12,000
b. P1,500 d. P18,000
10. In the immediately preceding problem, compute the total receipts of Mr. Ngina subject to the VAT.
a. P0 c. P400,000
b. P350,000 d. P550,000
Jansen owns a restaurant which has annual gross receipts ranging from P400,000 to P450,000. In January, the gross
receipts amounted to P27,500 while purchases of goods subject to VAT is P6,000 and not subject to VAT, P13,000.
12. If Jansen is a non-VAT registered taxpayer, his percentage tax due for the month is –
a. P12,000 b. P1,900 c. P825 d. P2,500
13. Assuming that Jansen is a VAT-registered taxpayer and the amounts indicated are exclusive of VAT, the value-
added tax due is –
a. P12,000 b. P1,900 c. P2,580 d. P2,500
14. Johnny operates two (2) pedicabs, two (2) passenger jeepneys plying the route Trinidad-Baguio in Baguio City,
and three (3) cargo trucks. The gross receipts for the month are:
Benny Transport Company is a transportation contractor. During the month, it had the following gross receipts:
From transport of passengers P 485,000
From transport of cargo 220,000
From rental of its cargo trucks to individual lessees 33,000
From rental of its “rent-a-car” to balikbayans (with chauffeur) 30,000
Payments to VAT registered persons during the month amount to P 99,000
Pagong Lines is engaged in provincial transport operation. It has the following gross receipts in June:
During the month, Bus 1 was bumped by another bus owned by D Tulak Lines and paid Pagong Lines P20,000
for the damage done.
18. There are two competing keepers of garage with the following receipts:
Parcorito P 1,200,000
Parkodun 2,500,000
19. Common carrier 1: Domestic sea or air carriers for passengers or cargoes.
Common carrier 2: International sea or air carriers for cargoes.
What is the respective business tax rate on the common carriers identified above if they travel from the
Philippines to a foreign country?
22. What is the proper business tax for A and B who are both engage in keeping automobile for hire.
23. An operator of car with chauffeurs for hire had the following financial results of operations during a month:
24. A, operates a ferryboat. During a particular quarter, its receipts consists of the following
Gross receipts: (without VAT)
Transport of passengers P 1,000,000
Transport of goods 1,500,000
Transport of cargoes 500,000
26. The franchise tax of grantees of radio and television broadcasting whose annual gross receipts of the preceding
year do not exceed P10,000,000 shall be
a. 2% of the gross receipts c. 4% of the gross receipts
b. 3% of the gross receipts d. 5% of the gross receipts
27. Sealiner Ferries transports passengers, goods and cargoes between the islands of Cebu and Bohol. During 2009,
it disclosed the following gross receipts, net of any business taxes:
Transport of passengers P2,000,000
Transport of goods 1,000,000
Transport of cargoes 500,000
28. Congress enacted a law imposing a 5% tax on gross receipts of common carriers. The law does not define the
term ‘gross receipts’. Express Transport, Inc., a bus company plying the Manila – Baguio route, has time
deposits with ABC Bank. In 2005, Express Transport earned P1,000,000 after deducting the 20% final
withholding tax from its time deposits with the bank. The BIR wants to collect a 5% gross receipt tax on the
interest income of Express Transport deducting the 20% final withholding tax. Is BIR correct?
a. Yes, gross receipts mean cash collected whether actually or constructively without any deductions.
b. Yes, gross receipts means all cash collections actually received without any deductions
c. No, gross receipts means actual receipts after deducting the withholding tax
d. No, gross receipts means actual receipts after deducting tax credits.
29. One of the following is not subject to the 3% percentage tax
a. International air carrier doing business in the Philippines
b. International shipping carrier doing business in the Philippines
c. Domestic carriers and keepers of garage
d. Franchise grantee of the electric utilities
30. Napartas Company is a transportation contractor of Haring Padala, a mail courier company. Napartas Company
delivers the mails to addressee location specified in the mail. During the month, Napartas Company was paid
P400,000 by Haring Padala.
31. Malaysian Birdie, an international air carrier, collected a total of P30,000,000 from transport of passengers
during the month. It also collected a total of P5,000,000 from transport of mails and baggage.
32. Puro-Air is a domestic airliner with annual receipts exceeding P50,000,000. During a month, it generated the
following receipts:
Passengers P 5,000,000
Cargoes and baggage 1,500,000
Total P 6,500,000
33. European Seagull, an international shipping carrier, had the following receipts on its Philippine operations:
34. American Hawk, an international air carrier, recorded the following taxable receipts during a month for
outgoing flights:
35. Franchise grantees of the city gas and water utilities are subject to franchise tax of
a. 2% b. 3% c. 4% d. 5%
36. A, is a holder of franchise to sell electricity. In a particular quarter, its gross receipts amounted to P2,000,000
from sale of electricity. It has also receipts from the lease of its auditorium and theater amounting to P600,000.
