1. Value added tax
a. Is an indirect national tax levied on the value added in the production of a good (or service)
as it moves through the various stages of production
b. Is ad valorem tax
c. Is preferred in place of a personal income tax by many economists because income taxes are
a disincentive to work, whereas a VAT discourages unnecessary consumption.
d. All of t he above
Commented [a1]:
2. Which of the following is incorrect?
a. A vat-taxable article may be exempt from vat
b. A vat-taxable article may be subject to vat
c. A taxpayer may have two businesses where one is subject to vat and the other is subject to
percentage tax
d. Manufacturers and importers of goods are subject to excise tax
Commented [a2]:
3. Which is correct?
a. Without a business pursued in the Philippines (except importation) by the tax payer, value
added tax cannot be imposed.
b. “In the course of trade or business” means 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.
c. Services rendered in the Philippines by a non- resident foreign person shall be considered as
being rendered in the course of trade or business even if the performance is not regular.
d. All of the above
Commented [a3]:
4. Which statement is wrong? Transactions considered “in the course of trade or business”, and
therefore subject to the business taxes include:
a. Regular conduct or pursuit of a commercial or an economic activity by a stock private
organization
b. Regular conduct or pursuit of a commercial or an economic activity by a non-stock nonprofit private organization
c. Isolated services in the Philippines by non-resident foreign persons
d. Isolated sale of goods or services
Commented [a4]:
5. The term “in the course of trade and business” does not include
a. Regular conduct or pursuit of a commercial or economic activity
b. Incidental business transactions
c. Transactions by any person, regardless of whether or not the person engaged therein is a
non-stock, non-profit private organization (irrespective of the disposition of its net income
and whether or not it sells exclusively to members) or government entity
d. None of the above
Commented [a5]:
6. Which of the following is incorrect?
a. An article exempt from vat may be exempt from percentage tax
b. An article subjected to excise tax may be subjected to vat
c. An article subjected to vat may be subjected to percentage tax
d. None of the above
Commented [a6]:
7. Which of the following is not a business tax?
a. Excise tax
b. Value-added tax
c. Other percentage tax
d. Income tax
Commented [a7]:
8. Statement 1: For a person to be subjected to any business tax, it is necessary that he is regularly
engaged in the conduct or pursuit of an economic activity.
Statement 2: A non-resident foreign person performing isolated transaction in the Philippines
shall be liable to VAT.
A
B
C
D
Statement 1
True
True
False
False
Statement 2
True
False
True
False
9. Statement 1: Non-stock and non-profit private organizations which sell exclusively to their
members in the regular conduct or pursuit or commercial or economic activity are exempt from
value-added tax
Statement 2: Government entities engaged in commercial or economic activity are generally
exempt from value-added tax.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
Commented [a8]:
Commented [a9]:
10. Who is the one statutorily liable for the payment of VAT?
a. Consumer
b. Buyer
c. Seller
d. Buyer or seller
11. An individual who is not an employee nor a license professional, deriving gross sales or receipts
not exceeding P 100,000 from activities principally for subsistence or livelihood
a. Minimum Wage Earner
b. Marginal Income Earner
c. Ambulant Vendor
d. A privileged store
Commented [a10]:
12. Which is correct?
a. An excise tax which imposes a tax based on weight or volume capacity or any other physical
unit measurement is called specific tax
b. An excise tax which imposes a tax based on selling price or other specified value of the
article is called ad valorem tax.
c. A percentage tax which is imposed whether the transaction resulted in a gain or loss is
called transaction tax
d. All of the above
Commented [a11]:
13. What is incorrect?
a. A taxpayer whose annual gross receipts or sales exceed P 3,000,000 shall pay vat even if not
registered.
b. A taxpayer whose annual receipts or sales do not exceed P 3,000,000 but who is vat
registered shall pay vat
c. A non-resident lessor or foreign licensor who is not vat-registered is subject to vat
d. An individual taxpayer whose gross sales or receipts do not exceed P 100,000 is exempt
from VAT provided he pays the 3% other percentage tax.
