ACC 143 Quiz 2 

Tax Holiday (ITH) for New ECOZONE Export or Free Trade Enterprises:
For New Registered Non-Pioneer Firms: 
a. Three (3) years from commercial operations
b. Four (4) years from commercial operations
c. Five (5) years from commercial operations
d. Six (6) years from commercial operations
 
The following are the purposes of the Conversion Authority, except:
a. To serve as the holding company of subsidiary companies created pursuant to Section 16 of
this Act and to invest in Special Economic Zones declared under Sections 12 and 15 of this Act
b. To manage and operate through government agencies developmental projects outside the
jurisdiction of subsidiary companies and special Economic Zones declared by presidential
proclamations and established under this Act
c. To establish a mechanism in coordination with the appropriate local government units to
effect meaningful consultation regarding the plans, programs and projects within the regions
where such plans, programs and/or project development are part of the conversion of the Clark
and Subic military reservations and their extensions and the surrounding communities as
envisioned in this Act
d. To plan, program and undertake the adjustment, relocation, or resettlement of population
within the Clark and Subic military reservations and their extensions as may be deemed
necessary and beneficial by the Conversion Authority, in coordination with the appropriate
government agencies and local government units.
 
ECOZONES or Special Economic Zones (SEZ) are selected areas with highly
developed or which have the potential to be developed into agri-industrial, industrial,
tourist, recreational, commercial, banking, investment and financial centers whose
metes and bounds are fixed or delimited by Presidential Proclamations. An ECOZONE
may contain any or all of the following: industrial estates (IEs), export processing zones
(EPZ), free trade zones and tourist / recreational centers. 

TRUE
FALSE
 
Start of Commercial Operations is the date specified in the Registration Agreement or
the date when the particular ECOZONE export enterprise actually begins production of
the registered product for commercial purposes, whichever comes first, irrespective of
phases or modules or schedule of development. 
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TRUE
FALSE
 
The Philippine Economic Zone Authority (PEZA) Board is an attached agency of: 
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a. Department of Finance (DOF)
b. Department of Trade and Industry (DTI)
c. National Economic and Development Authority (NEDA)
d. Securities and Exchange Commission (SEC)
 
The government agency that monitors and reviews the incentives granted by the
Conversion Authority and submit an annual report to the President.
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a. Department of Trade and Industry
b. Bureau of Internal Revenue
c. National Economic Development Authority
d. Department of Finance
 
The piece of legislation that amended Bases Conversion and Development Act of 1992.
a. R.A. 7227
b. R.A. 8553
c. R.A. 8748
d. R.A. 9400
 
Tax treaty relief application (TTRA) shall be filed with: 
a. Audit Information and Tax Exemption Division (AITED)
b. International Tax Affairs Division (ITAD)
c. Office of the Commissioner of Internal Revenue
d. Office of the Deputy Commissioner – Legal and Inspection Group
 
In order to avail the benefits of taxes paid abroad, what must be presented to the
regulatory body? 
a. Memorandum of agreement between the tax payer and host country.
b. Tax treaty law of the host country
c. Tax treaty relief application
d. Other relevant documents as may be required by regulatory body.
 
The following are non-fiscal incentives of a BOI registered enterprise, except: 
a. Foreign nationals may be employed in supervisory, technical or advisory positions within five
(5) years from a project’s registration
b. Income tax holiday for a number of years depending on whether the status of the registrant is
a pioneer or non-pioneer
c. Registered export-oriented enterprise shall have access to the utilization of the bonded
warehousing system in all areas.
d. Simplification of customs procedures for the importation of equipment, spare parts, raw
materials, and supplies and exports of processed products of registered enterprises in the
operations of their bonded warehouses.
e. There shall be no restrictions on the use of consigned equipment provided a re-export bond is
posted.
 
What is the purpose of tax treaty? . 
I. Is convention or agreement for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income (and on capital).

II. Is intended to promote international trade and investment in several ways, the most
important of which is by allocating taxing jurisdiction between the Contracting States so
as to eliminate or mitigate double taxation of income.
III. Is intended to permit the Contracting States to better enforce their domestic laws so
as to reduce tax evasion. IV. Is international agreement between two or more states
(contracting states) for efficient enforcement and beneficial implementation of tax laws. 
a. I and II
b. II and III
c. III and IV
d. All of the above
 
 
Filing of tax treaty relief application (TTRA) should be made:
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a. Before transaction (before the occurrence of the taxable event)
b. Within ten (10) days after the transaction
c. Within thirty (30) days after the transaction
d. Within one (1) month after the transaction
e. Within six (6) months after the transaction
 
ECOZONE Export Enterprise refers to an individual, association, partnership,
corporation or other form of business organization which has been registered with the
PEZA to engaged in manufacturing, assembling or processing activity falling within the
purview the Act and resulting in the exportation of 100% of its production, unless a
lower percentage of its production for exportation is prescribed by the Board subject to
such terms and conditions as the latter may determine. 
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TRUE
FALSE
 
The Board of Investments (BOI) was created under:
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a. EO 216
b. EO 226
c. EO 266
d. EO 286
 
 No law granting any tax exemption shall be passed without the concurrence of 
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a. Majority of all member of the Congress
b. 3/4 vote of all members of the Congress
c. 2/3 vote of all member of the Congress
d. Unanimous vote of all members of the congress
 
The following are No-Ruling Areas as far as the TTRA are concerned, except: 
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a. Based on hypothetical transactions
b. Future transactions
c. Past transactions
d. Request for rulings without complete documents
 
The powers and functions of the Conversion Authority shall be exercised by a Board of
Directors to be composed of ______ members.
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a. 6
b. 7
c. 8
d. 9
 
 
 The following are the powers of the Conversion Authority
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a. To give donations, grants, bequests and assistance of all kinds to local and foreign
government and private sectors
b. To invest its funds and other assets other than those of the Special Economic Zones under
Sections 12 and 15 of this Act in such areas it may deem wise
c. To exercise the right of eminent domain
d. To exercise oversight functions over the Special Economic Zones declared under this Act and
by subsequent presidential proclamations within the framework of the declared policies of the
Act
 
What taxes are covered by Philippine Tax Treaties?

I. Income tax

II. Business tax

III. Transfer tax

IV. Documentary stamp tax

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a. Only I
b. Both I and II
c. I, II and III
d. All of the above
 
Diplomatic and consular representatives are exempted from the community tax
certificate. The exemption adheres to the principle of: 
a. Situs of taxation
b. International comity
c. Tax exemption of dignitaries
d. Immunity of government from taxes
 
Tax Holiday (ITH) for New ECOZONE Export or Free Trade Enterprises:

-For New Registered Pioneer Firms: 

a. Three (3) years from commercial operations
b. Four (4) years from commercial operations
c. Five (5) years from commercial operations
d. Six (6) years from commercial operations
 
 
Tax Holiday (ITH) for New ECOZONE Export or Free Trade Enterprises:

For Expanding Firms: 

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a. Three (3) years from commercial operation of the expansion
b. Four (4) years from commercial operation of the expansion
c. Five (5) years from commercial operation of the expansion
d. Six (6) years from commercial operation of the expansion
 
ECOZONE Developer/Operator is a business entity or concern duly registered with
and / or licensed by the PEZA to develop, operate and maintain an ECOZONE or any or
all of the component IE, EPZ, Free Trade Zone or Tourist / Recreational Center and the
required infrastructure facilities and utilities such as light and power system, water
supply and distribution system, sewerage and drainage system, pollution control
devices, communication facilities, paved road network, administration building and other
facilities as may be required by the PEZA. 
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TRUE
FALSE
 
A treaty containing tax exemptions must be ratified by  
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a. 2/3 majority of the Senate
b. Majority of all members of Congress
c. Both
d. None of the above
 
The purpose of Double Taxation Agreements include the following, except: 
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a. Statutory tax rates can be effectively reduced by the agreement
b. Avoid double taxation
c. Relieve taxpayer of having to bear the burden of taxation two-fold (paying twice on same
income)
d. Divide the right of taxation between the contracting countries, to avoid differences, to ensure
taxpayers' equal rights and security, and to prevent evasion of taxation
e. All of the foregoing are purposes of DTA
 
 
For purposes of computing the tax, gross Income means the gross sales or gross
revenues derived from business activity within the ECOZONE, net of sales discounts,
sales return and allowances and minus costs of sales or direct costs but before any
deduction is made for administrative expenses or incidental losses during a given
taxable period. 
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TRUE
False
 
A Domestic Corporation pays royalty to a Foreign Corporation but it withholds a tax
lower than Philippine tax laws based on a treaty. What document need be presented to
prove the imposition of a lower withholding tax?
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a. Treaty law
b. Memorandum of agreement between the local and international company
c. Reciprocity clause
d. Tax treaty relief application.
 
