Business-

TAXATION

BUSINESS TAXATION The “Business" Concept What is in the course of trade or business? The regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization or government entity. General Rule: Habitual engagement in a commercial activity Exception Rule: 1. Business for subsistence (GR or NS ≤ P100,000/year) = not considered business 2. Sales or services of non-resident aliens/non-resident foreign corporations = considered engaged in business What is the consequence of being engaged in the course of trade or business? Such person, entity, organization or associations engaged in the course of trade or business shall be held liable to pay business tax. Nature of Business Taxes 1. Privilege tax – levied upon the right to engage in business (still chargeable even if the business is incurring losses) 2. Consumption tax – levied upon the consumption of goods or services 3. Indirect tax – passed by sellers to buyers What are the different kinds/types of business tax? Types of National Business Taxes a. Percentage tax b. Value Added Tax c. Excise tax – manufacturers or importers of sin products or non-essential commodities. A. SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAX 1. Persons Exempt from VAT – 3 % of gross sales or gross receipts 2. Common carriers by land and keepers of garage (Domestic Carriers) – 3% of quarterly gross receipts. Exemption: 2-wheel animal driven vehicles & bancas. Type 1. Jeepney for hire 2. Public Utility Bus: Not exceeding 30 passengers Exceeding 30 but not exceeding 50 Exceeding 50 3. Taxis 4. Car for hire (with chauffeur) 5. Car for hire (without chauffeur)

Manila and other Cities Php 65,700

Provincial Php 32,900

Php 98,600 Php 164,200 Php 197,100 Php 98,600 Php 82, 100 Php 49,300

Php 98,600 Php 164,200 Php 197,100 Php 65,700 Php 82, 100 Php 49,300

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% *Note: Electric Companies are Vatable. 5. Overseas dispatch of message or conversation originating from the Philippines Based of the amount paid by the user to the provider of the communication facility for outgoing calls only --------------------------------------------------- 10% of the amount paid Exemptions: (DING) a. government calls b. diplomatic services (embassies and consular offices of foreign governments)

c. international organizations – for messages transmitted by international organization or any of its agencies based on the Philippines enjoying privileges, exemptions and immunities which the Philippine Government recognize pursuant to international agreements d. news services 6. Banks and non-bank financial intermediaries performing quasi-banking functions

A. Banks and Non-bank financial intermediaries performing quasi-banking functions

1. On interest commissions and discounts from lending activities, income from financial leasing, on the basis of remaining maturities of instruments from which such receipt were derived: a. maturity period is 5 years or less ----------------------------------------------- 5% b.maturity period is more than 5 years ------------------------------------------ 1% 2. On dividends and equity shares in net income of subsidiaries ------------------0% 3. On royalties, rental of properties, real or personal, profits from exchange and all other items treated as gross income under the income tax law --------------------------------7% 4. On net trading gains on foreign currency, debt instruments, derivatives and other similar financial instruments -------------------------------------------------------------------7%

B. Tax on Other Non-bank financial intermediaries

1. On interest, commissions and discounts from lending activities, income from financial leasing, on the basis of remaining maturities of instruments from which such receipts were derived a. maturity period is five years or less -------------------------------------------- 5% b.maturity period is more than 5 years ------------------------------------------ 1% 2. On interests, commissions, discounts and all other items treated as gross income under the income tax law ---------------------------------------------------------------------------5%

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 8. Agents of foreign insurance companies - for marine, fire or miscellaneous insurance agents authorized to procure insurance to transact on risk located on the Philippines for companies not authorized to transact business in the Philippines – 2x tax on life insurance --------------------------------------------------10% - if the owner of property or the insured interest directly for himself obtained policies in foreign companies (This must be duly reported to the Insurance Commissions and the BIR) ----------5% 9. Amusement tax Amusement Place Place of boxing exhibitions Place for professional basketball games Cockpits, cabarets, night or day clubs Jai-alai and race tracks

Tax 10% 15% 18% 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% B. THE VALUE ADDED TAX What is VAT? It is an indirect business tax imposed on every (a) sales, barter or exchange of goods (b) sale of services (c) lease of goods or commodities in the normal course of trade or business and (d) importation (whether or not in the course of trade or business). The shifting feature of VAT allows the seller to shift the VAT to its buyers. Who are required to file vat returns? 

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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 How to compute VAT? OUTPUT VAT (12%) xxx Less: INPUT VAT (12%) xxx VALUE ADDED TAX PAYABLE xxx

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 A. Domestic sales – 12% 1. Actual sales – 12% of the gross selling price/ gross receipts What is meant by gross selling price or gross receipts? The price agreed in the sales contract as diminished by: 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. sales discounts indicated in the invoice at the time of sale, the grant of which is not dependent upon the happening of a future event, may be excluded from the gross sales within the same month/quarter it was given 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) B. Zero-rated sales – 0% (EXPORT SALE) Zero-rated sales of goods: 1. Actual export to a foreign, irrespective of the agreed shipping arrangement 2. Sale of raw or packaging materials to a non-resident buyer for delivery to a resident local export-oriented enterprise* 3. Sales to export oriented enterprises (exports exceeds 70% of annual production) 4. Export sales under EO 226 – in addition to actual export a. Sale of export producer to another export producer or to an export trader that subsequently export the same b. Even without actual exportation 1) Sales to bonded manufacturing warehouses of export-oriented manufacturers 2) Sales to export processing zones (BOI-registered manufacturers or producers) 3) sales to registered export traders operating bonded trading warehouses supplying raw materials in the manufacture of export products 4) 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 5. Sales to persons engage in international shipping or air transport operations (no domestic operation) 6. Sales of locally manufactured or assembled goods for household and personal use to Filipinos abroad and other non-residents of the Philippines (returning OFWs)* 7. Sale of gold to the BSP (before train law) 8. Sales to persons deemed tax-exempt under special laws or international agreements a. Subic Bay Metropolitan Authority (SBMA) – registered and accredited entities pursuant to RA 7227 b. Philippine Economic Zone Authority (PEZA) – registered and accredited entities c. Entities exempt under international agreements to which the Philippine is a signatory 1) Asian Development Bank (ADB) 2) International Rice Research Institute (IRRI) Zero-rated sales of services: 1. Processing, manufacturing and repacking goods for other persons doing business outside the Philippines, which goods are subsequently exported* 2. other services rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed * 3. transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country (Note: resident foreign international air or sea carriers are subject to 3% percentage tax) 4. sale of power or fuel generated through renewable sources of energy (biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuel) 5. services rendered to persons or entities whose exemptions under special laws or international agreements to which the Philippines is a signatory 6. services rendered to persons engaged in international shipping or air transport operation, including leases of property for use thereof 7. services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an export-oriented enterprise * Must be paid in acceptable foreign currencies and accounted for with the rules and regulations of the BSP 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. 1. Regular input VAT – 12% of a. Domestic purchase from VAT supplier b. Importation of goods or service for business use – 12% withheld VAT for payments to non-residents When to claim regular input VAT? a. Capital goods – aggregate cost (>P1M, amortize over not less than 60 months, otherwise immediately) b. Non-capital goods – immediately 2. Transitional input VAT – 2% of BI subject to VAT or actual VAT paid in BI whichever is higher 3. Presumptive input VAT – 4% of agricultural purchases of manufacturers of: a. Sardines d. Cooking Oil b. Mackerel e. Packed noodles c. Milk f. Refined sugar 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 Treatment of Input VAT 1. Input VAT traceable to zero-rated sales are claimable either as: a. Tax credit or b. Tax refund 2. Input VAT traceable to exempt sales are part of cost of goods sold 3. Input VAT traceable to sales to the government is compared with to the standard input VAT(7% of gross payment to the government or GOCC) a. If actual input VAT > standard input VAT(7% of invoice price to government sales) – deductible expense b. If actual input VAT < standard input VAT(7% of invoice price to government sales) – taxable gain 4. Input VAT traceable to regular sales is deducted against output VAT. a. net output VAT – VAT payable b. net input VAT – deferred input VAT How to claim of deferred input tax?  Deferred input VAT from the prior quarter is deductible in the first month of the succeeding quarter  Deferred input VAT in the first month is deductible in the second month  Deferred input VAT in the second month is not deductible in the cumulative quarterly VAT return Advanced Input VAT – applicable for manufacturers or processors of refined sugar, flour and timber INPUT VAT ALLOCATION & TREATMENT When a taxpayer with a VAT business and non-VAT business makes a purchase during a month from a VAT-registered person, for use in his VAT and non-VAT business, the input tax on the purchase shall be allocated between the VAT and non-VAT business on the basis of sales during the taxable month pro-rata. Treatment: Transaction Treatment Ordinary 12% Vatable Creditable Purchase