The percentage tax due for the quarter is
a. P40,000 b. P60,000 c. P100,000 d. None
37. A is a Radio-TV broadcasting franchise grantee. During the preceding year, its gross receipts did not exceed
P10,000,000. Durin gthe first quarter of the currents year, it has the following data:
Gross receipts, sale of airtime P2,000,000
Gross receipts, use of radio station’s communication facilities 500,000
Business expenses 700,000
The franchise tax due for the first quarter is
a. P60,000 b. P40,000 c. P75,000 d. P39,000
38. The franchise tax on grantees of radio and television broadcasting companies whose annual gross receipts in any
year do not exceed P10,000,000 shall be
a. 1% of gross receipts c. 3% of gross receipts
b. 2% of gross receipts d. 4% of gross receipts
39. Radio station DZWT has an annual gross receipts ranging from P4,000,000 to P5,000,000. During the month, it
had a gross receipts from advertisements of P330,000 (net of tax), while the disbursements subject to VAT
amounted to P224,000, inclusive of tax. How much franchise tax is payable by DZWT?
a. P30,000 b. P9,900 c. P50,000 d. P10,000
40. Amounts received for overseas dispatch, message or conversations originating from the Philippines are subjects
to
a. 3% franchise tax c. 2% franchise tax
b. 10% overseas communication tax d. 10% VAT
Too Big Company, a public service company, is a holder of a franchise to engage in the business of supplying water
to several towns and cities in Luzon. As recorded in its books during the month, its total gross receipts from the
sale of water amounted to P 2,550,000, while the receipts from rental of equipments and other services was
P280,000. The operating expenses amounted to P2,000,000, 11% of which was paid to VAT registered persons.
45. One of the following is not subject to amusement tax on gross receipts
a. Disco houses c. Professional basketball
b. Cockpits d. Bowling alleys
46. A operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter follow
Gross receipts:
Cockpit operations P 500,000
Restaurant operation:
Sale of foods 100,000
Sale of liquor 150,000
The amusement tax due from A is
a. P90,000 b. P135,000 c. P225,000 d. P75,000
47. Using the above data, except the restaurant is not owned by A but is owned by another person, B, not VAT
registered and whose annual gross sales never exceeded P1,919,500. The amusement tax due from A is
a. P90,000 b. P135,000 c. P225,000 d. P75,000
48. Continuing the preceding number, the percentage tax due from B is
a. P90,000 b. P135,000 c. P225,000 d. P7,500
49. A promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate receipts amounted
to P3,000,000 and additional receipts from television coverage was P2,000,000. The amusement tax due is
a. None b. P500,000 c. P300,000 d. P900,000
50. Assuming that the above data is not a world championship but a Philippine national boxing championship, how
much is the amusement tax?
a. None b. P500,000 c. P300,000 d. P900,000
Panda Hotel offers the following services to its guests and from which revenues were derived for the month, as
follows:
Revenues Collections
Hotel rooms P1,250,000 P984,000
Dining hall:
Sale of food and refreshments 940,000 860,000
Sale of wine, beer and liquors 780,000 620,000
Disco:
Admission fee 25,000 15,000
Sale of food and softdrinks 250,000 115,000
Sale of wines, beer and liquor 650,000 540,000
52. If Panda Hotel is subject to value-added tax, the output tax thereon is (assume the amounts are tax inclusive) –
a. P295,680 b. P264,000 c. P218,000 d. P120,600
53. Boy Arana is the operator of Arana Coliseum. During the month, it had the following gross receipts fro various
activities, to wit:
54. ABC Insurance Corporation, a domestic corporation, received the following premiums (net of any tax):
INSURANCE
Life Fire Marine
Cash received P 400,000 P 300,000 P 200,000
Promissory notes 100,000 100,000
TOTALS P 500,000 P 400,000 P 200,000
Madulag Insurance Company had the following data on collections of premiums and disbursements during the
month:
Life insurance Non-life insurance
Cash collections P150,000 P145,700
Checks 45,000 34,600
Accounts receivable 25,200 58,900
Payments of expenses to VAT businesses 43,000
Payment of expenses to non-VAT businesses 35,000
The amounts indicated pertaining to VAT transactions do not include the value-added tax.