 
In case of conflict between the provisions of a tax treaty and domestic law, the provision
of the tax treaty generally prevails.
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a. True
b. False
 
ECOZONE Service Enterprise is a business entity or concern within the ECOZONE
whose income derived within the ECOZONE shall be subject to taxes under the
National Internal Revenue Code. 
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TRUE
FALSE
 
The rental income of a non-resident foreign corporation from lease of aircraft is subject
to 7.5% final withholding tax under the Tax Code, but rentals and royalties are generally
subject to the 15% final withholding tax under the tax treaties. For Philippine income tax
purposes, what rate shall be used? 
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a. 15%
b. 7.5%
c. Either a or b at the option of the government
d. Either a or b at the option of the taxpayer
 
ABC PTE Ltd. is an eco-zone developer/operator and facility enterprise. It is subject to
5% gross income taxation. Which of the following is NOT an allowable deduction in
computing its tax? 
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a. Direct salaries, wages or labor expenses
b. Financing charges associated with fixed assets
c. Rent and utility charges for buildings and capital equipment
d. Salaries of product supervisor
 
 
The % share of the national government in 5% gross income taxation of PEZA locators
is: 
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a. 2%
b. 3%
c. 40%
d. 60%
 
The BOI is an attached agency of:
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a. Department of Finance (DOF)
b. Department of Trade and Industry (DTI)
c. National Economic and Development Authority (NEDA)
d. Securities and Exchange Commission (SEC)
 
ECOZONE Pioneer Enterprise may be an ECOZONE enterprise which uses a design,
formula, scheme, method, process or system or production of transformation of any
element, substance or raw materials into another raw material or finished goods which
is new and untried in the Philippines. 
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TRUE
FALSE
 
The Ambassador of the United States of America decided to go on vacation in the
Shangrila Hotel in Boracay, he stayed there for a week enjoying the beautiful waters
and beaches of Boracay. On his departure from the hotel, he was presented with a bill
for his stay, to which he noticed that he was being imposed the VAT of 12% as, part of
the bill. He refused to pay the same because he is entitled to tax exemptions in the
Philippines, being an ambassador assigned to the Philippines. The hotel argued that
since he is there on his 
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a. Correct in insisting on his privileges because of the principles of international comity in
taxation
b. Correct in insisting on his privileges because he represents the most powerful nation in the
world
c. Incorrect because he was acting as a private citizen during the period
d. Incorrect because as a temporary resident in the Philippines, he is required to contribute to
the Philippine coffers, regardless of his length of stay in the Philippines.
 
 
Registration Agreement is the final agreement executed by the PEZA and the
ECOZONE Enterprise setting forth the terms and conditions for the latter's operation of
business or engaged of economic activity within the ECOZONE. 
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TRUE
FALSE
 
Customs Territory is the national territory of the Philippines outside of the proclaimed
boundaries of the ECOZONES except those areas specifically declared by other laws
and/or presidential proclamations to have the status of special economic zones and / or
free ports
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TRUE
FALSE
 
The Board of Directors of the Conversion Authority shall perform the following functions,
except
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a. Prepare the annual and supplemental budgets of the Conversion Authority
b. Submit an annual report of the operation of the Conversion Authority to the President of the
Philippines, President of the Senate and Speaker of the House of Representatives
c. Determine the organizational structure of the Conversion Authority, define the duties and
responsibilities of all officials and employees and adopt a compensation and benefit scheme at
least equivalent to that of the Central bank of the Philippines
d. Appoint all officials down to the third level and authorize the president of the Conversion
Authority to appoint all others; Provided, That all appointments shall be on the basis of merit
and fitness and all personnel action shall be in pursuance of the civil code, rules and
regulations, except those coterminus employees of the members of the Board
 
The % share of the city or municipality in 5% gross income taxation of PEZA locators
is: 
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a. 2%
b. 3%
c. 40%
d. 60% Income
 
The PEZA Board is headed by a _____________with the rank of department
undersecretary who shall be appointed by the President. 
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a. Administrator
b. Director general
c. Manager
d. Presiding Officer