Zero-rated Purchases Exempt Purchases

Creditable or Refundable Cost or Expense

Convertible

or

VAT EXEMPT TRANSACTIONS A. Sale or importation of agricultural and marine food products in their original state (original state even if they have undergone the simple process of preparation or preservation for the market such as freezing, drying, salting, broiling, roasting, smoking or stripping); B. Sale or importation of fertilizers, ordinary feeds, seeds, seedlings and fingerlings; C. Importation of personal and household effects belonging to residents of the Philippines returning abroad and non-resident coming to resettle in the Philippines; D. Importation of professional instruments and implements wearing apparel, domestic animals and personal household effects; E. Services subject to other percentage taxes; F. Services of agricultural contract growers and milling for others of palay into rice, corn ito grits and sugar cane to raw sugar; G. Educational services rendered by private education institutions duly accredited by DEPED, CHED and TESDA; H. Medical, dental, veterinary services except those rendered by professionals; I. Services rendered pursuant to employee-employer relationship; J. Services rendered by regional or area headquarters established in the Philippines by multinational corporations which act as supervisory, communication and coordinating centers; K. Sale by agricultural cooperatives duly registered with the Cooperative Development Authority. L. Gross receipts from lending cooperatives; M. Sales by non-agricultural, non-electrical and non-credit cooperatives duly registered with the CDA. N. Export sale of non-vat registered indivuals; O. Sale of residential lot P1,919,500 and below and other residential dwellings valued at P3,199,200 and below; P. Lease of residential unit with monthly rental not exceeding P12,800; Q. Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally for paid advertisements; R. Sale or importation of passenger or cargo vessels and aircrafts for domestic or international operations; S. Importations of fuel, goods, and supplies by person engaged in international shipping or air transportation; T. Service of banks, non-bank, financial intermediaries; U. Sale or lease of goods or properties or the performance of service other than the transactions mentioned in the preceding paragraph, the gross annual sales and/or receipts do not exceed the amount of P1,919,500. V. Sales to PWD and SC W. Sale of gold to BSP 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. Where to file the VAT return and pay the tax? In any of the following location within the revenue district where the taxpayer is registered or required to register: a. Authorized Agent Bank b. Revenue Collecting Officer c. Duly authorized government agency 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 DEADLINE OF PAYMENT OF BUSINESS TAXES

A. Value Added Tax a. Monthly – 20 days end of month b. Quarterly – 25 days end of quarter 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

BIR ADMINISTRATIVE PROVISIONS Monthly VAT Declarations 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 3. Duly approved Tax Debit Memo, if applicable 4. Duly approved Tax Credit Certificate, if applicable 5. Authorization letter, if return is filed by authorized representative. 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: 

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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 

Through Electronic Filing and Payment System (eFPS): Business Industry Period for filing Monthly VAT Declarations

Group A Insurance and Pension Funding

25 days following the end of the month

Activities Auxiliary to Financial Intermediation Construction Water Transport Hotels and Restaurants Land Transport

Group B Manufacture and Repair of Furniture 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

24 days following the end of the month

Manufacturing N.E.C. Metallic Ore Mining Non-Metallic Mining & Quarrying

Group C Retail Sale Wholesale Trade and Commission Trade

23 days following the end of the month

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 Electricity, Gas, Steam & Hot Water Supply

22 days following the end of the month

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. 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

Quarterly Value-Added Tax Return Tax Form

21 days following the end of the month

BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS) Attachments to the Return 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 3. Duly approved Tax Debit Memo, if applicable 4. Duly approved Tax Credit Certificate, if applicable 5. Previously filed return and proof of payment, for amended return 6. Authorization letter, if return is filed by authorized representative 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:  

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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. Monthly Percentage Tax

Tax Form BIR Form 2551M - Monthly Percentage Tax Return Documentary Requirements 1. 2. 3. 4.

Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable Duly approved Tax Debit Memo, if applicable For amended return, proof of payment and the return previously filed Authorization letter, if filed by an authorized representative

Procedures 1. Fill-up BIR Form 2551M in triplicate copies 2. If there is payment: 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.

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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.

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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 following the end of each month

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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

Quarterly Percentage Tax Tax Form

BIR Form 2551Q - Quarterly Percentage Tax Return Documentary Requirements 1. 2. 3. 4.

Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable Duly approved Tax Debit Memo, if applicable For amended return, proof of payment and the return previously filed Authorization letter, if filed by an authorized representative

Procedures 1. Fill-up BIR Form 2551Q in triplicate copies. 2. If there is payment:  Proceed to any AAB located within the territorial jurisdiction of the RDO where the taxpayer is registered and present the duly accomplished BIR Form 2551Q, 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 2551Q, together with the required attachments and payment, shall be filed/paid with the RCO or duly Authorized Treasurer of the city or municipality where said business or principal place of business is located. 

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

DRILLS - BUSINESS TAX THEORY OF CONSUMPTION TAX 1.

Which form of consumption is tax-free? a. Sales to a resident b. Sales to a non-resident c. Importation by an importer engaged in business d. Importation by an importer not engaged in business

2.

As to determination of amount of tax, the VAT on importation is a form of a. Direct tax c. Ad valorem tax b. Indirect tax d. Specific tax

3.

Which of these import consumptions is tax-free? a. Importation from a seller not engaged in trade or business b. Importation from a seller engaged in trade or business c. Both A and B d. Neither A nor B

4.

Which importation is subject to the VAT on importation? a. Importation by a person engaged in business b. Importation by a person not engaged in business c. Both A or B d. Neither A nor B

5.

Who is the statutory taxpayer to the VAT on importation? a. Foreign seller c. Both A and B b. Domestic buyer d. None of these

6.

Who is the statutory taxpayer of business taxes? a. The seller who must be engaged in trade or business b. The seller, whether or not engaged in trade or business c. The buyer who must be engaged in trade or business d. The buyer, whether or not engaged in trade or business

7.

Which statement is conceptually incorrect? a. The buyer pays the consumption tax on his/her purchase to the seller b. The buyer pays the consumption tax to the government c. The seller pays the consumption tax to the government d. The seller collects consumption tax for the government

8.

