BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
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BUSINESS &
TRANSFER
TAXATION
SOLUTION
MANUAL
University
2019 Edition
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BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
CHAPTER 1 – INTRODUCTION TO CONSUMPION TAXES
True or False 1
F 1. Consumption tax is a tax levied upon businesses
T 2. A purchase is a form of consumption.
T 3. A tax on consumption will effectively causes all residents of the state to pay tax.
T 4. Consumption is the acquisition or utilization of goods and services.
T 5. Income tax is based on the taxpayers' capacity to sacrifice for the support of the government.
F 6. Consumption tax is more consistent with the "ability to pay theory rather than the "benefit received"
theory.
T 7. A tax on consumption would support savings initiative.
T 8. Consumption taxes should not apply to basic necessities.
F 9. Both domestic consumption and foreign consumption are subject to consumption tax.
T 10. Non-resident sellers are exempt from consumption taxes on their domestic sales.
F 11. Resident sellers shall pay consumption tax on foreign consumption.
F 12. The sale by non-resident persons abroad is subject to Philippine consumption tax.
F 13. The utilization or consumption of goods or services shall be taxable in their country of origin.
F 14. The sale by non-resident persons in the Philippines is exempt from consumption tax.
T 15. The sale by resident in the Philippines is subject to consumption tax.
True or False 2
T 1. The consumption tax for purchases of goods or services from foreign sources shall be payable by the
buyer.
T 2. Business tax is a form of consumption tax.
F 3. Consumption tax is a form of business tax.
T 4. Business tax is imposed on the sales of sellers which is the purchases made by the buyers.
F 5. The VAT on importation is payable only by those regularly engaged in trade or business.
T 6. Business taxes are paid by sellers while the VAT on importation is paid by the buyers.
T 7. The statutory taxpayer and the economic taxpayer are the same with the VAT on importation.
T 8. Business taxes are usually included in the price of goods and services of the seller but are remitted by the
seller to the government.
T 9. In business taxes, the statutory taxpayer is not the economic taxpayer.
T 10. The sales or importation of goods is not subject to specific percentage tax.
T 11. When the impact and incidence of taxation rests upon different persons, the tax is an indirect tax.
VOID 12. Domestic pay consumption tax to domestic sellers.
F 13. Importers pay consumption tax to non-resident sellers.
T 14. Domestic sellers pay consumption tax to the government.
F 15. Exporters pay consumption tax to the government.
Multiple Choice - Theory: Part 1
1. Which type of consumption will pay consumption tax?
a. Domestic consumption
b. Foreign consumption
c. Both domestic and foreign consumption
d. Neither domestic nor foreign consumption
2. Which is a tax upon the usage of income?
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. Savings tax
b. Investment tax
c. Consumption tax
d. Business tax
3.Which is subject to the VAT on importation?
a Foreign consumption from resident sellers
b. Foreign consumption from foreign sellers
c. Domestic consumption from resident sellers
d. Domestic consumption from foreign sellers
4. Which is subject to business tax?
a. Foreign consumption from resident sellers
b. Foreign consumption from foreign sellers
c. Domestic consumption from resident sellers
d. Domestic consumption from foreign sellers
5. Which is an incorrect statement regarding consumption taxes?
a. They are always indirect in nature.
b. They effectively tax everyone in the state.
c. They apply only when the goods or services are destined for consumption within the Philippines,
d. Consumption taxes may encourage savings formation
6. Which is correct regarding consumption tax?
a. It may help in the redistribution of wealth to society,
b. It is entirely based upon the consumers' ability to pay.
c. It applies to both domestic and foreign consumption
d. It applies only when the seller is non-resident.
7. Domestic consumption is taxable when the seller is
a. non-resident
b. a resident.
c. either a resident or a non-resident.
d. both a resident and a non-resident.
8. Foreign consumption shall
a. pay consumption tax if the seller is a resident
b. pay consumption tax if the seller is a non-resident
c. not pay consumption tax if the seller is a non-resident
d. not pay consumption tax regardless of the residency of the seller.
9. The tax on domestic consumption is referred to as
a. VAT on importation.
b. Business tax.
c. Either A or B
d. Neither A nor B
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
10. The tax on domestic consumption from foreign suppliers is
a. VAT on importation.
b. Business tax.
c. Either A or B
d. Neither A nor B
11. The tax on domestic consumption from resident suppliers is
a. VAT on importation.
b. Business tax.
c. Either A or B
d. Neither A nor B
12. Which is not a business tax?
a. VAT on importation
b. VAT on sales
c. Percentage tax
d. Excise tax
13. The percentage tax is generally
a. 3% of sales or receipts
b. 3% of purchases
c. 3% of mark-up
d. 12% of mark-up
conceptually, 12%
14. The VAT as a business tax is
a. 12% of sales or receipts
b. 12% of purchases
c. 12% of mark-up
d. 3% of mark-up
15. The VAT on importation is
a. 12% of sale
b. 12% of purchases
c. 12% of mark-up
d. 3% of mark-up
16. 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
17. As to incidence of tax, the VAT on importation is a form of
a. Direct tax
b. Indirect tax
c. Ad valorem tax
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
d. Specific tax
18. 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
19. 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
20. Who is the statutory taxpayer to the VAT on importation?
a. Foreign seller
b. Domestic buyer
c. Both A and B
d. None of these
Multiple Choice - Theory: Part 2
1. Generally, the tax basis of business tax is gone
a. sales or receipts
b. purchase cost
c. Either A or B
d. Both A and B
2. 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
3. The economic taxpayers of consumption taxes are
a. Sellers who are engaged in trade or business
b. Sellers, whether or not engaged in trade or business
c. Buyers who are engaged in trade or business
d. Buyers, whether or not engaged in trade or business
4. What is the method used to determine the VAT due and payable?
a. Direct method
b. Indirect method
c. Tax credit method
d. Withholding method
5. Which statement is conceptually incorrect?
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
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.
