C.
D.
LOCAL TAXATION
Numbers 31, 32, 33 and 34 (Community tax))
The following information pertains to business operations for 2019:
Gross receipts from business
900,000.00
Rental income
650,000.00
Operational expenses
400,000.00
Real properties
000,000.00
31.What is the amount of Individual Community tax?
A.
B.
C.
D.
1,555
1,155
5,200
5,005
36. Your client, Mr. Aegis, an importer, inquired what laws will have most
relevance in his daily transactions. Having several laws to take into
consideration, which laws do you recommend for Mr. Aegis to read?
A.
B.
C.
D.
17,
Local Government Code
Tariff and Customs Code
7,920.00
7,560.00
1,120.00
10,500.00
33. Which has the authority to collect Community Tax?
A.
B.
C.
D.
Bureau of Internal Revenue
Local Government Unit
Bureau of Customs
National Treasury
34. What is the characteristic of Community Tax?
A.
B.
C.
D.
National Internal Revenue Code
Implementing Rules and Regulation of NIRC
Tariff and Customs Code
Local Government Code
Yes, there is double taxation and it is progressive.
The City of Makati has no taxing power.
Yes, there is double taxation and this is illegal in the Philippines.
Double taxation is allowed where one tax is imposed by the
national government and the other by local government.
41. The Municipality of Icawat passed an ordinance imposing a tax on
installation managers. At that time, there was only one installation
manager in the municipality. Thus, only the installation manager
37. The RATE program of the Bureau of Internal Revenue is to
would be liable for the tax. Is the law constitutional?
eradicate
A. It is unconstitutional because it clearly discriminates against this
A. Underground economy.
person.
B. Smugglers.
B. It is unconstitutional for lack of legal basis
C. Evaders
C. It is constitutional as it applies to all persons in that class
D. Unregistered taxpayers.
D. It is constitutional because the power to tax is the power to
destroy.
32. What is the amount Corporate Community Tax?
A.
B.
C.
D.
you for advice because he thinks he is being subjected to double
taxation. What advice will you give him?
38. A documentary stamp tax is necessary in
A.
B.
C.
D.
Sale of real property.
Inheritance of real property.
Estate tax payment
Donation of real property.
42. Philtele is a power generation and distribution company operating
mainly in City of Makati. It owns electric poles which it also rents out
to other companies that use poles such as telephone and cable
companies. The City of Makati passed an ordinance imposing a fee
equivalent to 1% of the annual rental for these poles. Philtele
questioned the legality of the ordinance on the ground that it
imposes an income tax which local government units are prohibited
from imposing. What is the validity of the ordinance?
A.
39. AZEP Corporation secured an income tax holiday for 4 years as a
pioneer industry. On the third year of the tax holiday, AZEP
Corporation declared and paid cash dividends to its shareholders, all
of whom are individuals. Are the dividends taxable?
B.
C.
The ordinance is void because the fee is based on rental
income and therefore a tax on income.
The ordinance is valid as a legitimate exercise of police
power to regulate electric poles
The ordinance is void because 1% of annual rental is excessive
and oppressive
The ordinance is valid because a LGU may impose income tax.
D.
The dividends are taxable because the tax exemption of
A. Tax
AZEP does not extend to its shareholders.
43. You were preparing your income tax return and had some doubt on
B. Fee
B. The dividends are tax exempt because of AZEP Corporation
whether a commission you earned should be declared for the current
C. Identification Card
income tax holiday.
year or the succeeding year. You sought the opinion of a lawyer
D. License
C. The dividends are taxable if they exceeded 50 % of AZEP
who advised you to report the commission in the succeeding year.
Corporation retained earnings.
