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Income Tax - Quiz 1 - Chapter 1-2

Points:
86/97
Correct
1/1 Points
1
The principal purpose of taxation is
a. To encourage the growth of home industries through the proper use of tax exemption and tax
incentives
b. To implement the police power of the state
c. The reduce excessive inequalities of wealth
d. To raise revenues for government needs
Correct
1/1 Points
2
The aspects of taxation are
a. Legislative in character
b. Executive in character
c. Shared by the legislative and executive departments
d. Judicial in character
Correct
1/1 Points
3
Taxation as distinguished from police power and power of eminent domain
a. Property is taken to promote the general welfare
b. May be exercised only by the government
c. Operates upon the whole citizenry
d. There is generally no limit as to the amount that may be imposed
Correct
1/1 Points
4
Which of the inherent powers may be exercised even by public service
corporation and public entities
a. Power of taxation
b. Police power
c. Power of eminent domain
d. A and C
Incorrect
0/1 Points
5
Which of the following statements is correct?
a. Income tax is an indirect tax
b. Our National Internal Revenue Laws are criminal in nature
c. The theory of taxation states that the power of taxation is supreme, plenary, unlimited, and
comprehensive
d. Taxation is subject to inherent and constitution limitations
Correct
1/1 Points
6
This is an inherent limitation on the power of taxation
a. Rule on uniformity and equity in taxation
b. Due process of law and equal protection of the laws
c. Non-impairment of the jurisdiction of the Supreme Court in tax cases
d. Tax must be for public purpose
Correct
1/1 Points
7
This is a constitutional limitation on the power of taxation
a. Tax laws must be applied within the territorial jurisdiction of the state
b. Exemption of government agencies and instrumentalities from taxation
c. No appropriation of public money for religious purposes
d. Power of tax cannot be delegated to private persons or entities
Correct
1/1 Points
8
The power to acquire private property upon payment of just compensation for
public purpose
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Power of love
Correct
1/1 Points
9
The power to regulate liberty and property to promote the general welfare
a. Police power
b. Power of taxation
c. Power of eminent domain
d. Super power rangers
Correct
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10
The tax imposed should be proportionate to the taxpayer’s ability to pay
a. Fiscal adequacy
b. Equality or theoretical justice
c. Administrative feasibility
d. Economic consistency
Correct
1/1 Points
11
The sources of revenue as a whole, should be sufficient to meet the demand of
public expenditures
a. Fiscal adequacy
b. Equality or theoretical justice
c. Administrative feasibility
d. Revenue generation
Correct
1/1 Points
12
The tax laws must be capable of convenient, just and effective administration
a. Fiscal adequacy
b. Equality or theoretical justice
c. Administrative feasibility
d. Psychological compatibility
Incorrect
0/1 Points
13
The tax laws must be capable of convenient, just and effective administration

a.
b.
c.
d.
Correct
1/1 Points
14
Enforced proportional contributions from persons and property levied by the
state by virtue of its sovereignty for the support of the government and for all
public needs
a. Tall
b. Licensed fee
c. Taxes
d. Assessment
Correct
1/1 Points
15
Persons or things belongings to the same class be taxed at the same rate
a. Simplicity in taxation
b. Reciprocity in taxation
c. Equality In taxation
d. Uniformity in taxation
Correct
1/1 Points
16
Which is not an essential characteristic of a tax?
a. It is unlimited as to amount
b. It is payable in money
c. It is proportions in character
d. It is an enforced contribution
Correct
1/1 Points
17
Special assessment is an enforced proportional contribution from owners of land
especially benefited by the public improvement. Which one of the following is
not considered as one of its characteristics?
a. It is levied on land
b. It is based on the government’s need of money to support its legitimate objectives
c. It is not a personal liability of the persons assessed.
d. It is based solely on the benefit derived by the owners of the land
Correct
1/1 Points
18
It is the privilege of not being imposed a financial obligation to which others are
subject
a. Tax incentives
b. Tax exemption
c. Tax amnesty
d. Tax credit
Correct
1/1 Points
19
As the scope of the legislative power to tax, which is not correct?
a. Where there are no constitutional restrictions, and provided the subjects are within the
territorial jurisdiction of the state, Congress has unlimited jurisdiction as to the persons, property or
occupations to be taxed
b. In the absence of constitutional prohibition, the House of Representatives has the right to levy
a tax of any amount it sees fit.
c. The discretion of Congress in imposing taxes extends to the mode method or kind of tax, if
not restricted by the constitution.
d. The sole arbiter of the purpose for which taxes shall be levied is the Commissioner of Internal
Revenue (CIR), provided the purpose is public. However, the courts may review the levy of the tax to
determine whether or not the purpose is public.