57. Bayani’s ticket (daily double) won P42,000, gross of withholding tax and cost of ticket, in a horse race in San
Lazaro Hippodrome. His ticket had cost him P250. Bayani had other non-winning tickets costing P2,500. How
much tax was withheld on winnings in horse races by Bayani?
a. P1,680 b. P4,200 c. P1,670 d. P4,175
58. A horseracing enthusiast has the following winnings during a particular racing day
Total winnings (winner take all) P10,000
Cost of winning tickets 500
59. Using the data above, but the total winnings came from double bet, the percentage tax on winnings is
a. P1,000 b. P400 c. P950 d. P380
60. All of the following except one are liable to ½ of 1% stock transaction tax. Which one is not?
a. Individual tax payers, whether citizens or alien c. Estates and Trust
b. Corporate taxpayers, whether domestic or foreign d. Dealers in securities
62. Chess sold the following shares of stock thru his stock broker:
Selling Price Market Value
Ex Company, not traded P 123,670 P 114,850
Why Company, traded 65,980 62,540
See Company, traded 143,750 156,230
The percentage tax due on the above transactions is –
a. P1,667.00 b. P1,048.65 c. P1,093.85 d. P1,668.10
Purchases:
Eef Corporation, not traded 32,415
Gee Corporation, traded 48,657
64. Tito owns shares of stock of domestic corporations which are actively traded in the Philippines Stock
Exchange. Due to the unstable prices in the stock exchange, he decided to sell the shares to the public. The data
of which are as follows:
Selling Price Cost Gain/Loss
Vic Corporation P230,000 P220,000 P10,000
Joey Corporation 360,000 395,000 (35,000)
The stock transaction tax is –
a. P2,950 b. P1,150 c. P50 d. Zero
65. Benzene Corporation, a closely held corporation, decided to open itself to the public. The initial public offering
of its shares had a selling price of P6,250,000 which is 22.5%of its total outstanding shares after the listing in the
local stock exchange. The percentage tax due is –
a. P31,250 b. P125,000 c. P1,406,250 d. P250,000
66. A domestic corporation paid P40,000 stock transaction tax on Initial Public Offering (IPO) of 500,000 shares.
After the IPO, there were 800,000 shares outstanding. The selling price per share of IPO shares was
a. P10 b. P8 c. P4 c. P2
67. RFB Corporation, a closely-held corporation, has an authorized capital stock of 100,000,000 shares with par
value of P1.00/share as of January 1, 2008. Of the 100,000,000 authorized shares, 25,000,000 thereof is
subscribed and fully paid up by the following shareholders:
RFB Corporation finally decided to conduct an IPO and initially offers 25,000,000 of its unissued shares to the
investing public for P1.50 per share. Compute the percentage tax.
a. P380,000 c. P325,000
b. P375,000 d. Exempt
68. At the IPO, Mrs. Linda O. Evangelista has likewise decided to sell her entire 5,000,000 shares to the public at
P1.50/share, compute the percentage tax due.
a. P300,000 b. P150,000 c. P75,000 d. Exempt
69. After the IPO, RFB Corporation decided to increase the capitalization by offering another 30,000,000 unissued
shares for P2.0 to the investing public. Compute the percentage tax.
a. P 0 c. P800,000
b. P600,000 d. P1,200,000
70. After the IPO, Mr. Conrado G. Cruz decided to sell his entire 5,000,000 shares to the public at P3.0/share,
compute the percentage tax due.
a. P 0 c. P150,000
b. P 75,000 d. P300,000
72. Bullion Bank reported the following receipts during the month:
Interest income:
- 1 to 3 year loan P 1,200,000
- 3 to 5 year loan 800,000
- 6 to 8 year loan 600,000
- 8 to 10 year loans 400,000
Total P
3,000,000
74. A quasi-bank receives the following from its short-term placement of excess funds:
Dividend income P
500,000
Bank interest income, net of final
tax 800,000
Total P 1,300,000
75. The China Bank, a domestic bank, shows the following data for January 2010:
Rentals from safety deposit boxes and real property acquired through foreclosure
proceeding for bad loans P 880,000
Net foreign exchange gains (difference between the value of foreign currency sold and 220,000
purchased)
Net trading gains from trading of securities, commercial papers and other financial
instruments (difference between the yield or selling price and the cost of obtaining the 660,000
same)
Trust fees 110,000
Dividend from domestic corporation 30,000
Other service fees 220,000
Interest income from lending activities from instrument with remaining term of:
Five years and less 700,000
More than five years 800,000
76. Big bank has the following income/loss for the months of March and April:
March April
Interest income maturity of less than 5 years P50,000 P 100,000
Rentals 50,000 50,000
Net trading gain/loss (10,000) 20,000
The gross receipts taxes payable for March and April, respectively –
a. P500,000; P8,500 c. P6,000; P9,200
b. P6,000; P9,900 d. P5,300; P9,200
77. Johnny executed on December 1, 2005 a long-term 10% loan from BPI amounting to P5,000,000 payable in 10
years with the first interest due on or before December 1, 2006. On December 1, 2009, the loan was
preterminated. Assuming that all previous percentage taxes were correctly withheld by BPI, compute the
percentage tax on pretermination.
a. P80,000 b. P85,000 c. P100,000 d. P125,000
81. Almendras Corporation sells bread to various stores and makes P150,000 monthly sales on the average. During
the month, it made total sales of P200,000 out of which only P160,000 was collected. Compute the percentage
tax.
c. P 0 c. P 4,800
d. P 4,500 d. P 6,000