Free Company, a resident business, renders services to Mr. Erlwin, a resident person who is not engaged in business. Which of the following is subject to consumption tax? a. Free Company c. Both A and B b. Mr. Erlwin d. Neither A nor B

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 b. none of the above

c. all of the above except VI 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 7. One of the following is not an activity subject to VAT a. Sale in retail of goods by a dealer c. Sublease of real property in the course of business b. Sale of bamboo poles by a dealer d. Importation of ordinary feeds for poultry chicken 8. Which of the following importation is subject to VAT? a. Importation of frozen meat c. Importation of apples for personal consumption b. Importation of bamboo poles d. Importation of grapes for sale 9. Which of the following is subject to VAT? a. Sale of smoked fish c. Sale of shells and coral products by a dealer b. Sale of lechon d. Sales of newspaper 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 b. neither I nor II is correct

c. Only I 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 18. Educational services are exempt from VAT if rendered by: I – private educational institutions duly accredited by DepED, CHED and TESDA II – government educational institutions 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 20. Which of the following shall not be exempt from VAT? a. services rendered by individual pursuant to an employer-employee relationship b. services rendered by regional or area headquarters established in the Philippines by multinational corporations which act as supervisory communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia pacific region and do not earn or derive income from the Philippines c. Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws d. Services rendered by professionals such as CPAs, engineers, lawyers, etc. 21. Which importation is exempt from VAT? a. Importation of books by a school b. Importation of books by a student c. Importation of books by a bookstore d. All of these 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 Hybrid corn and rice seeds Pesticides Water pumps and hand tractors Total

P

45,000 65,000 120,000 240,000 P 470,000

Compute the sales subject to business tax. a. P 110,000 c. P230,000 b. P 120,000 d. P360,000

25. Mang Andrew is a meat vendor. He purchases live hogs from piggery operators, butchers the hogs, and sells their meat in a public market. In January 2015, Mang Andrew purchased 12 live hogs for P180,000 from Mang Manso and sold these to customers for P320,000. Which statement is correct? a. Mang Manso shall not pay business tax, but Mang Andrew shall pay business tax. b. Mang Manso shall pay business tax, but Mang Andrew shall not pay business tax. c. Both Mang Manso and Mang Andrew shall pay business tax. d. Neither Mang Manso nor Mang Andrew shall pay business tax. 26. A farmer sold the following goods in March: 20 sacks rice 100 sacks corn Total

P

45,000 90,000 P 135,000

Determine the gross selling price subject to business tax. a. P 0 c. P 90,000 b. P 45,000 d. P 135,000 27. A restaurant reported the following revenues and receipt in May 2016: Rice and viands Soft drinks Snacks Total

P 120,000 10,000 30,000 P 160,000

Compute the exempt sales. a. P 0 c. P150,000 b. P120,000 d. P160,000 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. The following were the sales in January 2016: Canned sardines Excess fresh sardines Dried fish Total sales

P 850,000 130,000 40,000 P 1,020,000

What is the amount of taxable sales? a. P 0 c. P820,000 b. P130,000 d. P850,000 29. Rodel Masipag is a vegetable trader. He buys raw vegetables from farmers and sells them to consumers. Which statement is correct? a. Rodel shall pay business tax as he is engaged in business. b. Rodel shall not pay business tax on the sale of vegetables. c. Rodel shall not pay business tax as he is not engaged in the farming business. d. Rodel shall pay business tax since he is a trader rather than a farmer. 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. What is the taxable amount of sales? a. P 0 c. P5,000 b. P 3,000 d. P8,000 31. A “sari-sari” store registered as a VAT-taxpayer had the following sales:

Sales of newspapers Sales of fish and meat Sales of fruits and vegetables Sales from snacks and soft drinks Sales from general merchandise Total The total vatable sales is a. P 0 b. P95,000

P

20,000 30,000 10,000 15,000 80,000 P 155,000

c. P115,000 d. P155,000

32. Rovin Store made the following sales during the month: Frozen meat Frozen fish Processed foods Household appliances and furniture Total

P

30,000 20,000 220,000 250,000 P 520,000

Determine the vatable sales. a. P 0 c. P470,000 b. P 220,000 d. P520,000 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: Total landed cost of importation Total sales

P 800,000 1,200,000

What is the VAT on importation? a. P 0 c. P 96,000 b. P24,000 d. P 144,000 34. In the immediately preceding problem, what is the VAT on sales? a. P 0 c. P96,000 b. P24,000 d. P144,000 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:

Books Advertising magazines Election campaign materials Tarp Total

Revenue Collection P 200,000 P 180,000 250,000 150,000 700,000 400,000 80,000 80,000 P 1,230,000 P 810,000

Determine the vatable amount. a. P 480,000 c. P780,000 b. P 630,000 d. P1030,000 37. Mr. Panzer is both employed and self-employed. He had the following income receipts during the month: Gross compensation income Director’s fees Professional fees Total gross income

P 120,000 80,000 200,000 P 400,000

The total amount subject to business tax is a. P 120,000. c. P280,000. b. P 200,000. d. P400,000. 38. An insurance agent had the following receipts during the month: Commission income Loan Total

P

90,000 120,000 P 210,000

Determine the gross receipt to be subjected to business tax. a. P 0 c. P120,000 b. P90,000 d. P210,000 39. A realty trader sold the following properties: Residential lot Residential dwelling Commercial lot What is the vatable sale? a. P 0 b. P 800,000

P 1,200,000 2,000,000 800,000 c. P2,000,000 d. P4,000,000

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. Compute the exempt sales. a. P 0 c. P440,000 b. P80,000 d. P520,000 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. Which is a correct statement? a. Don Chicken is exempt from business tax on its sale to customers, but Mr. Barako shall pay business tax. b. Mr. Barako is exempt from business tax. c. Both Mr. Barako and Don Chicken are exempt. d. Both Mr. Barako and Don Chicken shall be taxable. 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. Which statement is correct? a. The sale of the residential lot by Panay Realty Corporation is subject to business tax. b. The construction service rendered by Aliling Construction is exempt from business tax. c. The sale of the house and lot by Camiguin is exempt from business tax. d. Only realty contractors are subject to business tax. 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. Which statement is correct? a. The P300,000 is exempt from both percentage tax and VAT. b. The P300,000 is exempt from VAT, but is subject to percentage tax. c. The P300,000 is exempt from percentage tax, but is subject to VAT. d. The P300,0000 is subject to both percentage tax and VAT. 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. Which statement is correct? a. THS is subject to VAT. b. THS is subject to percentage tax. c. THS is subject to both VAT and percentage tax. d. THS is exempt from business tax. 48. Centermall leases commercial spaces to various businesses on its mall. Receipts for the month are as follows: Spaces with rental below P12,800/month P 1,200,000 Spaces with rental above P12,800/month 1,800,000 Total P 3,000,000 What is the amount exempt from business tax? a. P 0 c. P1,800,000 b. P1,200,000 d. P3,000,000 49. Mariz Leasing Company leases residential houses with the following rentals for each unit per month: 10 units of Class A residence 20 units of Class B residence 50 units of Class C residence

P

20,000 15,000 10,000

Compute the exempt receipt of Mariz Leasing Company in one month: a. P 0 c. P 800,000 b. P500,000 d. P1,000,000 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: Residential lot P 2,000,000 Residential dwelling 3,000,000 The amount subject to VAT is a. P 0 c. P3,000,000 b. P2,000,000 d. P5,000,000 52. Mr. Alabang owns a 400-unit dormitory near a university. Each boarder pays a rental of P4,000 each month. Which of the following is a correct statement?

a. b. c. d.

Mr. Alabang is exempt from income tax Mr. Alabang is exempt from business tax Mr. Alabang shall pay VAT Mr. Alaban shall pay percentage tax

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. Which statement is correct? a. Only the sale of the car is subject to business tax. b. Only the sale of the residence is subject to business tax. c. Both sales are subject to business tax, d. Neither sale is subject to business tax. 54. Gosten Developers sold three residential units: Green residence Blue residence Pink residence

P 1,900,000 1,400,000 3,000,000

Green residence and Blue residence are adjacent and were sold to two unrelated buyers. What is the vatable sales? a. P 0 c. P3,000,000 b. P1,900,000 d. P3,300,000 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. Which is a correct statement? a. The sale of both properties is exempt from VAT since they are below the price ceiling. b. Both properties are subject to VAT without regard to whether they are above or below the price ceiling. c. Only the sale of the first lot is exempt since it is P1M in price. d. Only the sale of the second lot is subject to VAT. 56. A private hospital admitted a senior citizen. Total amount due before discharge was P112,000. Compute the output VAT. a. P 0 c. P 12,000 b. P 9,600 d. P 13,440 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. Compute the VAT on importation. a. P 218,400 c. P 232,400 b. P 227,040 d. P 239,040 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: Invoice price in US Dollars $ 12,000 Other costs to bring goods to the Philippines P BOC charges 100,000 Customs duties is 10% of dutiable value Peso-Dollar Exchange rate P 42.80: $1

145,000

Compute the VAT on importation. c. P 0 c. P91,032.00 d. P 81,643.20 d. P98,935.20 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 Freight Wharfage fee Arrastre charge Brokerage fee Facilitation fee

P

4,000 15,000 4,000 7,000 8,000 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. What is the VAT on importation? c. P 25,500 c. P 35,100 d. P 30,540 d. P 35,700 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

12.