You heeded lawyer’s advice and reported the commission in the
35. Elorde, a famous boxer, intends to convert his boxing gymnasium
D. The dividends are exempt if paid before the end of AZEP
succeeding year. The lawyer’s advice turned out to be wrong. In
into a cockpit arena. Elorde summons you to give him advise to go
Corporation fiscal year.
your petition against the BIR assessment, the court ruled against
over his tax exposures. As Certified Public Accountant, which
you. Are you guilty of fraud?
reference or document will you recommend to Mr. Elorde?
40. Mr. Compton sells shoes in Makati through a retail store. He pays
the VAT on his gross sales to the BIR and the municipal license tax
A. Not guilty of fraud because you simply followed lawyer’s
A. National Internal Revenue Code
based on the same gross sales to the City of Makati. He comes to
advice.
B. Revenue Regulations of the NIRC
B. Guilty of fraud because it was deliberate
A.
C.
D.
44.
45.
46.
47.
Not guilty it is the lawyer’s fault.
Guilty for failure to consult an accountant.
IV. Adverse decision against the government appealable to the 53. Mendoza is an importer and his merchandise was seized and
Secretary of Finance.
forfeited by the Bureau of Customs. What is the extent of
Mendoza’s liability?
All of the following are tax incentives given to micro business
A. I and II
enterprises, except
B. III and IV
A. Mendoza’s civil liability is limited to the value of imported.
C. I and IV
B. Mendoza is still liable to pay customs duties and tariff on the
A. Income tax exemption from all income arising from the
D. I, II, III and IV
imported merchandise even though it was confiscated and
operations of the enterprise
forfeited in favor of the Government.
B. Exemption from the coverage of the Minimum Wage Law but
48. The authority and function of Collector of Customs include all of the
C. Mendoza is exonerated from civil and criminal liabilities because
employees will still receive the same social security and health
following, except
the seized merchandize is considered the price for his offense.
care benefits as other employees
D. Mendoza’s civil liability is subsumed by the confiscation of
C. Priority to a special credit window set up specifically for the
A. Cause all importer articles to be entered in customs warehouse.
merchandize but may still be liable criminally.
financing requirements of MBEs
B. Classify and assess imported articles
D. Technology transfer, production and management training and
C. Collect customs duties and tariff.
54. What is the device or scheme resorted to enable merchandise
marketing assistance programs for MBE beneficiaries.
D. Forfeit and destroy contraband goods.
affected by taxes to be exported and later sold in foreign countries
under the same terms as if it is not taxed at all?
Page 11 49. The different classifications of imported goods include all of the
following, except
A. Import Entry
Which is a function of the Bureau of Customs?
B. Manifest
A. Contraband
C. Drawings
A. Assessment and collection of revenues from imported articles
B. Duty Free
D. Drawback
and all other impositions under the Tariff and Customs Code.
C. Conditionally Free goods
B. Control smuggling and related frauds
D. Smuggled goods
55. Llmado’s Cessna plane was being used without his knowledge to
C. Supervision and control over the entrance and clearance of
smuggle goods into the Philippines. The Bureau of Customs
vessels and aircrafts
50. Which of the following is a regular duty?
confiscated Llmado’s airplane. Is the confiscation legal or illegal?
D. To investigate the operation of tariff and customs laws,
including their relation to the national revenues, their
A. Marking Duty
A. The forfeiture of the smuggled goods is legal but the
effects upon industries and labor of the country
B. Discriminatory Duty
confiscation of the plane is illegal
C. Alternative Duty
B. The forfeiture of the smuggled goods is illegal and the
Who has the authority to cause all importation to be entered in the
D. Countervailing Duty
confiscation of the plane is legal.
customs warehouse?
C. The forfeiture of the smuggled goods and the confiscation
51. Which of the following is a special duty?
of the plane are legal
A. Port Authority
D. The forfeiture of the smuggled goods and the confiscation of the
B. Bureau of Customs
A. Ad Valorem
plane are illegal.