Commented [a12]:
14. Which of the following has an option to register under the VAT system in 2018?
I.
Common carriers by air transporting passengers, the gross receipts of which do not
exceed P 3,000,000
II.
Radio and/or television broadcasting companies whose annual gross receipts of the
preceding year exceeds P 10,000,000
III.
Operator of cockpit, the receipts of which do not exceed P 3,000,000 during the year
IV.
Seller f at-subject services the gross receipts of which do not exceed P 3,000,000
a. IV only
b. I and III only
c. I and IV only
d. All of the above
15. In 2016, the following gross receipts/sales were recorded by Juan:
Gross receipts from practice of profession
Gross sales from trading activities
Gross-sales – sale of agriculture food products
Commented [a13]:
P 1,250,000
600,000
475,000
Assuming Juan is non-vat registered, will he be subject to vat?
a. No, because his gross receipts/sales in each business do not exceed the vat threshold of P
1,919,500
b. Yes, because if a professional, aside from the practice of his profession, also derives revenue
from other lines of business which are otherwise subject to VAT, the same shall be
combined for purpose of determining whether the threshold has been exceeded
c. No, because he is not vat registered
d. None of the above
Commented [a14]:
16. Pedro is a manufacturer of fermented liquors. In making sales, all taxes on the products and
transactions are passed on to the buyers. For purposes of the value added tax, which of the
three (3) taxes listed below that he pays forms part of the gross selling price?
a. Excise tax
b. Value-added tax
c. Percentage tax
d. None of the choices
17. Which of the following taxes describes the value added tax?
a. Income tax
b. Sales tax
c. Indirect tax
d. Personal tax
18. Registration of taxpayers under the vat system may be classified as, except
a. Mandatory vat registration
b. Optional vat registration
c. Mixed vat registration
d. None of the above
19. The following data were provided by spouses’ Pedro and Ana. In 2018, Pedro’s gross receipts
from his practice of profession was P 2,850,000 while her wife, Ana, has gross sales of P
2,200,000 derived from her trading business. Assuming they are not at registered, will they be
subject to vat?
a. Yes, because their aggregate gross receipts/sales exceeded the vat threshold of P 3,000,000
b. No, because for purposes of vat threshold, husband and wife shall be considered as
separate taxpayers
c. Yes, because their gross receipts/sales are not specifically exempt from vat as provided in
the Tax Code
d. None of the above
20. JJ is a certified public accountant. He applied for work and was hired by a Firm which is engaged
in Business Process Outsourcing business handling accounting work for US entities. He was paid
for his services. How should JJ treat such payment for business tax purposes?
a. Subject to 12% VAT
b. Subject to Percentage Tax
c. Exempt from VAT and Percentage Tax
d. It is a zero-rated transaction
21. Where even if there is a business, there is no vat imposable when
I.
A business is pursued by an individual where the aggregate gross sales and or receipts
do not exceed P 100,000 during any twelve-month period
II.
Sale of real properties for low cost housing
III.
Sale of real properties for socialized housing
Commented [a15]:
Commented [a16]:
Commented [a17]:
Commented [a18]:
Commented [a19]:
IV.
V.
a.
b.
c.
d.
Sale of residential lot at P 1,500,000 per unit and below beginning January 1, 2018
Sale of house and lot and other residential dwellings valued at P 2,500,000 and below
beginning January 1, 2018
I, II and III only
III and III only
III,IV and V only
All of the above
22. One of the following is not an activity subject to VAT:
a. Sale in retail of goods by a dealer
b. Sale of Bamboo poles a dealer
c. Sublease of real property in the course of business
d. Importation of ordinary feeds for poultry chicken
23. The following are exempt from vat, except
a. Sale of marinated fish
b. Sale of gold to the Bangko Sentral ng Pilipinas
c. Association dues, membership fees, and other assessments and charges collected by home