Correct
1/1 Points
20
Which of the following is a nature of taxation?
a. The power is exercised by legislative action
b. It is essentially an administrative function
c. It is generally payable in money
d. The state can exist without it
Correct
1/1 Points
21
The use of illegal or fraudulent means to avoid or defeat the payment of tax
a. Shifting
b. Exemption
c. Avoidance
d. Evasion
Correct
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22
The use of legal or permissible means to minimize or avoid taxes
a. Shifting
b. Exemption
c. Avoidance
d. Evasion
Correct
1/1 Points
23
Synonymous to tax evasion
a. Tax dodging
b. Tax minimization
c. Tax exemption
d. Tax shield
Correct
1/1 Points
24
Synonymous of tax avoidance
a. Tax dodging
b. Tax minimization
c. Tax exemption
d. Tax evasion
Correct
1/1 Points
25
In case of doubt, tax statutes are construed
a. Strictly against the government and the taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally I favor of the government and strictly against the taxpayer
Correct
1/1 Points
26
In case of doubt, tax exemptions are construed
a. Strictly against the government and taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer
Incorrect
0/1 Points
27
In case of conflict between the Tax Code and the Philippine Accounting
Standards (PAS)
a. PAS shall prevail over the Tax Code
b. Tax Code shall prevail over PAS
c. Pas and Tax Code shall be both disregarded
d. The taxpayer may choose between the PAS or the Tax Code
Correct
1/1 Points
28
Tax of a fixed amount imposed upon all persons residing within a specified
territory without regard to their property, income, or occupation they may be
engaged in
a. Personal, poll or capitation
b. Property
c. Excise
d. Regressive
Correct
1/1 Points
29
Tax imposed on personal or real property in proportion to its value or on some
other reasonable method of apportionment
a. Personal, poll or capitation
b. Property
c. Excise
d. Regressive
Correct
1/1 Points
30
Tax imposed upon the performance of an act, the enjoyment of privilege or the
engaging in an occupation
a. Personal, poll or capitation
b. Property
c. Excise
d. Progressive
Correct
1/1 Points
31
Tax which is demanded from the persons whom the law intends or desires to pay
it
a. Direct
b. Indirect
c. Excise
d. Income
Correct
1/1 Points
32
Tax which is demanded from one person the expectation and intension that he
shall indemnify himself at the expense of another
a. Direct
b. Indirect
c. Property
d. Income
Correct
1/1 Points
33
Tax which imposes a specific sum by the head or number or by some standard of
weight or measurement and which requires no assessment other than a listing or
classification of the objects to be taxed.
a. Specific
b. Ad-valorem
c. Excise
d. Income
Correct
1/1 Points
34
Tax of a fixed proportion of the amount or value of the property with respect to
which the tax to assessed
a. Specific
b. Ad-valorem
c. Excise
d. Percentage
Correct
1/1 Points
35
Tax based on a fixed percentage of the amount of property, income or other to
be taxed
a. Proportional
b. Progressive
c. Regressive
d. Indirect
Correct
1/1 Points
36
Tax where the rate decreases as the tax base increases
a. Proportional
b. Progressive
c. Regressive
d. Indirect
Correct
1/1 Points
37
Tax where the rate increases as the tax base increases
a. Proportional
b. Progressive
c. Regressive
d. Indirect
Correct
1/1 Points
38
Which of the following statements is not correct?
a. Tax burdens shall neither be imposed nor presumed to be imposed beyond what the statute
expressly and clearly states because tax statutes should be construed strictly against the government
b. Tax exemption, tax amnesty condonations and their equivalent provisions are not presumed
and, when granted, are strictly construed against the taxpayer because such provisions are highly
disfavored by the government
c. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must
be able to justify his claim or right
d. The Bureau of Internal Revenue has the duty and the exclusive power of enacting
implementing and interpreting tax laws
Correct
1/1 Points
39
The strongest of all inherent powers of the state because without it, the
government can neither survive nor dispense any of its other powers and
function effectively
a. Police power
b. Power of Eminent Domain
c. Power of Taxation
d. Power of Greystone
Correct
1/1 Points
40
This power is superior to the non-impairment clause is broader in application
because it is the power to make and implement the laws
a. Power of Taxation
b. Power of Recall
c. Power of Eminent Domain
d. Police Power
Correct
1/1 Points
41
Which of the following statements is not correct?
a. An inherent limitation of taxation may be disregarded by the application of a constitutional
limitation
b. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our
country
c. Taxes may be imposed retroactively by law, but unless so expressed by such law, these taxes
must only be imposed prospectively
d. Tax laws are either political or penal in nature
Correct
1/1 Points
42
Which of the following is not a constitutional limitation on the Power of Taxation?
a. No person shall be deprived of life, liberty or property without due process of law
b. No person shall be denied the equal protection of the law
c. No person shall be imprisoned for debt or non-payment of tax
d. No law granting any tax exemption shall be passed without the concurrence of a majority of
all the members of Congress
Correct
1/1 Points
43
The distinction of a tax from permit or license fee is that a tax is
a. Imposed for regulation
b. One which involves an exercise of police power
c. One in which there is generally no limit on the amount that may be imposed
d. Limited to the cost of regulation
Correct
1/1 Points
44
Police power as distinguished from the power of eminent domain
a. Just compensation is received by the owner of the property
b. May be exercised by private individuals
c. May regulate both liberty and property
d. Property is taken by the government for public purpose
Correct
1/1 Points
45
A tax wherein both the impact of or the liability for the payment of the tax as well
as the burden of the tax fall on the same person
a. Direct tax
b. VAT
c. Indirect tax
d. Percentage tax
Correct
1/1 Points
46
Which one of the following is not a characteristic or element of a tax?
a. It is an enforced contribution
b. Is is legislative in character
c. It is based on the ability to pay
d. It is payable in money or in kind
Correct
1/1 Points
47
Tax as distinguished from license fees
a. Limited to cover cost of regulation
b. A regulatory measure
c. Non-payment does not necessarily render the business illegal
d. Imposed in the exercise of police power
Correct
1/1 Points
48
The power to impose taxes is exercised by the
a. President
b. Supreme Court
c. BIR
d. Congress
Correct
1/1 Points
49
One of the characteristics of internal revenue laws is that they are:
a. Criminal in nature
b. Penal in nature
c. Political in nature
d. Generally, prospective in application
Correct
1/1 Points
50
Which of the following in not an example of exercise tax:
a. Transfer tax;
b. Sales tax
c. Real property tax
d. Income tax
Correct
1/1 Points
51
The following are similarities of the inherent power of taxation, eminent domain,
and police power, except one:
a. Are necessary attributes of sovereignty
b. Superior to the non- impairment clause of the constitution
c. Compensation/benefit is received
d. Are legislative in character
Correct
1/1 Points
52
Which of the following statements is not correct?
a. Taxes may be imposed to raise revenues or to provide disincentives to certain activities within
the state;
b. The state can have the power of taxation even if the Constitution does not expressly give it
the power to tax;
c. For the exercise of the power taxation, the state can tax anything at any time;
d. The provisions of taxation in the Philippine Constitution are grants of power enabling the
state to impose taxes.
Correct
1/1 Points
53
License fee as distinguished from tax:
a. Non-payment does not necessary render the business illegal;
b. A revenue raising measure;
c. Imposed in the exercise of taxing power
d. Limited to cover cost of regulation
Correct
1/1 Points
54
Value added tax is an example of a:
a. Graduated tax
b. Progressive tax
c. Regressive tax
d. Proportional tax
Correct
1/1 Points
55
Which tax principle is described in the statement “The more income earned by
the taxpayer, the more tax he has to pay.”
a. Fiscal adequacy
b. Theoretical justice/Equitability
c. Administrative feasibility
d. Inherent in sovereignty
Correct
1/1 Points
56
One of the characteristics of a tax is that:
a. It is generally based on contact;
b. is generally payable in It money;
c. It is generally assignable;
d. It is generally subject to compensation
Correct
1/1 Points
57
The following are the characteristics of our internal revenue laws except;
a. Political in nature;
b. Civil in nature;
c. Generally prospective in application
d. May operate retrospectively if Congress so provide
Correct
1/1 Points
58
Which of the following statements is wrong? A revenue bill:
a. Must originate from the House of Representative and on which same bill the senate may
propose amendments;
b. May originate from the Senate and on which same bill the House of Representative may
propose amendments;
c. May have a House version and a Senate version approved separately, and then consolidated,
with both houses approving the consolidation version
d. May be recommended by the President to Congress
Correct
1/1 Points
59
Tax as distinguished from special assessment:
a. Not a personal liability of the person assessed
b. Based wholly on benefits
c. Exceptional as to time and place
d. Based on necessity and the purpose is to raise revenues
Correct
1/1 Points
60
Under the basic principle of a sound tax system, the Government should not incur
a deficit:
a. Theoretical justice
b. Administrative feasibility
c. Fiscal adequacy
d. Uniformity in taxation
Correct
1/1 Points
61
Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. License fees
Correct
1/1 Points
62
No person shall be imprisoned for non-payment for this:
a. Excise tax
b. VAT
c. Income tax
d. Poll tax
Correct
1/1 Points
63
This is a demand of ownership
a. License fee
b. Tax
c. Toll
d. Custom duties
Correct
1/1 Points
64
Income tax is generally regarded as
a. An excise tax
b. A tax on persons
c. A property tax
d. Tax on profits
Correct
1/1 Points
65
Which of the following is not acceptable for legally refusing to pay the tax?
a. That the right of the state to collect the tax has prescribed
b. That there is no jurisdiction to collect the tax
c. That the tax law was declared as unconstitutional
d. That there in no benefit derived from the tax
Correct
1/1 Points
66
A law granting tax exemption requires the concurrence of
a. Majority vote of all members of Congress
b. 2/3 vote of members of Congress
c. ¾ vote of members of Congress
d. Unanimous vote of members of Congress
Correct
1/1 Points
67
No person shall be imprisoned for debt or non-payment of a poll tax. This is a
(an)
a. Inherent limitation
b. Constitutional limitation
c. International limitation
d. Territorial limitation
Correct
1/1 Points
68
The Department of Finance (Executive) thru its officers entered into a contract
with foreign investors, granting them exemption from all forms of taxes to
encourage investments in the Philippines.
The contract is
a. Void, unless the President ratifies
b. Void, because the power to grant tax exemption is vested in Congress
c. Valid, if the President
d. Valid, because the purpose is to promote public welfare
Correct
1/1 Points
69
Tax as distinguished from debt
a. No imprisonment for non-payment
b. May be paid in kind
c. Based on contract
d. Based on law
Correct
1/1 Points
70
Congress can impose a tax at any amount and at any time shows thatTax as
distinguished from debt
a. Taxation is an inherent power of the estate
b. Taxation is essentially a legislative power
c. Taxation is a very broad power of the state
d. Taxation is based on taxpayers’ ability to pay
Correct
1/1 Points
71
A change imposed on land for special benefits derived resulting from public
improvements
a. Tax
b. Toll
c. License
d. Special assessment
Correct
1/1 Points
72

a. I, II, III, IV
b. I, II, III, IV, V
c. I, II, III, IV, V, VI
d. I, II, III, IV, V, VI, VII
Correct
1/1 Points
73
The three fundamental powers of the state are

I.           Inherent in the state and may exercised by the state without need of any
constitutional grant.
II.         Not only necessary but indispensable
III.       Methods by which the state interferes with private rights
IV.       Exercised primarily by the legislature
a. All true
b. All false
c. Half true, half false
d. None of the above
Correct
1/1 Points
74
I. Police power regulates both liberty and property while the power of eminent
domain and the power of taxation affect only property rights.

II Police power and the power of taxation may be exercised on by the


government while the power of eminent domain may be exercised by some
private entities.

III. The property taken in police power is destroyed while the property taken
under the power of eminent domain and power of taxation is not destroyed

IV. In the power of taxation, the compensation received is the protection of the
state afforded to its citizens; in police power, a higher standard of living is
enjoyed by the citizens; and in the power of eminent domain, a citizen receives
just compensation for the property taken from him.
a. All true
b. All false
c. Half true
d. None of the above
Incorrect
0/1 Points
75
I. The point on which a tax is originally imposed is impact of taxation
II The point on which a tax burden finally rests or settles down is incidence of
taxation
III. Police power is superior to the non-impairment clause of the constitution.
IV Power of taxation is not superior to the non-impairment clause of the
constitution
a. All true
b. All false
c. Half true
d. None of the above
Correct
1/1 Points
76
I. No person shall be imprisoned for debt or non-payment of tax
II Tax laws are civil and penal in nature because there are criminal penalties when
they are violated
III. Taxes may be collected in an unlimited amount
IV License fees may be collected in an unlimited amount
a. One statement is true
b. Two statements are true
c. Three statements are true
d. All statements are true
Incorrect
0/1 Points
77
I. Tax is imposed on persons, property, and property rights
II Special assessment is imposed on persons, property and property rights
III. Tax collection is legislative act
IV Imposition of tax is an administrative act
a. One statement is true
b. Two statements are true
c. Three statements are true
d. All statements are true
Correct
1/1 Points
78
I. There can only be a tax if there is a law imposing the tax
II The power to tax may include the power to destroy
a. True, true
b. True, false
c. False, true
d. False, false
Correct
1/1 Points
79
I. Due process of law in taxation under the constitution is a grant of power
II Provisions in the Philippine constitution on taxation are grants of power
III There may be double taxation in the Philippines
IV Taxation may be used to implement the police power of the state
a. One statement is true
b. Two statements are true
c. Three statements are true
d. All statements are true
Correct
1/1 Points
80
I. License fee is a charge imposed under police power
II Special assessment is levied on land only
III. Tax is imposed regardless of public improvements.
IV Special assessment is imposed regardless of public improvements
a. One statement is true
b. Two statements are true
c. Three statements are true
d. All the statements are true
Correct
1/1 Points
81
I. One of the essential characteristics of a tax is it is unlimited in amount.
II. A tax is generally unlimited because it is based on the needs of the state.
a. True, true
b. True, false
c. False, true
d. False, false
Incorrect
0/1 Points
82
A system of taxation where the amount of revenue from indirect taxes are more
than the direct taxes is
a. Progressive
b. Regressive
c. Proportional
d. Schedular
Incorrect
0/1 Points
83
Congress passed a law which granted tax amnesty to those who have not paid
their income taxes in 2010 but did not provide for the refund to those who paid.
Is the law valid?
a. No, this will encourage taxpayers not to pay their taxes
b. Yes, Congress has the sole discretion of determining whom to tax
c. No, the grant of amnesty is the sole prerogative of the President
d. Yes, Congress provided for a valid classification
Correct
1/1 Points
84
Money collected from taxation shall not be paid to any religious dignitary EXCEPT
when
a. The religious dignitary is assigned to the Philippine Army
b. It is paid by a local government unit
c. The payment is passed in audit by the COA
d. It is part of lawmaker’s pork barrel
Correct
1/1 Points
85
Which theory in taxation states that without taxes, government would be
paralyzed for lack of power to activate and operate it, resulting in its destruction?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. No money, no honey theory
Incorrect
0/1 Points
86
The actual effort exerted by the government to effect the exaction of what is due
from the taxpayer is known as
a. Assessment
b. Levy
c. Payment
d. Collection
Correct
1/1 Points
87
Although the power of taxation is basically legislative in character, it is NOT the
function of Congress to
a. Fix with certainty the amount of taxes
b. Collect the tax levied under the law
c. Identify who should collect the tax
d. Determine who should be subject to the tax
Correct
1/1 Points
88
An example of a tax where the concept of progressively finds application is the
a. Graduated income tax rates on individuals
b. Excise tax on petroleum products
c. Value-added tax on certain articles
d. Amusement tax on boxing exhibitions
Incorrect
0/1 Points
89
The power to tax is the power to destroy. Is this always so?
a. No. the Executive Branch may decide not to enforce a tax law which it believes to be
confiscatory
b. Yes. The tax collectors should enforce a tax law even if it results to the destruction of the
property rights of the taxpayer
c. Yes. The tax laws should always be enforced because without taxes the very existence of the
State is endangered
d. No. The Supreme Court may nullify a tax law, hence, property rights are not affected
Incorrect
0/1 Points
90
This is not an inherent limitation on the power of taxation
a. Double taxation, though not prohibited, is disfavored
b. Equality and uniformity in taxation
c. Public purpose of taxation
d. Territoriality
Correct
1/1 Points
91
Revenue regulations (RRs) are:
a. Issuances signed by the Secretary of Finance, upon recommendation of the CIR, that specify,
prescribe or define rules and regulations for the effective enforcement of the provisions of the
National Internal Revenue Code (NIRC) and related statutes
b. Issuances that publish pertinent and applicable portions, as well as amplifications, of laws,
rules, regulations and precedents issued by the BIR and other agencies/offices
c. Issuance that provide directives or instructions, prescribe guidelines; and outline processes,
operations, activities, workflows, methods and procedures necessary in the implementation of stated
policies, goals, objectives, plans and programs of the Bureau in all areas of operation, except auditing
d. None of the above
Correct
1/1 Points
92
Revenue Memorandum Circulars (RMCs) are:
a. Issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of
Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement
of the provisions of the National Internal Revenue Code (NIRC) and related statutes.