C. Collector of Customs
B. Specific
D. Tariff Commission
C. Compounding Duty
56. Which statement is true about customs protest?
D. Dumping Duty
Julia, an importer, protested an assessment and classification by the
I. The customs protest is required to be filed only in cases the
Collector of Customs. However, the Collector of Customs denied
liability of importer over duties and tariffs has been determined
Julia’s protest. Hence, Julia went to appeal the adverse decision by 52. Tariff and customs are applied when?
and such importer disputes said duties and tariff.
the Collector of Customs with the Commissioner of Custom. Which
II. The customs protest is not required if there is no dispute over
of the following statements is correct in case the Commissioner
A. When vessel or aircraft enters Philippine territory with intention
the duties and tariffs but mere claim of refund due to destruction
decides to favor or deny Julia?
to unload goods.
of imported merchandise.
B. Upon payment of duties and release from customs warehouse.
I. Adverse decision against Julia appealable to Court of Tax
C. When vessel or aircraft enters Philippine territory with the
A. I only
Appeal.
intention to unload goods and upon payment of duties and
B. II only
II. Adverse decision against the government appeal to Court of
release from customs warehouse
C. Both I and II
Tax Appeal.
D. None of these
D. Neither I nor II
III. Adverse decision against Julia appealable to Secretary of
Finance.
57. Pirate vessel engaged in smuggling was detected by Customs
Police in Panatag shoal but apprehended already in China territory.
May such pirate be prosecuted in the Philippines?
A. Yes, under the doctrine of inflagrante delicto.
B. Yes, under doctrine of hot pursuit
C. No, the arrest and seizure are warrantless
D. No, because of lack of territorial jurisdiction.
B. Natural calamity
C. Any cause which physically or legally prevented the owner to
utilized his land
D. Declared by the President of the Philippines
61. Which statement is true about real property taxes?
I.
Page 13
No regular court may intervene in assessment of real property
taxes because this is the primary jurisdiction of the Board of
Assessors.
II.
No injunction by court will lie against real property tax collection
by the Local Government.
A.
B.
C.
D.
I only
II only
Both I and II
Neither I nor II
Local Taxes, Preferential Taxation, DTA
Llamado/ Dela Cruz / De Vera / Lopez
1.
Where does the local tax authority emanate from?
a. Legislature
c. Sanggunian
b. Executive
d. Supreme Court
2.
Which of the following is not a fundamental principle of local
taxation?
a. It shall be uniform in each local sub-unit.
b. It shall evolve a progressive system of taxation.
c. The revenues collected under the Local Government
Code shall inure solely to the benefit of and subject to
disposition by the LGU levying the tax or other imposition
(autonomy).
d. Collection of local taxes can be delegated to any
private person.
3.
When may a Local Government Unit adjust local taxes?
a. Every 5 years
b. Every 2 years
c. Every year
d. Anytime the sanggunian deems it fit.
4.
Where the National government elects to tax a particular area, it
impliedly withholds from the local government the delegated
power to tax the same field. This doctrine is known as?
a. Preemption
b. Separatedness of Departments of Government
c. Exclusive prerogative doctrine
d. Tax Jurisdiction
5.
Zion Shoes’s head office is located in Ortigas, Pasig City.
However, its manufacturing plant is in Taytay, Rizal. As the
company accountant you were asked by Zion where to pay the
2% Local Business Tax. Zion’s gross receipts is Php10 million.
a. Pay Php200,000 at Taytay, Rizal.
b. Pay Php200,000 at Ortigas, Pasig City.
c. Pay Php60,000 at Ortigas, Pasig City and
Php140,000 at Taytay, Rizal.
d. Pay Php140,000 at Ortigas, Pasig City and
Php60,000 at Taytay, Rizal.
58. Which statement is true about the Bureau of Customs?
62. Which is statement is true about tax relief?
I.
No regular court may intervene in customs cases because it is
the primary jurisdiction of the Bureau of Customs.
I.
II. No attachment issued by court will lie against imported goods
within the custody of Bureau of Customs.
A.
B.
C.
D.
I only
II only
Both I and II
Neither I nor II
59. Mr. Lim bought a piece of land in Manila 2017 whereby he
discovered that it has unpaid real property tax for year 2016. Which
statement is correct?
63.
A.
B.
C.
D.
Mr. Lim is liable for real property tax because he is the new
owner.
Mr. Lim is liable for real property tax because he assumed
responsibility carried from previous owner.
Mr. Lim is not liable because realty tax attaches to the
property and is chargeable against the person who had
actual or beneficial use and possession of the property
regardless of whether or not he is the owner.
Mr. Lim is not liable because realty tax attaches to the property
and it is the property itself that is liable.
60. Idle lands are exempt from real property tax under all of the following
circumstances, except
A. Civil disturbance
Local tax relief or exemption is granted to cases of natural
calamity, civil disturbance, general failure of crops, or adverse
economic conditions, such as substantially decrease in prices.
II. Local tax incentives are granted only to new investments in the
locality.
A.
B.
C.
D.
I only
II only
Both I and II
Neither I nor II
Which statement is true about tax cases?
I.
Local tax cases may be brought to the attention of the
Secretary of Finance.
II. Customs tax cases may be brought to the attention of the
Secretary of Justice.
A.
B.
C.
D.
I only
II only
Both I and II
Neither I nor II
END
CPA Review School of the Philippines
Rental Income
6.
7.
8.
650,000.00
The presentation of a community tax certificate is necessary in
Operational Expenses
the following situations, except:
400,000.00
A.To acknowledge execution of document before a notary
Real Properties
public
17, 000,000.00
B.To take oath of office in the government
C.
To receive any license or permit or certificate from
Compute Individual Community tax.
public authority
a. P1,555.00
c. P5,200.00
D.
To receive private funds
b. P1,155.00
d. P5,005.00
Which is not a characteristic of the real property tax?
a. Direct tax
b. Ad Valorem
c. Progressive
d. Indivisible
Which real property is subject to the real property tax?
A.
B.
C.
D.
9.
Real property of religious and charitable institution
Machineries actually, directly, and exclusively used by local
water districts
Real property owned by cooperatives
Machineries for pollution control
What is considered idle land?
(i) agricultural lands more than one hectare in area, half
of which remains uncultivated except agricultural
land with perennial crops with at least 50 trees and
those used for grazing;
(ii) land in the city or municipality more than one
thousand square meters in area, one half of which
remains unutilized or unimproved by the owner.
a. True, True
c. False, True
b.
True, False
d. False, False
10. For the given year 2018 the following information from business:
Gross Receipts from business
P 900,000.00
16. AZEP Corporation secured an income tax holiday for 4 years as
a pioneer enterprise. On the third year of the tax holiday, AZEP
Corporation declared and paid cash dividends to its
stockholders, all of whom are individuals. Are the dividends
taxable?
a.
b.
c.
11. Compute Corporate Community Tax.
a. P7,920.00
c. P 1,120.00
b. P7,560.00
d. P10,500.00
12. Who has the authority to collect Community Tax?
a. Bureau of Internal Revenue c. Bureau of Customs
b. Cities/Municipalities
d.
National
Treasury
13. What is the characteristic of Community Tax?
a. Tax
b. Fee
c. Identification Card
d. License
14. Elorde, a famous boxer intends to convert his boxing
gymnasium into a cockpit arena. Elorde summons you to give
him advise to go over his tax exposure. As a certified public
accountant, you will recommend to Mr. Elorde which of following
reference/documents?
a. National Internal Revenue Code
b. Revenue Regulations of the NIRC
c. Local Government Code
d. Tariff and Customs Code
15. Your client, Mr. Aegis, is an importer who inquired what laws will
have most relevance in his daily transactions. Having several
laws to take into consideration, which laws do you recommend
for Mr. Aegis to read?
a. National Internal Revenue Code.
b. Implementing Rules and Regulation of NIRC.
c. Tariff and Customs Code, as amended by the CMTA
d. Local Government Code.
d.
