REVIEW IN BUSINESS LAW AND TAXATION

INTRODUCTION TO INCOME TAXATION

1. A citizen of the Phils. who works and derives income from abroad is a resident if he stayed
outside the Phils.
A. For less than 180 days
B. For more than 180 days
C. For 183 days or more
D. For less 183 days
2. A citizen of the Phils. Who works abroad and whose employment requires him to be physically
present abroad most of the time during taxable years
A. Taxable on income within and without the Phils.
B. Taxable on income from without the Phils.
C. Exempt from income tax
D. Taxable income from within the Phils.
3. A citizen of a foreign country is considered a non-resident alien engaged in business in the Phils. If he
stayed inside the Phils.
A. For 183 days or more
B. For less than 183 days
C. For more than 180 days
D. For less than 180 days
4. Income tax is generally regarded as
a. An excise tax
b. A tax on persons
c. A property tax
d. Tax on profits
5. An income tax is a tax
a. Collected from the proprietor, lessee or operator of duly designated places or activities for pleasurable
diversion or entertainment
b. Imposed on a fixed ratio between the gross sales or receipts and the burden imposed upon the taxpayer
c. Which is imposed only on the increase in the worth, merit or importance of goods, properties or
services, and not on the total value of the goods or services sold or rendered
d. On the yearly profits arising from employment, property, professions, trades and offices
6. “Global system of income taxation” means
a. All types of incomes, except those subject to final tax, are added together to arrive at taxable income
b. Separate at graduated rates are imposed on different types of income
c. Capital gains are excluded in determining taxable income
d. Compensation income, business and professional income are taxed at different places in the world
7. It is important to know the source of income for income taxation purposes, i.e. from within or without the
Philippines because
a. The Philippines imposes income tax on income from sources within and without of a non-resident citizen
b. Some individual taxpayers are citizens while others are aliens
c. Separate graduated rates are imposed on different types of income
d. Some taxpayers are taxed on their worldwide income while others are taxable only upon income from
sources within the Philippines
8. A non-resident citizen who, at the start of the year, returns to reside in the Philippines.
a. Resident citizen
b. Resident alien
c. Non-resident citizen
d. Non-resident alien in business in the Philippines
9. An alien who shall have stayed in the Philippines for more than one hundred eighty days.
a. Resident citizen
b. Resident alien
c. Non-resident citizen
d. Non-resident alien in business in the Philippines
10. An alien who shall have stayed in the Philippines for more than one year.
a. Resident citizen
b. Resident alien
c. Non-resident citizen
d. Non-resident alien in business in the Philippines

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 REVIEW IN BUSINESS LAW AND TAXATION
11. A citizen who stayed outside the Philippines for one hundred eighty days.
a. Resident citizen
b. Resident alien
c. Non-resident citizen
d. Non-resident alien in business in the Philippines
12. 1st Statement: A non-resident citizen is taxable only on his income from within the Philippines.
2nd Statement: A non-resident citizen is not taxable on his income from outside the Philippines.
3rd Statement: A non-resident citizen is taxable on his income from within and outside the Philippines.
a. True, true, true
b. False, false, false
c. True, true, false
d. False, false, true
13. Who among the following is a non-resident alien?
a. An alien who comes to the Philippines for a definite purpose which in its nature may be promptly
accomplished.
b. An alien who comes to the Philippines for a definite purpose which in its nature would require an
extended stay.
c. An alien who has acquired residence in the Philippines.
d. An alien who lives in the Philippines with no definite intention as to his stay.
14. The following are subject to 25% final tax on their gross income in the Philippines:
 Non-resident alien individual doing business in the Philippines.
 Non-resident alien individual not doing business in the Philippines.
 Non-resident alien cinematographic film owner/lessor.
a. True, true, true
b. True, false, false
c. False, true, true
d. False, false, false
15. A non-resident alien doing business in the Philippines is one who is/shall:
a. An individual whose father or mother is engaged in business in the Philippines.
b. An individual who is naturalized in accordance with law.
c. An individual whose residence is within the Philippines and who is not a citizen thereof.
d. Come to the Philippines and stay therein for an aggregate period of more than 180 days during the
calendar year.
16. The following individuals are required to file an annual income tax return:
I. Every Filipino citizen residing in the Philippines.-
II. Every Filipino citizen residing abroad, on his income from sources within the Philippines.
III. Every alien residing in the Philippines, on income derived from sources within the Philippines.
IV. Every nonresident alien engaged in trade, business or in the exercise of profession in the Philippines.
a. All the statements are true.
b. All the statements are false.
c. One of the statements is false.
d. Some of the statements are false.
Items 24 and 25 are based on the following information:
Saludo had the following data from his employment in 2018:
Monthly salary P24,000
Taxes withheld 16,000
Pag-ibig fund contributions 3,000
Union dues 4,800
Philhealth contributions 1,440
SSS premiums 960
13th month pay 24,000
Mid-year bonus 24,000
Loyalty award 10,000
17. The portion of compensation which is excluded from the gross compensation income if Saludo is a rank
and file employee:
a. P10,200
b. P58,000
c. P68,200

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 REVIEW IN BUSINESS LAW AND TAXATION
d. None
18. The gross compensation income of Saludo that is taxable in 2018:
a. P272,000
b. P277,800
c. P288,000
d. P322,000
19. Apollo is an employee in a firm that gives benefits to its rank and file employees. He received the
following in a year. Salaries, net of SSS, Philhealth and Pag-ibig contributions, and of labor union dues,
P360,000; Thirteenth month pay, P30,000; Productivity incentives pay, P30,000; Mid- year bonus, P15,000;
Christmas bonus, P30,000; Rice subsidy, P20,000. The gross compensation income of Apollo subject to
income tax is:
a. Р360,000
b. P375,000
c. P395,000
d. P377,000
20. Which of the following is not a characteristic of the regular income tax?
a. Gross income tax
b. Annual tax
c. Creditable withholding tax
d. Progressive
e. or proportional tax
21. This arises from an employer-employee relationship.
a. Business income
b. Professional income
c. Compensation income
d. All of the above
22. This pertains to the acquisition cost of the goods for merchandising or the manufacturing cost of the
goods in manufacturing.
a. Cost of goods sold
b. Total goods available for sale
c. Ending inventory
d. Purchases
23. These are gross inflow of benefits
a. sales
b. fees
c. revenues
d. receipts
24. Which of the following is true?
a. Corporate taxpayers are subject to a MCIT of 4% even if losing in business.
b. Corporate taxpayers are subject to a MCIT of 2% unless losing in business.
c. Corporate taxpayers are subject to a MCIT of 4% unless losing in business.
d. Corporate taxpayers are subject to a MCIT of 2% even if losing in business.
25. What is the tax rate of corporations?
a. 30%
b. 40%
c. 25%
d. exempt
26. A tax imposed whenever a corporation has zero or negative taxable income or whenever the minimum
income tax is greater than the normal income tax due from such corporation:
a. Improperly accumulated earnings tax (IAET)
b. Gross income tax (GIT)
c. Capital gains tax (CGT)

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 REVIEW IN BUSINESS LAW AND TAXATION
d. Minimum corporate income tax (MCIT)
27. A corporation which was registered with the Bureau of Internal Revenue in May, 2018 shall be covered
by MCIT in:
a. 2019
b. 2022
c. 2020
d. 2021
28. The minimum corporate income tax of a domestic or resident trading or manufacturing corporation is:
a. 2% of gross income
b. 5% of gross sales
c. 15% of gross income
d. 15% of gross sales
29. The minimum corporate income tax of a domestic or resident service corporation is:
a. 2% of gross receipts
b. 2% of gross income
c. 15% of gross receipts
d. 15% of gross income
30. One of the following statements correct. Which is it? The minimum corporate income tax of a
corporation is computed:
a. In the quarterly and the annual returns of the corporation.
b. In the annual income tax return only of the corporation.
c. In the quarterly return only of the corporation.
d. In all the taxable years of operations of the corporation.

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