Mr. Smile, a professional practitioner, imported the following: Calculators and computers for his firm P Books 600,000 Total P 1,500,000

900,000

How much is subject to VAT on importation? a. P 0 c. P 1,200,000 b. P 900,000 d. P 1,500,000 13.

Mr. Juan Manuel Marquez arrived in the Philippines with an immigration visa. He had with him the following: Clothing, shoes, and apparel P 100,000 Professional instruments and implements Personal car 300,000 Total costs of personal belongings P 550,000

150,000

Compute the total amount subject to VAT on importation. a. P 0 c. P 300,000 b. P 200,000 d. P 550,000 14.

Mr. Xhi, a non-VAT taxpayer, made the following domestic purchases of goods: Purchase of scrap metals from a PEZA-locator P Purchase of machine from a VAT supplier 800,000

200,000

What is the imposable VAT on importation? a. P 0 c. P 96,000 b. P 24,000 d. P 120,000 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: Domestic sales Export sales

P 2,100,000 1,000,000

What is the amount subject to business tax? a. P 0 c. P 2,100,000 b. P 1,000,000 d. P 3,100,000 2. A non-VAT taxpayer made the following sales during the year: Domestic sales Export sales

P 100,000 120,000

What is the amount subject to business tax? a. P 0 c. P 120,000 b. P 100,000 d. P 220,000 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 4. Which of the following entities below is not considered as a business? a. A sari-sari store with P500,000 annual sales b. A news stand with sales exceeding P100,000 c. A cigarette vendor with sales not exceeding P100,000 d. An employed professional earning part-time self-employment income not exceeding P100,000 5. Which of the following is not considered as engaged in business? a. A purely self-employed individual b. A self-employed and employed individual c. A purely employed individual d. A and B 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. Which statement is false? a. Both statements c. Statement 1 only b. Neither statement d. Statement 2 only 7. The term “gross selling price” excludes a. The contract price of the goods sold b. Discounts which are contingent upon future events c. Delivery charges d. Sales returns and allowances 8. The term “gross receipts” excludes a. Reimbursements for customer expenses paid by the service provider b. Reimbursements for out-of-pocket expenses incurred by the service provider c. Advances made by the client for services yet to be rendered d. Cash collections for services rendered 9. Which is not a constructive receipt? a. Bank deposits made available to the service provider without restriction b. Transfer of amounts retained by the payor to the account of the contractor-service provider

c. Judicial consignation by the payor of the contract price which the service provider wishes to donate to the payor d. Collection of revenue for past services rendered 10. Who pays percentage tax? a. Those who exceed the VAT threshold and opt to be register as non-VAT b. Those who did not exceed the VAT threshold but are registered as VAT taxpayers c. Only those service providers specifically subject to percentage tax d. Those providers of services specifically subject to percentage tax and those whose sales or receipts in any 12-month period are below the VAT threshold. 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: Proceeds of health insurance Receipts from business advisory services Receipts of rentals from boarding house

P 300,000 250,000 100,000

What is the total amount subject to business tax? a. P 100,000 c. P 350,000 b. P 250,000 d. P 650,000 17. A person engaged in business sold the following properties: Sales of goods held for sale Sale of personal residence Sale of personal car

P 200,000 2,000,000 500,000

Compute the sales in the course of business subject to business tax. a. P 0 c. P 2,200,000 b. P 200,000 d. P 2,700,000 18. Mr. Julio, employed, received the following from his employer:

Proceeds of property insurance Proceeds of bank loan Compensation income

P 200,000 300,000 500,000

What is the amount subject to business tax? a. P 0 c. P 300,000 b. P 200,000 d. P 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: Sale of stocks Sale of bonds Total

Sales P 120,000 280,000 P 400,000

Commission P 1,200 2,800 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: Sale of car rugs Sale of cigarettes Sale of candies Total

P P

2,000 3,000 3,000 8,000

Compute the total amount subject to business tax. a. P 0 c. P 5,000 b. P 2,000 d. P 8,000 22. Mr. Kim Jong, a security dealer, sold the following during the month: Sale of securities for own account P 400,000 Commission income on sale of securities of clients Sale of vacant lot held as investment 1,000,000

36,000

What is the amount subject to business tax? a. P 0 c. P 436,000 b. P36,000 d. P 1,436,000 23. JDC Corporation, a merchandiser, had the following sales during the month: Sale of merchandise P Commission income from consignors Sales of stocks investments

200,000 180,000

50,000

Compute the amount subject to business tax. a. P 200,000 c. P 380,000 b. P 250,000 d. P 430,000 24. Mang Indio has a sari-sari store with P500,000 annual sales. He had the following sales during the month: Sale of various merchandise Cash donated by his brother Cash from proceeds of bank loan

P

30,000 200,000 300,000

Compute the amount subject to business tax. a. P 0 c. P 230,000

b. P 30,000

d. P 530,000

25. Mr. McCullot is a consultant. During the month, he had only one client from which he derived the following receipt: Professional fees Less: Withholding tax Net amount received

P 150,000 7,500 P 142,500

What is the amount subject to business tax? a. P 0 c. P 142,500 b. P 7,500 d. P 150,000 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 Compute the amount subject to business tax. a. P 0 c. P 77,000 b. P 62,000 d. P 90,000 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: Fees, paid in cash and checks P 80,000 Fees, paid in notes 150,000 Advances by clients for future services 20,000 Reimbursement for out-of-pocket expenses 40,000 Reimbursement for client expenses 20,000 Total P 330,000 Compute the amount subject to business tax.

a. P 350,000 b. P 250,000

c. P 160,000 d. P 140,000

33. The following data pertain to a business taxpayer during a quarter: Revenue (Sales) Cash collections

January February March P 200,000 P 240,000 P 230,000 180,000 240,000 220,000

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 40. Compute the business tax payable in November. a. P 12,000 c. P 36,000 b. P 20,000 d. P 48,000 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 5. Who is the one statutorily liable for the payment of VAT? a. Buyer b. Seller c. Consumer

d. None of the choices

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 7. Which of the following shall be subject to VAT? a. Sale of a residential house and lot c. Sales of private car by its owner b. Sale of an apartment house d. All of the above OUTPUT VAT 8. One of the following is not a transaction deemed sale a. Transfer, use or consumption not in the ordinary 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 of goods or properties as share in the profits of a vat – registered person or to creditors in payment of debt c. Retirement from or cessation of business, with respect to inventories of taxable goods on hand as of the date of such retirement or cessation d. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned 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 Problems – Regular VAT

1.

A non-VAT taxpayer sold goods for P20,000, half of which are paid by the buyer who gave a promissory note for the balance. The output VAT is a. P 0 c. P 2,400 b. P 1,200 d. P 4,800

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. What is the output VAT? a. P 4,920 c. P 3,600 b. P 4,800 d. P 0

3.

A VAT-taxpayer compiled the following for the purpose of filing his BIR Form 2550M: Sales to VAT taxpayers Sales to non-VAT taxpayers Total

P 200,000 150,000 P 350,000

What is the output VAT? a. P 0 c. P 24,000 b. P 18,000 d. P 42,000 4.

A VAT-registered car dealer sold the following goods to a relative: Selling price Fair market value

P 300,000 500,000

What is the output VAT? a. P 0 c. P 42,000 b. P 36,000 d. P 60,000 5.

A VAT-registered realty dealer sold a parking lot on the following terms: Zonal value (fair value) Less: 10% discount Selling price

P 2,000,000 200,000 P 1,800,000

Compute the output VAT. a. P 0 c. P 216,000 b. P 168,000 d. P 240,000 6.