owners associations and condominium corporations
d. None of the above
24. Which of the following shall be except from VAT?
a. Common carriers transporting passengers by air within the Philippines
b. Common carriers transporting passengers by sea within the Philippines
c. Common carriers transporting passengers by land within the Philippines
d. Common carriers transporting cargoes by air within the Philippines
25. A dealer in securities sold unlisted shares of stocks of a domestic corporation in 2018 and
derived a gain of P 100,000 therefrom. The sale is:
a. Subject to capital gains tax
b. Subject to percentage tax of ½ of 1% of gross selling price
c. Subject to 12% vat
d. Exempt from business tax
26. Where even if there is no business, vat is imposable on:
I.
Importations of goods for personal use
II.
Services rendered in the Philippines by non-resident foreign persons, even isolated, shall
be considered as being rendered in the course of trade or business.
a. I only
b. II only
c. I and II
d. None of the above
Commented [a20]:
Commented [a21]:
Commented [a22]:
Commented [a23]:
Commented [a24]:
Commented [a25]:
27. The following are exempt from vat, except
a. Sale of 1 sack of rice
b. Sale of lechon manok
c. Sale of pet food
d. Sale of newspaper
28. Which of the following shall be exempt from vat?
a. Services of banks
b. Services of money changers and pawnshop
c. Services of credit cooperatives
d. All of the above
29. Which of the following carrier shall be subject to value-added tax?
a. Sea carrier as Resident Foreign Corporation, annual gross receipts is P 2,000,000
b. Air carrier as Resident Foreign Corporation, annual gross receipts is P 2,000,000
c. Sea carrier classified as Domestic Corporation, voyage is from Philippines to Japan, annual
gross receipts is P 2,000,000
d. None of the choices
30. Sale of the following real properties beginning January 1, 2018 are subject to vat except:
a. Residential lot, held for sale in the ordinary course of business, sold for P 1,600,000
b. Residential house and lot, held for sale in the ordinary course of trade, sold for P 2,700,000
c. Sale of real property used in the ordinary course of business
d. Sale of real property not primarily held for sale in the ordinary course of business
31. Statement 1: The sale of two(2) adjacent residential lots in the course of trade or business to
one buyer within the same taxable year for P 1,000,000 each is subject to vat
Statement 2: The sale of parking lot as an adjunct of a condominium unit in the course of trade
or business at a gross selling price of P 500,000 is exempt from vat as long as its price, together
with the unit, does not exceed P 3,199,200.
A
B
C
D
Statement 1
True
True
False
False
Statement 2
True
False
True
False
32. Assume the taxable year in the preceding number is 2018, the sale shall be classified as
a. 12% VAT transactions
b. 0% VAT transactions
c. VAT exempt transactions
d. None of the foregoing
33. In 2018, a subdivision developer sold five (5) residential house and lots, each to different
vendees, for P 3,000,000 per lot, or a total sales of P 15,000,000 for the taxable period. These
sales shall be classified as:
a. 12% VAT transactions
Commented [a26]:
Commented [a27]:
Commented [a28]:
Commented [a29]:
Commented [a30]:
Commented [a31]:
Commented [P32]:
b. 0% VAT transactions
c. VAT exempt transactions
d. None of the foregoing
34. Statement 1 : Lease of a parking lot attached to a residential unit at P 8,000 per month is
exempt from vat.
Statement 2 : Lease of 8 residential units at P 18,500 per month is subject to vat.
Statement 1
Statement 2
A
True
True
B
True
False
C
False
True
D
False
False
Commented [a33]:
35. Statement 1: Sale of drugs and medicines prescribed for the treatment/and or prevention of
diabetes, high cholesterol and hypertension is exempt from vat beginning January 1, 2019
Statement 2: Importation of drugs and medicines prescribed for the treatment/and or
prevention of diabetes, high cholesterol and hypertension is exempt from vat beginning January
1, 2019.