b. Issuances that publish pertinent and applicable portions, as well as amplifications, of laws,
rules, regulations and precedents issued by the BIR and other agencies/offices
c. Issuances that provide directives or instructions, prescribe guidelines; and outline processes,
operations, activities, workflows, methods and procedures necessary in the implementation of stated
policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except
auditing
d. None of the above
Correct
1/1 Points
93
Revenue Memorandum Orders (RMOs) are:
a. Issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of
Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement
of the provisions of the National Internal Revenue Code (NIRC) and related statutes.
b. Issuances that publish pertinent and applicable portions, as well as amplifications, of laws,
rules, regulations and precedents issued by the BIR and other agencies/offices
c. Issuances that provide directives or instructions, prescribe guidelines; and outline processes,
operations, activities, workflows, methods and procedures necessary in the implementation of stated
policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except
auditing
d. None of the above
Incorrect
0/1 Points
94
The following are the powers of the CIR except:
a. After a return has been filed or when no return is filed the CIR may authorized the
examination of any taxpayer, and the assessment of the correct amount of tax
b. The CIR has the power to issue Summons or Subpoena Duces Tecum to a taxpayer, an officer
of employee of a taxpayer, or to any person having possession of records relating to the business of
a taxpayer
c. THE CIR has the power to take the testimony of a person, under oath, that may be relevant or
material to the inquiry
d. The CIR has the power to inquire into a taxpayer’s bank deposits in all instances
Correct
1/1 Points
95
What is tax mapping?
a. It is equivalent to tax assessment within the applicable reglementary periods depending on
whether the taxpayer is guilty of fraud or not
b. It is a mere verification made by the BIR of a taxpayer’s compliance with registration and other
requirements prior to, during, and after its business operations such as the following: (a) registration
of the head office and branches; (b) payment of annual registration fee and posting of the same in
the place of business; (c) authority to print receipts and invoices; (d) the issuance of receipts and
invoices on every sale; (e) the contents of such receipts and invoices; (f) registration of cash register
machines, point-of-sale machines, and computerized accounting systems; and (g) registration of
books of accounts
c. This is the directory of the Revenue District Offices of the BIR with a listing of all officers and
revenue agents.
d. None of the above
Correct
1/1 Points
96
Dante Company is a hotel company registered as a local economic enterprise
(“LEE”) of the City of Dapitan. The company is asserting that, as a LEE owned and
operated by a local government unit (“LGU”), it should no longer be required to
pay income taxes to the BIR. It argues that all revenues collected by it must
accrue exclusively to the city government of Dapitan. Is the company correct?
a. Yes. Since the company is owned by an LGU which itself is exempt from taxes imposed by the
tax Code, the same privileges must also be accorded to it.
b. Yes. Under Section 18 of the Local Government Code, LGU are authorized to generate their
own sources of revenues, and the allocation of the same shall accrue exclusively to them.
c. No. The company is not one of those corporations exempt from taxes under Section 30 of the
Tax Code or under any special laws. Besides, the acts of an LGU in its corporate capacity and for the
purpose of economic gain may be subject to tax just like any other private or government
corporation (BLGF Opinion, April 20, 2017)
d. None of the above
Correct
1/1 Points
97
Mr. Compton sells shoes in Makati through a retail store. He pays the Vat on his
gross sales to the BIR and the municipal license tax based on the same gross
sales to the City of Makati. He comes to you for advice because he thinks he is
being subjected to double taxation. What advice will you give him?
a. Yes, there is double taxation and it is progressive
b. The City of Makati has no taxing power
c. Yes, there is double taxation, and this is illegal in the Philippines
d. Double taxation is allowed where one tax is imposed by the national government and the
other by local government

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