A VAT-registered seller sold various merchandise at wholesale price, exclusive of VAT: Product total retail price Less: Trade discount (10%) Product wholesale price Less: Cash discount (5%)* Net price due in 15 days

P 300,000 30,000 P 270,000 13,500 P 256,500

*If customer pays in 15 days What is the output VAT? a. P 0 c. P 32,400 b. P 30,780 d. P 36,000 7.

A non-VAT taxpayer prepared the following summary of sales for the purpose of filing his BIR Form 2551M: Sales to VAT taxpayers Sales to non-VAT taxpayers Total Compute the output VAT. a. P 0 c. P 24,000 b. P 18,000 d. P 42,000

P 200,000 150,000 P 350,000

8.

A VAT-registered practicing lawyer disclosed the following during a month: Total professional fees billed Total professional fees collected Advances by certain clients

P 800,000 600,000 200,000

Compute the output VAT. a. P 120,000 c. P 72,000 b. P 96,000 d. P 0 9.

A VAT-registered service provider prepared the following list of cash collections during a month: Gross receipts inclusive of VAT Client advances Proceeds of bank loan Total

P 504,000 200,000 300,000 P 1,014,000

Compute the output VAT. a. P 54,000 c. P 84,480 b. P 78,000 d. P 108,643 10.

A VAT-registered seller indicated the following in a VAT invoice evidencing the sale of vegetables: Selling price Output VAT Total amount due

P P

5,000 600 5,600

What is the output VAT? a. P 0 c. P 6,520 b. P 600 d. P 6,720 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: June July August

Bill Collection P 448,000 P 403,200 504,000 453,600 336,000 302,400

What is the output VAT respectively in June and July? a. P 53,760; P 114,240 c. P 43,200; P 91,800 b. P 48,000; P 54,000 d. P 43,200; P 48,600 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 16.

A VAT-registered seller of goods reported the following in a month: Cash sales P 200,000 Credit sales 300,000 Installment sales 400,000 Consignment sales (30 days old) Total P1,000,000

100,000

Compute the output VAT. a. P 24,000 c. P 72,000 b. P 60,000 d. P 108,000 17.

A VAT-registered seller received the following statement from its consignees: Gross price Less: Commission (20%) Freight charges Net remittance

P 500,000 100,000 20,000 P 380,000

What should be the output VAT on the sales? c. P 44,000 c. P 57,600 d. P 45,600 d. P 60,000 18.

A VAT-registered seller had the following summary of sales and consignments in April: Cash sales P 200,000 Credit sales 150,000 Sales reported by consignees 250,000 Unsold January consignment 50,000 Unsold February consignment 30,000 Unsold March consignment 40,000 Unsold April consignment 65,000 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: Gross receipts from profession Gross receipts from hotel Total

P 1,000,000 800,000 P 1,800,000

Compute the output VAT. a. P 0 c. P 120,000 b. P 96,000 d. P 216,000 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: Supplies, bought from non-VAT suppliers P 50,000 Supplies, bought from VAT suppliers 80,000 Merchandise, bought from VAT suppliers 100,000 Merchandise, bought from non-VAT suppliers Total P 250,000

20,000

Compute the output VAT on the deemed sales. a. P 0 c. P 21,600 b. P8,400 d. P 30,000 21.

A VAT-registered farm supply dealer sold the following during a month: Fertilizers Corn seeds Farm equipment Pesticides Total

P 200,000 250,000 1,200,000 300,000 P 1,950,000

What is the output VAT? a. P 234,000 c. P 180,000 b. P 204,000 d. P 144,000 22.

A VAT-registered bookstore had the following revenues during a month: Commission income on sales of booksP 300,000 Sales of books held as inventory 400,000 Sales of school supplies 900,000 Total P 1,600,000 Compute the output VAT. a. P 192,000 c. P 144,000 b. P 156,000 d. P 108,000

23.

A VAT taxpayer made the following sales during the quarter: Domestic sales: Sales of VAT-exempt goods Sales of vatable goods

P 1,200,000 900,000

Export sales

800,000

What is the output VAT? a. P 348,000 c. P 204,000 b. P 252,000 d. P 108,000 24.

King Bank presented the following gross receipts during the quarter: Interest income – short term loans P 4,000,000 Interest income – long-term loans 1,200,000 Rental of ROPA 800,000 Processing fees 200,000 Total P 6,200,000 Compute the output VAT. a. P 0 c. P 120,000 b. P 107,143 d. P 744,000

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 Transport of cargoes

P40,000,000 12,000,000

International operations Transport of passengers Transport of cargoes

P30,000,000 8,000,000

Compute the output VAT. a. P 1,440,000 c. P 6,240,000

b. P 4,800,000 26.

d. P 10,800,000

Cebu Ferries has a fleet of ships traversing the islands of Bohol and Cebu. It reported the following total receipts during a month: Transport of passengers Transport of cargoes and baggage Total

P 8,000,000 1,000,000 P 9,000,000

Compute the output VAT. a. P 0 c. P 960,000 b. P 120,000 d. P 1,080,000 27.

Victor Lines is a VAT-registered operator of buses. During the month, it had the following total receipts: Transport of passengers Transport of cargoes and baggage Total

P14,000,000 1,000,000 P15,000,000

Compute the output VAT. a. P 0 c. P 1,680,000 b. P 120,000 d. P 1,800,000 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. Compute the output VAT. a. P 0 c. P 312,000 b. P 278,572 d. P 321,000

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: House and Lot – 2B-A House and Lot – 2B-D House and Lot – 2C-E Residential Lot – 1A Residential Lot – 2B Total sales

P 2,000,000 3,000,000 4,000,000 1,000,000 2,000,000 P12,000,000

Compute the total output VAT. a. P 0 c. P 1,080,000 b. P 720,000 d. P 1,320,000 31.

A VAT-registered dealer sold two residential units to the same buyer with the following separate prices: House and Lot – 1C-A House and Lot – 1C-B

P 1,500,000 2,000,000

What is the output VAT? a. P 0 c. P 240,000 b. P 180,000 d. P 420,000 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: Residential lot – 2A House and Lot – 2B What is the output VAT?

P 800,000 900,000

a. P 0 b. P 96,000 33.

c. P 108,000 d. P 204,000

An insurance company had the following gross receipts during a month: Cash collections from life premiums P 1,800,000 Notes receivable for life premiums 200,000 Cash collections from non-life premiums Notes receivable for non-life premiums

1,100,000 300,000

What is the output VAT? a. P 0 c. P 180,000 b. P 360,000 d. P 132,000 Output VAT – Zero-rated 20. Which statement is correct? a. Zero rated sales is exempt from the VAT b. A person whose sales or receipts do not exceed P250,000 is exempt from VAT and OPT c. A person who issues a VAT invoice on a VAT exempt transaction is nevertheless subject to VAT on the said transactions d. Entities which are exempt from income tax are also exempt from VAT 21. Which of the following statements is INCORRECT? a. A zero-rated sale of goods or properties (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not result in any output tax b. the input tax on purchases of goods, properties or services, related to zero-rated sales, shall be available as tax credit only in accordance with the Regulations c. For purposes of zero-rating, the export sales of registered export traders shall include commission income d. The exportation of goods on consignment shall not be deemed export sales until the export products are in fact sold by the consignee 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 26. Which of the following shall be considered export sale? I. Sales for locally manufactured and assembled goods for household and personal use to Filipinos abroad and other non-residents of the Philippines as well as returning Overseas Filipinos under the Internal Export Program of the government paid for in convertible foreign currency and accounted for in accordance with the rules and regulations of the BSP II. Sales of goods, properties or services made by a VAT-registered supplier to BOI-registered manufacturer or producer whose products are 100% exported a. Neither I nor II b. Both I and II c. I only d. II only 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-intrade, 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 36. Which of the following occurrence shall not be subject to VAT? I – Change of control of a corporation by the acquisition of the controlling interest of such corporation by another stockholders or group of stockholders II – Change in the trade or corporate name of the business III – Merger or consolidation of corporation a. I, II, and III b. I and II only c. II and III only d. III 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 Theory and Problems – Zero Rated VAT 1. Which is subject to zero-rating?

Customer a. Resident alien b. Non-resident foreign corp. c. Non-resident alien d. Non-resident citizen

Place rendered Philippines Philippines Abroad Abroad

Amount € 150,000 $ 10,000 P 1,000,000 ¥ 2,000,000

2. Which is not required in the zero-rating of services rendered to a non-resident? a. The services must be performed in the Philippines b. The non-resident alien must be a resident in the Philippines at the time the services were rendered c. The services must be paid in acceptable foreign currencies d. The payment must be accounted for under the rules and regulations of the BSP 3. Sale of services to this entity is subject to the 12% VAT. a. Development Bank of the Philippines b. International Rice Research Institute c. Philippine National Red Cross d. Philippine Amusement and Gaming Corporation 4. Which is not subject to zero-rating? a. Services to an export-oriented enterprise b. Sale of services to a BOI-registered enterprise c. Sale of services to PEZA locators d. Sale of services to embassies with VEC 5. To which of the following is a sale not subject to zero-rated VAT? a. Philippine Amusement and Gaming Corporation b. Philippine National Red Cross c. Ecozone entities d. Government agencies 6. Which is not subject to zero-rating? a. Sale to a domestic air carrier on its international operations b. Sale to a domestic sea carrier on its domestic operations c. Sale to an international air carrier d. Sale to an international sea carrier 7. Which is incorrect with effectively zero-rated sales? a. The sale must be rendered in the Philippines b. The sale must be rendered to a person with indirect tax exemption c. The sale need not be paid for in acceptable foreign currencies d. The sale must be made by a VAT-exempt person 8. Which is incorrect with foreign currency-denominated sales? a. The goods must be destined for consumption abroad b. Title to the goods must pass to the buyer outside Philippine territory c. The sale must be paid for in acceptable foreign currency d. The remittance of the proceeds of the sale must be accounted for under Central bank rules 9. Which is subject to zero-rating? a. Outgoing transport of passengers by an international carrier b. Outgoing transport of mails, cargoes or baggage by an international carrier c. Outgoing transport of passengers, cargoes, excess baggage or mails by a domestic carrier d. Incoming transport of passengers, cargoes, excess baggage or mails by a domestic carrier 10. Which of these services is subject to zero-rating? a. Incoming transport by an international sea carrier b. Incoming transport by a domestic sea carrier c. Incoming transport by a domestic air carrier d. None of these 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 34.

A business payer reported the following sale during a period: Domestic sales Deemed sales Export sales Total

P 200,000 100,000 300,000 P 600,000

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: Export sales Purchases Input VAT

P 400,000 200,000 12,000

Compute the gross income for taxation purposes. a. P 188,000 c. P 212,000 b. P 200,000 d. P 224,000 36.

A VAT-registered taxpayer made the following sales:

Sales destination

Terms

Payment

China FOB destination $ 10,000 Malaysia FOB destination P 450,000 Hong Kong FOB shipping point ¥ 800,000 Philippines FOB shipping point P 300,000 The applicable exchange rate to the Peso was $1:P42 and ¥1:P0.50. Compute the total zero-rated sales. a. P 420,000 c. P1,270,000 b. P 820,000 d. P 1,570,000 37.

Compute the output VAT. a. P 0 c. P 54,000 b. P 36,000 d. P 90,000

38.

An exporter entered into the following transactions during the month: Type of transaction Export sales Export sales Consignment abroad

Amount P 1,000,000 $ 100,000 $ 50,000

Unsold portion 40%

Forex rate = $1: P42.50. Compute the zero-rated sales. a. P 0 c. P 6,100,000 b. P 4,250,000 d. P 6,525,000 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 Receipts from Oceania, an international carrier 1,200,000 Receipts from International Rice Research Institute

1,000,000 800,000

Compute the total zero-rated sales or receipts. a. P 0 c. P 2,000,000 b. P 800,000 d. P 3,000,000 40.

A VAT-registered service provider had the following receipts from services rendered in the Philippines in February 2015: Paid for in foreign currencies (Peso equivalent) Services rendered to non-residents P 500,000 Services rendered to residents 400,000 Paid for in the local currency Services rendered to non-residents Services rendered to residents

P 800,000 1,200,000

What is the total zero-rated sale? a. P 400,000 c. P 900,000 b. P 500,000 d. P 1,300,000 41.

Legazpi Corporation had the following sales in March 2015: Sale to an export-oriented enterprise Sale to a BOI-registered enterprise

P 2,000,000 3,000,000

40% of the sale to the export-oriented enterprise was eventually exported. The sale to the BOI enterprise was eventually exported. Compute the total effectively zero-rated sales. a. P2,000,000 c. P 3,800,000 b. P3,000,000 d. P 5,000,000 42.

An electric cooperative sold the following during the month: Sale of electricity from renewable sources of energy Sale of electricity generated from coal and natural gas

P 2,000,000 1,000,000

What is the zero-rated sale of the electric cooperative? a. P 0 c. P 2,000,000 b. P 1,000,000 d. P 3,000,000 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 nonGovernment 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 8. Which of the following shall be allowed presumptive input tax? I – Persons or firms engaged the processing of sardines, mackerel and milk II – Persons or firms manufacturing refined sugar, cooking oil and packed noodle-based instant meals a. Both I and II b. Neither I nor I 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 11. The allowable transitional input tax is a. The lower between 2% of the value of beginning inventory or actual VAT paid on such inventory b. The higher between 2% of the value of the beginning inventory or actual vat paid on such inventory c. The actual vat paid on the beginning inventory d. 2% of the value of beginning inventory 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 VATregistered 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 Problems – Input VAT 1. Andrew, a VAT-taxpayer, imported a golden necklace as a gift to his girlfriend. The foreign seller billed a total price of P200,000. Andrew further paid P40,000 in other landed costs excluding VAT. Andrew can claim an input VAT of a. P 0 c. P25,714 b. P 24,000 d. P28,800 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 2. A VAT-registered purchaser received the following billing from a VAT-registered seller: Selling price Output VAT

P 200,000 20,000

Invoice price

P 220,000

What is the creditable input VAT? a. P 0 c. P23,571 b. P 20,000 d. P24,000 3. A, a VAT – registered, made the following purchased during the month of January 2014 Goods for sale, inclusive of VAT Supplies, exclusive of VAT Office air conditioner, total invoice amount Home appliances for residence, gross of VAT Repair of store, total invoice amount evidenced by ordinary receipt of the contractor Creditable input taxes are a. P26,400 b. P29,400

P 224,000 20,000 56,000 17,600

c. P24,000

4,400 d. P32,400

4. A VAT taxpayer made the following purchases during the year: Purchases of goods, exclusive of VAT Purchases of goods, inclusive of VAT Purchase of services, exempt from VAT Purchase of services, inclusive of VAT Total What is the input VAT? a. P 0 b. P 12,677

P

50,000 44,800 10,000 23,520 P 128,320

c. P13,320 d. P14,198

5. Mr. Alarcon is a percentage taxpayer. He bought goods billed at an invoice price of P20,160 from a VATregistered taxpayer. Mr. Alarcon sold the goods in the same month at a price of P42,000. How much input VAT is claimable by Mr. Alarcon? a. P 0 c. P2,160 b. P 160 d. P2,419 6. Ms. Kibungan, a VAT-taxpayer, made the following purchases (net of VAT) of vatable goods during the month: Purchase from non-VAT taxpayers Purchases from VAT taxpayers Total What is the input VAT? a. P 0 b. P 6,000

P

50,000 250,000 P 300,000

c. P 30,000 d. P 36,000

7. A VAT-taxpayer received and paid the following billings for vatable goods purchased: Purchase from non-VAT taxpayers Purchases from VAT taxpayers Total

P

50,000 250,000 P 300,000

What is the claimable input VAT? a. P 0 c. P 26,786 b. P 5,357 d. P 32,143 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 Assume all accounts are exclusive of VAT.