A
B
C
D
Statement 1
True
True
False
False
Statement 2
True
False
True
False
Commented [a34]:
36. Statement 1: Sale of drugs and medicines of pharmacy run by the hospital to outpatients are
subject to VAT.
Statement 2: Pharmacy items used in the performance of medical procedures in hospital units
such as in the operating and delivery rooms and by the other departments are considered part
of medical services rendered by the hospital, hence, not subject to vat.
A
B
C
D
Statement 1
True
True
False
False
Statement 2
True
False
True
False
Commented [a35]:
37. A telephone Company , VAT-registered, provides services for domestic and overseas calls. It is a
taxpayer as far as what business tax is concerned?
a. Value-added tax
b. Overseas communication tax
c. Vat on domestic calls and overseas communications tax on overseas calls
d. Franchise tax
38. Which of the following is not subject to VAT by a VAT-registered seller?
a. Remaining inventory upon retirement from business
b. Sale of company’s used car to its officers
c. Sales of goods or services to the national government
d. Sale of residential lot amounting to P 1,000,000
Commented [a36]:
Commented [a37]:
39. 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
40. Which of the following is not deductible from Gross Selling Price for vat purposes?
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.
41. Mr. Andres, VAT-registered real estate dealer, transferred a parcel of land held for sale to his
son as gift on account of his graduation. For VAT purposes, the transfer is:
a. Not subject to VAT because it is gift
b. Subject to VAT because it is 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
Commented [a38]:
Commented [a39]:
Commented [a40]:
42. The following are the data of Davao International for the last quarter of 2018:
Sales up to Dec. 15 (invoice value)
P 380,800
Purchases up to Dec. 15(net)
P 150,000
Additional information:
On December 16, 2016, the Company retired from its business and the inventory valued at P
190,000 remained unsold. There is a deferred input tax from the third quarter of P 3,500.
How much is the total value-added taxes payable of Davao International?
a. P 42,100
b. P 21,500
c. P 22,800
d. P 19,300
43. Sta. Lucia Realty, a real estate dealer, sold a commercial lot mounting to P 800,000. This
transaction is
a. Vat exempt
b. Zero-rated sale
Commented [a41]:
c. Subject to vat
d. Subject to OPT
44. Gross selling price includes all of the following except one. Which one?
a. Total amount which the purchaser pays to the seller
b. Total amount which the purchaser is obligated to pay to the seller
c. Excise tax
d. Value-added tax
45. On January 5, 2018, Pinoy Food Corporation, vat-registered sold on account goods for P 112,000
inclusive of vat. The term was: 2/10,n/30. Payment was made on January 10, 2018. The total
amount due is:
a. P 110,000
b. P 107,800
c. P 112,000
d. P 109,760
46. One of the following is not a transaction deemed sale:
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 of goods or properties as share in the
profits of a VAT-registered person or credits in payment of debt
c. Retirement from or cessation from business with respect to all 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.
Commented [a42]:
Commented [a43]:
Commented [a44]:
Commented [a45]:
47. Genson Distribution Inc., a VAT taxpayer, had the following data in a month:
Cash Sales
P 200,000
Open account sales
P 500,000
Consignment:
0 to 30 days old (on which there were remittance from
Consignees of P 200,000)
P 600,000
31 to 60 days old
P 700,000
61 days old and above
P 900,000
How much is the output tax?
a. P 348,000
b. P 216,000
c. P 264,000
d. P 108,000
Commented [a46]:
48. Ana a vat registered lessor of commercial spaces received P 1,337,500 rentals during the year
from various clients, net of the 5% creditable withholding tax on rental income. How much is the
correct output vat?
a. P 154,080
b. P 142,500
c. P 150,000
d. P 160,500
49. Assume that in the preceding number, Ana is a non-vat registered lessor, how much is her
correct business tax?
a. P 42,237
b. P 40,125
c. P 38,118
d. P 0
50. Tax credit
Commented [a47]:
Commented [a48]: