Exercise 2-Intro to Business Tax

Determine which of the following transactions are considered sale in the ordinary
course of trade, consequently subject to business tax. 
1. An auditing firm rendered audit and tax services to its clients. - YES

2. Peter sold his 3-year-old sedan to Mara for P400,000. Peter sold his 3-year-old
sedan to Mara for P400,000. NO
3. Lina sold some of her jewelry for P50,000 to her best friend, Jill. NO
4. Wowee Corporation, distributor of appliances, sold TV units from its inventory
to various malls in Metro Manila. YES

CASE 1:The Double Line Inc. is a VAT registered taxpayer engaged in trading
consumer goods.

Q1: What is the applicable business tax of Double Line Inc.? 

a. VAT
b. Percentage Tax
c. Excise Tax
d. Both VAT and Percentage Tax
e. Both VAT and Excise Tax
f. Both Percentage and Excise Tax
Q2: may the BIR subject the sale of Double Line Inc. to percentage tax in
addition to VAT? 
a. YES
b. NO
c. MAYBE

CASE 2:Beep Beep Transport Corporation is engaged in operating jeepneys in Metro

Manila.

Q1: What is the applicable business tax of the company? 

a. VAT
b. Percentage Tax
c. Excise Tax
d. Both VAT and Percentage Tax
e. Both VAT and Excise Tax
f. Both Percentage and Excise Tax
 Q2. May the BIR subject the company to 12% VAT in addition to percentage tax? 

YES
NO 
MAYBE
Case 3: Peep Transport Corporation is engaged in:
 Jeepney operations in Metro Manila; and
 Sale of jeepney spare parts and accessories.

Q1: What is the applicable business tax of the company? 

a. VAT
b. Percentage Tax
c. Excise Tax
d. Both VAT and Percentage Tax
e. Both VAT and Excise Tax
f. Both Percentage and Excise Tax

Case 4: Cigar corporation is engaged in manufacturing and selling premium

cigarettes.

Q1: What is the applicable business tax of the company?

a. VAT
b. Percentage Tax
c. Excise Tax
d. Both VAT and Percentage Tax
e. Both VAT and Excise Tax
f. Both Percentage and Excise Tax

II. PROBLEM SOLVING

The following data pertain to a business taxpayer during a quarter:

a. If the taxpayer is registered as a non-VAT service provider, how much should be

reported in the BIR form to be filed on the reportorial month:
 January *ANSWER: 0

February *ANSWER: 0

March *ANSWER: 555,000

(125,000+280,000+150,000) = 555,000

b. If the taxpayer is registered as a non-VAT seller of goods, how much should be

reported in the BIR form to be filed on the reportorial month:

January *ANSWER: 0

February *ANSWER: 0

March *ANSWER: 98,000

(250,000+350,000+380,000) = 980,000

c. If the taxpayer is registered as a VAT seller of goods, how much should be

reported in the BIR form to be filed on the reportorial month:

January *ANSWER: 250,000 

February *ANSWER: 350,000

March *ANSWER: 980,000

(250,000+350,000+380,000) = 980,000

d. If the taxpayer is registered as a VAT service provider, how much should be

reported in the BIR form to be filed on the reportorial month:

January *ANSWER: 125,000

February * ANSWER: 280,000

 March *ANSWER: 555,000

(125,000+280,000+150,000) = 555,000
Esmeralda Co., a non-VAT taxpayer paying 3% percentage tax exceeded the VAT
threshold on September 2021. Esmeralda generated P600,000 and P500,000 sales in
October and November and paid respectively P15,000 and P20,000 input VAT in
these months. Esmeralda immediately registered to the VAT system at the start of
November 2021.

a. Compute the business tax payable in October, assuming Esmeralda claimed for tax
credit and was approved by the BIR. __________________ *

ANSWER: 54,000

ANSWER:
Output VAT (600,000 x.12) 72,000
Input VAT (not entitled) 0
Percentage tax credit (600,000 x.03) (18,000)
VAT payable 54,000

b. Compute the business tax payable in October, assuming no claim for tax refund. *

ANSWER: 72,000

Output VAT (600,000 x.12) 72,000

Input VAT (not entitled) 0
Percentage tax credit (not entitled) 0
VAT payable 72,000

Since Esmeralda applied for cash refund, it will receive cash rather than tax credit.)
No credit for the percentage tax paid shall be taken. 

c. Compute the business tax payable in November. *

ANSWER: 40,000

Output VAT (500,000 x.12) 60,000

Input VAT (20,000)
VAT payable 40,000