What is the creditable input VAT in the January 2015? a. P 0 c. P9,600 b. P 6,000 d. P15,600 9. What is the creditable input VAT in February 2015? a. P9,600 c. P 39,600 b. P 15,600 d. P 45,600 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: Input VAT on exempt sales Input VAT on regular sales Input VAT on export sales Total Input VAT

P 204,000 174,000 150,000 P 528,000

What is the total creditable input VAT? a. P 0 c. P378,000 b. P 324,000 d. P528,000 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: Purchases from non-VAT suppliers P 210,000 Purchases from VAT suppliers, inclusive of VAT Total P 232,400 What is the transitional input VAT? a. P 2,400 c. P 4,648 b. P 4,600 d. P 24,900

22,400

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 Inventory of processed goods Inventory of non-food goods Total

P

30,000 170,000 210,000 P 410,000

The taxpayer acquired all the goods from non-VAT suppliers. What is the transitional input VAT? a. P 0 c. P 7,600 b. P3,400 d. P 8,200 3. Miss Beauty Fooled became subject to VAT effective the month of September. She had the following beginning inventory in September: Purchases from non-VAT suppliers P 30,000 Purchases from VAT suppliers, exclusive of VAT Total P 250,000

220,000

What is the transitional input VAT? a. P 0 c. P 26,400 b. P 5,000 d. P 30,000 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 Farm equipment Pesticides Total

300,000 98,000 18,000 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: Raw land contributed by shareholders P11,200,000 Corporate office building 20,000,000 Various equipment 4,000,000 Compute the transitional input VAT? a. P 0 c. P624,000 b. P224,000 d. P1,200,000 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 7. In January 2015, a VAT taxpayer made the following purchases: Goods, exclusive of VAT Capital goods, exclusive of VAT Total

P 800,000 700,000 P 1,500,000

The capital goods pertain to several equipment with estimated useful life of 3 years. What is the claimable input VAT? a. P180,000 c. P98,333 b. P160,714 d. P97,400 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 What is the claimable input VAT in April 2015? a. P192,000 c. P120,000 b. P127,200 d. P7,200 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:

Machineries Useful life

Purchased from VAT suppliers Non-VAT Suppliers P 800,000 P 300,000 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

Assume all amounts are exclusive of VAT. What is the creditable input VAT in June 2015? a. P 1,950 c. P2,650 b. P 2,200 d. P144,000 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

Assume all amounts are inclusive of VAT. What is the creditable input VAT in July 2015? a. P 1,500 c. P 3,360 b. P 3,000 d. P 180,000 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: April Equipment Machineries

P

1,200,000

May 400,000 600,000

June 200,000 -

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: Tin cans, exclusive of VAT Tomatoes Sardines Labels, exclusive of VAT Total

P

80,000 150,000 200,000 20,000 P 450,000

What is the presumptive input VAT allowable to Sardinia? a. P 0 c. P14,000 b. P 6,000 d. P18,000 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: Output VAT Input VAT

1st Quarter April May P 200,000 P 300,000 P 250,000 240,000 320,000 240,000

What is the creditable input VAT carry-over to be credited in May? a. P 20,000 c. P 60,000 b. P 40,000 d. P 70,000 26. What is the total creditable input VAT in April? a. P 360,000 c. P 320,000 b. P 340,000 d. P 300,000 27. What is the input VAT carry-over to be credited in June? a. P 0 c. P 40,000 b. P 10,000 d. P 70,000 INTEGRATED APPLICATION CASES 1. The records of A, a VAT taxpayer show

Output Tax Input Tax

October November December P96,000 P180,000 P60,000 108,000 72,000 48,000

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? 3. The following data (net of VAT) are available: Third quarter: Sales P 1,500,000 Purchases 800,000 Purchase of machinery (2nd month of 3rd quarter)2,000,000 Unutilized input VAT as of end of second quarter 97,000 Fourth quarter: Sales 2,000,000 Purchases 100,000 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): Sales, total invoice value P 6,921,600 Purchases, net of input taxes 5,500,000 Sales returns (based on total invoice value) 224,000 Purchase returns (net of input tax) 300,000 Deferred input taxes (carried over from the third quarter of 2014) 9,500 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 The zonal value of the residential lot was 3,600,000. 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 Determine the VAT due (excess input tax) for the month 8. Sweet Tooth, Inc. manufactures refined sugar. The following selected data are taken form its books: Sale of refined sugar, net of VAT Purchase of sugar cane from farmers Purchases of packaging materials, gross of VAT Purchases of labels, gross of VAT Advance payment of VAT before release from refinery

P 2,000,000 500,000 784,000 112,000 60,000

How much is the VAT payable? 9. A VAT-registered trader had the following transactions: Sales of goods to private entities Purchases of goods sold to private entities, gross of VAT Sales to a government owned corporation (GOCC), net of VAT Purchases of goods sold to GOCC, net of VAT

P 2,500,000 896,000 1,000,000 700,000

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? 17. Monthly VAT declarations is filed on or before the a. 10th day from the end of each month c. 25th day from the end of each month b. 20th day from the end of each month d. 30th day from the end of each month 18. Quarterly VAT return shall be filed on or before the a. The 10th day from the end of each quarter c. The 15th day from the end of each quarter b. The 20th day from the end of each quarter d. The 25th day from the end of each quarter 19. One of the following statements is incorrect a. Imported goods which are subject to excise tax are no longer subject to VAT b. VAT on importation is paid to the Bureau of Customs before the imported goods are released from its custody c. Expenses incurred after the goods are released from Customs custody are disregarded in computing the VAT on importation

d. When a person who enjoy a tax – exemption on his importation subsequently sells in the Philippines such imported articles to a non – exempt person, the purchaser – non – exempt person shall pay the VAT on such importation 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 Open Account Sales Installment Sales

P200,000 100,000 100,000

Note: Receipt from installment sales Consignment made (net of VAT): June 15, 2014 May 15, 2014 April 15, 2014

40,000 100,000 100,000 100,000

Compute the output VAT. a. P52,800 b. P48,000

c. P60,000

c. P67,200

---- End of Handouts ---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 The percentage tax due is a. P10,000 b. P13,500

c. P16,500

d. None

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 The percentage tax due for the quarter is a. P2,250 b. P3,000

c. P7,500

4. Which of the following statements is incorrect?

d. P6,500

a. A taxpayers whose annual gross receipts/sales exceed P1,919,500 shall pay VAT even if he is not VAT registered b. A taxpayer whose annual gross receipts/sales do not exceed P1,919,500 but who is VAT-registered shall pay VAT c. Percentage tax maybe imposed together with VAT d. Percentage tax maybe imposed together with excise tax 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: Compensation income – teaching Receipts from taxi Receipts from professional practice Total

P 200,000 50,000 350,000 P 600,000

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 11. Benjamin owns the following businesses/establishments: Annual Gross Receipts I. Restaurant P1,350,000 II. Barbershop 625,000 III. Seller of agricultural food products 1,875,000 Which combination will subject Benjamin to VAT? a. I only b. I and II c. I, II and III

d. None

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 valueadded 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: Jeepney No. 1 – P22,000

Truck No. 1 – P 7,250

Jeepney No. 2 – 23,300 Pedicab No. 1 – 800 Pedicab No. 2 – 1,000

Truck No. 2 – 8,500 Truck No. 3 – 14,000

The percentage tax due on Johnny is – a. P831 b. P795

c. P1,359

d. P1,413

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 15. The percentage tax due is – a. P22,740 b. P21,150

c. P7,590

d. P15,450

Pagong Lines is engaged in provincial transport operation. It has the following gross receipts in June: Bus 1 (carriage of goods, P8,000) P 100,000 Bus 2 (carriage of goods, P3,500) 65,000 Salaries of drivers an conductors 25,000 Cost of oil and gasoline 160,000 Taxi 30,000 Jeepney 22,000 Cargo truck 45,000 Sea vessel 250,000 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. 16. The percentage tax due on Pagong Line in June is – a. P6,180 b. P6,165 c. P14,430 17. The output tax on Pagong Lines is – a. P37,380 b. P31,150

d. P5,730

c. P33,375

d. P36,780

18. There are two competing keepers of garage with the following receipts: Parcorito Parkodun

P 1,200,000 2,500,000

Which will pay 3% percentage tax? c. Parcorito c. Both d. Parkodun d. None of them 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? a. b. c. d.