The dividends are taxable; the tax exemption of AZEP
does not extend to its stockholders.
The dividends are tax exempt because of AZEP
Corporation’s income tax holiday.
The dividends are taxable if they exceeded 50% of AZEP
Corporation’s retained earnings.
The dividends are exempt if paid before the end of AZEP
Corporation’s fiscal year.
17. The following are tax incentives given to micro business
enterprises, except?
A.
B.
C.
D.
Income tax exemption on all types of income of the
enterprise.
Exemption from the coverage of the Minimum Wage Law (but
employees will still receive the same social security and health
care benefits as other employees);
Priority to a special credit window set up specifically for the
financing requirements of BMBEs; and
Technology transfer, production and management training,
and marketing assistance programs for BMBE beneficiaries.
18. Mr. Lim bought a piece of land in Manila in 2017 whereby he
discovered that it has unpaid real property tax for year 2016.
Which of the following is correct?
A.Mr. Lim is liable to real property tax because he is the new
owner.
B.Mr. Lim is liable to real property tax because he assumed
responsibility carried from previous owner.
C.
Mr. Lim is not liable because realty taxes attach to
the property, and are chargeable against the person
who had actual or beneficial use and possession of it
regardless of whether or not he is the owner.
D.
Mr. Lim is not liable because but realty tax attaches
upon the property. It is the property itself which is liable.
19. Idle lands are exempt from real property tax under the following
circumstances, except:
A. Civil disturbance
B.
C.
Natural Calamity
Any cause which physically or legally prevents the owner
from utilizing his land D. Declared by the president
20. 1st Statement: No regular court may intervene in assessment of
real property taxes; it is the primary jurisdiction of the Board of
Assessors.
2nd Statement: No injunction by court will lie against real property
tax collection by the Local Government.
A.True, False C. False, True
B.True, true D. False, False
21. 1st Statement: Local tax relief or exemption is granted in cases
of natural calamities, civil disturbances, general failure of crops,
or adverse economic conditions which substantially decrease
prices.
2nd Statement: Local tax incentives are granted only to new
investments in the locality.
A.True, False
B.True, true C.
False, True
D. False, false
22. 1st statement: Local tax cases may be brought to the attention
of the Secretary of Finance. 2nd statement: Customs tax cases
may be brought to the attention of the Secretary of Justice.
A.True, False
B.True, true
C.
False, True
D.
False, false
23. Which of the following has no power to impose taxes?
a. Provinces
b. Cities
c. Barangays
d.
Barrios
24. Talong Company is a domestic corporation whose principal
classification is for well drilling work. It has no branches nor
sales outlets, but maintains project offices in different
localities in the Philippines. It is also registered as a Specialty
Contractor at the Philippine Overseas Construction Board. As
part of its business expansion plan, the company intends to offer
its well drilling and construction services to clients located
overseas.
Are cities and municipalities authorized to impose and collect
local business taxes on gross receipts realized by a specialty
contractor from its overseas construction projects?
27. The Municipal Assessor of San Francisco, Agusan del Sur
assessed the National Grid Corporation of the Philippines
(“NGCP”) for deficiency real property tax (“RPT”) for the years
2011 and 2012. In its petition with the LBAA, NGCP assailed
the RPT assessment on the ground that it is exempt from
payment of the same under Section 9 of R.A. No. 9511 and
Section 234(c) of the Local Government Code. The Municipal
Assessor filed a Motion to Dismiss citing lack of jurisdiction on
the part of the LBAA to rule on the petition due to NGCP’s failure
to first pay the tax under protest.
(a)
No. Gross receipts must be realized from services
rendered within the jurisdiction of the LGU imposing the
tax. (BLGF Opinion, May 2017).
(b)
Yes. The local business tax depends on the previous
Did the LBAA acquire jurisdiction over NGCP’s petition ag
year’s sales receipts regardless of source.
assessment?
(c)
It depends.
a. Yes. Since the taxpayer is questioning the very authority of
(d)
None of the above.
the assessor to impose the assessment, the petition is under
the jurisdiction of the LBAA even without first paying the tax
under protest.
25. Kamay Holding Company, a holding company, owns 51% of
b. No. Under Section 252 of the LGC, payment under protest
Hawak Corporation. In its Statement of Comprehensive Income,
is
mandatory
if
the
taxpayer
questions
the
the holding company reported its proportionate share in the
reasonableness or correctness of the RPT assessment.
income of Hawak Corporation as “revenue from equity in the net
(NGCP vs. CBAA, CTA En Banc Case No. 1392,
earnings of an associate.” Is the “revenue from equity in the net
September 5, 2017).
earnings of an associate” considered as gross receipts subject
c. It depends on the amount of RPT assessed. (d) None of the
to the LBT?
above.
(a) Yes. Equity in net earnings is still considered revenue.
(b) No. The “revenue from equity in the net earnings of an
associate” does not fall under the category of gross
receipts. It is a mere paper entry mandated by accounting
28. A power generation company with principal office in Cebu City
rules. (BLGF Opinion, July 2017). (c) Call me maybe.
acquired and operated a power plant in Navotas City. Due to
(d) None of the above.
the difficulty in hiring competent administrative personnel willing
to work in flood-prone Navotas City, the company established an
26. Uniwide Sales Warehouse Club, Inc. (“Uniwide”) conducts and
administrative office in Malabon City. This administrative office
operates its business in buildings constructed on parcels of land
does not generate sales orders nor does it receive collections
covered by 3 Transfer Certificates of Title (“TCTs”) issued by the
from sales.
Register of Deeds of Pasig City. The TCTs indicate Pasig City
as the location of the parcels of land. However, Cainta is
Which of the 3 offices shall be liable for the local business tax
claiming that the same are within its territorial jurisdiction. To
(LBT”)?
which LGU must Uniwide pay local business taxes?
a.
Pasig City. To identify the LGU entitled to collect taxes,
the location stated in the certificate of title should be
followed until amended thru proper judicial proceedings
(Supreme Court Second Division, G.R. Nos. 176703 &
176721, June 28, 2017). (b) Cainta.
(c) Baguio
(d) Colombia
a.
b.
c.
All 3 offices.
Offices in Cebu City and in Malabon City.
Offices in Cebu City and in Navotas City. Pursuant to
Section 150(b) of the LGC, 70% of all sales recorded in the
principal office shall be subject to the LBT in Navotas
City. The remaining 30% shall be subject to the LBT in
Cebu City. (d) Note of the above
Note: The Malabon office, on the other hand, shall not be
subject to LBT, and no gross receipts should be
allocated to it. A mere administrative office is not a
branch which generates and records sales, and
receives collections from customers. Nor is it a
project office or factory which is indispensable to the
main purpose of the business.
However, Malabon City may collect the Mayor’s permit
and other regulatory fees or service charges pursuant
to Section 147 of the LGC (BLGF Opinion, October 27,
2017).
29. In general, in order to avail of relief from double taxation on
income earned within the Philippines in the form of decreased
tax rates thereon or exemption therefrom, what must be
submitted by a non-resident alien to the International Tax
Affairs Division (ITAD) of the BIR?
a. Memorandum of agreement between the taxpayer and host
country
b. Tax treaty law of the host country
c. Tax treaty relief application (“TTRA”)
d. None of the above.
30. In order to avail of relief from double taxation on dividends,
interest, and royalty income earned within the Philippines in
the form of decreased tax rates thereon or exemption therefrom,
what must be submitted by a non-resident alien to the payor of
the income?
a. Memorandum of agreement between the taxpayer and host
country
b. Tax treaty law of the host country
c. Certificate of Residence for Tax Treaty Relief
(“CORTT”)
d. None of the above.
END