Common Carrier 1 0% 3% 0% 12%

Common Carrier 2 3% 3% 0% 3%

20. One of the following is subject to common carrier’s tax a. Owners banca b. Owners of animal-drawn two wheeled vehicles c. Common carriers by land for transport of goods or cargoes d. Common carriers by land for transport of passengers

21. A person whose business is to keep automobile for hire or keep them stored for use or order a. Keepers of garage c. Taxicab operators b. Common Carrier d. Tourist bus operator 22. What is the proper business tax for A and B who are both engage in keeping automobile for hire.

a. b. c. d.

Keepers of Garage A with gross receipts exceeding P1,919,500 Value added tax Value added tax Percentage tax Percentage tax

Keepers of Garage B with gross receipts not exceeding P1,919,500 Value added tax Percentage tax Value added tax Percentage tax

23. An operator of car with chauffeurs for hire had the following financial results of operations during a month: Total collections P 240,000 Less: Fuel P 100,000 Other car supplies 24,000 Driver’s salaries 20,000 144,000 Net income P 96,000 What is the percentage tax? a. P2,880 c. P4,320 b. P4,200 d. P7,200 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 The common carrier’s tax payable is a. P30,000 b. P90,000

c. P100,000

d. None

25. Using the data above, the output VAT is a. P360,000 b. P90,000

c. P100,000

d. P240,000

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 Compute the Output Vat and the percentage tax respectively. a. P420,000; P105,000 c. P180,000; P60,000 b. P0; P105,000 d. P420,000; P0 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. The percentage tax is a. P 0 b. P12,000

c. P24,000 d. P48,000

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. Compute for the percentage tax. a. P 0 c. P900,000 b. P150,000 d. P1,050,000 32. Puro-Air is a domestic airliner with annual receipts exceeding P50,000,000. During a month, it generated the following receipts: Passengers Cargoes and baggage Total

P 5,000,000 1,500,000 P 6,500,000

The percentage tax is a. P 0 b. P45,000

c. P150,000 d. P195,000

33. European Seagull, an international shipping carrier, had the following receipts on its Philippine operations: Gross receipts from: Incoming voyages Outgoing voyages Total

Passengers Baggage Total P 2,000,000 P 1,500,000 P 3,500,000 3,000,000 1,800,000 4,800,000 P 5,000,000 P 3,300,000 P 8,300,000

How much is the percentage tax? a. P 0 c. P99,000 b. P54,000 d. P144,000 34. American Hawk, an international air carrier, recorded the following taxable receipts during a month for outgoing flights:

Passengers Mails and baggage Total

From booking agencies in Philippines Abroad Total P 2,000,000 P 3,000,000 P 5,000,000 500,000 1,200,000 1,700,000 P 2,500,000 P 4,700,000 P 6,700,000

Compute for the percentage tax. a. P15,000 c. P60,000 b. P51,000 d. P75,000 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 41. A cellular company had the following receipts: P 2,000,000 – From domestic calls P 3,000,000 – Incoming calls to the Philippines P 2,500,000 – Outgoing calls abroad What is the percentage tax? a. P 0 c. P 165,000 b. P 75,000 d. P 250,000 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. 42. The percentage tax due is – a. P51,000 b. P5,000

c. P16,500

d. P56,500

43. The value-added tax payable for the month is – a. P33,600 b. P5,000

c. P16,500

d. P7,200

44. A tax on the right or privilege to enter places of amusement a. VAT c. Amusement tax b. Franchise tax d. Income tax 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 51. The amusement tax due is – a. P110,700 b. P120,600

c. P552,240

d. P386,640

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: Concert by Rosa Mia Professional basketball Amateur basketball Billiard

P 85,000 120,000 36,700 45,000

The percentage tax payable by Boy Arana on the coliseum is – a. P18,000 b. P23,505 c. P43,005

d. P24,750

54. ABC Insurance Corporation, a domestic corporation, received the following premiums (net of any tax): Life P 400,000 100,000 P 500,000

Cash received Promissory notes TOTALS

INSURANCE Fire P 300,000 P 200,000 100,000 P 400,000 P 200,000

Required: Determine the following: 1) The percentage tax due is a. P45,000 b. P55,000

c. P20,000

d. P10,000

2) The output vat is a. P0

c. P48,000

d. P60,000

b. P72,000

Marine

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. 55. The percentage tax due is – a. P3,900 b. P9,750 56. The VAT payable is – a. P16,476

c. P11,010

b. P9,750

d. P9,015

c. P28,704

d. P63,730

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 The tax on winnings is a. P1,000 b. P400

c. P950

d. Zero

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 61. One of the following statements is incorrect a. The ½ of 1% tax shall be collected by the brokers who made the sale and shall be remitted within 5 banking days from the date of collection b. The tax paid on sale of shares through local stock exchange and initial public offering and secondary offering shall not be allowable deduction for income tax purposes c. The ½ of 1% tax stock transportation is a final withholding tax on income d. The ½ of 1% tax stock transaction is collected whether there is an income or loss and is a percentage tax 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 63. Stock Addict had the following transactions of shares of stock: Sales: Selling Price Bee Corporation, not traded P 32,450 Cee Corporation, traded 69,780 Dee Corporation, traded 123,820 Purchases: Eef Corporation, not traded Gee Corporation, traded The total percentage tax on the above transaction is – a. P1,130.25 b. P724.89 c. P968.00

Cost P31,980 64,321 98,760 32,415 48,657 d. P815.40

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: Mr. Estigoy B. Zabala Mrs. Rowena V. Posadas Mr. Conrado G. Cruz Mr. Benedict O. Sison Mrs. Linda O. Evangelista Total shares outstanding

5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 25,000,000

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 71. Gross receipts tax is a business tax paid by a – a. Hotel operator b. Insurance company c. Franchise holder 72. Bullion Bank reported the following receipts during the month: Interest income: - 1 to 3 year loan - 3 to 5 year loan - 6 to 8 year loan - 8 to 10 year loans Total

P 1,200,000 800,000 600,000 400,000 P 3,000,000

Compute for the gross receipts tax. a. P 100,000 c. P 80,000 b. P 110,000 d. P 70,000 73. Venture Bank had the following summary of receipts: Interest income on short term loans

P 2,000,000

d. Bank

Interest income on long-term loans Rent income on ROPOA Services fees and gains

1,000,000 800,000

200,000 Total P 4,000,000 How much is the gross receipts tax? a. P 220,000 c. P 180,000 b. P 200,000 d. P 160,000 74. A quasi-bank receives the following from its short-term placement of excess funds: Dividend income Bank interest income, net of final tax Total

P 500,000 800,000 P 1,300,000

Compute for the gross receipts tax. a. P 0 c. P 50,000 b. P 40,000 d. P 91,000 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 Net foreign exchange gains (difference between the value of foreign currency sold and 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 same) Trust fees Dividend from domestic corporation Other service fees Interest income from lending activities from instrument with remaining term of: Five years and less More than five years

P 880,000 220,000 660,000 110,000 30,000 220,000 700,000 800,000

The percentage or gross receipt tax for the month is a. P0 c. P43,000 b. P189,300 d. P104,500 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 78. Which is not subject to gross receipt tax? a. Development Bank of the Philippines c. Philippine Land Bank b. Philippine National Bank d. Bangko Sentral ng Pilipinas 79. Which of the following is subject to percentage tax? a. Derby winnings c. Premiums on re-insurance contract b. Cinema houses d. Van for hire driven by lessees

80. Geneva Corporation, a non-VAT taxpayer, leases commercial spaces to various businesses. During a month, it received P142,500 rentals, net of 5% creditable withholding tax. Compute the percentage tax. a. P 0 c. P 4,275 b. P 4,061 d. P 4,500 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