6. Which is correct?
a. The sales to foreigners must include a business tax.
b. The sales to residents must include a business tax.
c. The purchase from abroad must include a business tax.
d. All of these
7. The deduction from Output VAT is called
a. Percentage tax
b. VAT due and payable
c. Input VAT
d. VAT on importation
8. Which is a pure form of a sales tax?
a. Percentage tax
b. Value Added Tax
c. Both A and B
d. Neither A nor
9. Statement 1. A business which pays VAT normally does not pay percentage
tax.
Statement 2: A business which pays percentage tax also pays VAT.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
10. Which of the following business taxes applies only for domestic
consumption?
a. VAT on sales
b. Percentage tax
c. Excise tax
d. All of these
11. Excise tax is paid by
a. Sellers
b. Buyers
c. Importers or manufacturers
d. Seller or buyer depending on who agreed to pay the excise tax
12. Export sale is (select the incorrect one)
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. Exempt from percentage tax
b. Exempt from VAT
c. Exempt from excise tax
d. All of these
13. Statement 1: Excise tax is always paid together with VAT or percentage tax,
Statement 2: Excise tax is paid at the point of sale.
Which statement is false?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
14. Which is imposed with a tax of zero percent (0%)?
a. All export sales
b. Export sales of VAT-registered taxpayers
c. Import sales of VAT-registered taxpayer
d. Export sales of non-VAT registered taxpayers only
15. Which is not subject to excise tax?
a. Sin products
b. Non-essential commodities
C. Food products
d. Mineral products
16. The tax basis of consumption tax on foreign purchase is
a. sales or receipts.
b. purchase costs.
c. Either A or B
d. Both A and B
17. The consumption tax on domestic purchases is imposed upon the
a. sales or receipts
b. purchase cost
c. Either A or B
d. Both A and
18. Technically, the excise tax on the manufacture of certain articles is payable only when the article is
intended for
a. Domestic consumption
b. Foreign consumption
c. Both A and B
d. Neither A nor B
19. Which is correct with the VAT on importation?
a. Payable only when the importer is engaged in business
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. Payable only when the foreign seller is engaged in business
c. Payable regardless of the purpose of the importation
d. Payable only when the resident seller is not engaged in business
20. The VAT on domestic sales is an example of good
a direct tax.
b. an indirect tax
c. a regulatory tax.
d. a specific tax.
Multiple Choice - Problem Part 1
1. Free Company, a resident business, renders services to Mr. Erlwin, a resident person who is not engaged in
business.
Identify the statutory taxpayer and the type of consumption tax.
a. Free Company - Business tax
b. Mr. Erlwin - VAT on importation
c. Mr. Erlwin - Business tax
d. Free Company - VAT on importation
2. Baliwag Company, a non-resident business, purchased P200,000 from Cauayan Company, a resident
business. Which will pay the consumption tax on this transaction?
a. Cauayan Company
b. Baliwag Company
c. Both A and B
d. Neither A nor B
3. Heidenberg Corporation, a resident business, purchased P 100,000 goods from Kiwi Company, a nonresident business.
Identify the statutory taxpayer and the type of consumption tax.
a. Heidenberg Company - Business tax
b. Kiwi Company - business tax
c. Heidenberg Company - VAT on importation
d. Kiwi Company - VAT on importation
4. Mr. Cedric, an employee, sold his residential lot to Mrs. Corneto, a real property dealer. Who is subject to
consumption tax with respect to this transaction?
a. Mr. Cedric
b. Mrs. Corneto
c. A and B
d. Neither A nor B
5. Mr. Porma made a casual sale involving a car to Mrs. Tutyal, a resident
buyer. Mr. Porma is not a car dealer. Who is subject to consumption tax?
a. Mr. Porma
b. Mrs. Tutyal
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
c. Both Mr. Porma and Mrs. Tutyal
d. Neither Mr. Porma nor Mrs. Tutyal
6. Mr. Llama, an employee, imported a pair of shoes from Hongkong. Which consumption tax is he liable to
pay?
a. Business tax
b. VAT on importation
c. Both
d. None
7. Kapederasyon, a charitable non-profit corporation, imports various office supplies from XG Manufacturing
Industries in China. Which is correct?
a Kapederasyon is exempt from VAT on importation.
b. Kapederasyon is subject to VAT on importation.
c XG Manufacturing Industries is subject to business tax.
d. XG Manufacturing Industries shall pay the VAT on the importation.
8. Mr. Cavite produces an excisable article for sale in the Philippine market. Which is incorrect with respect to
Mr. Cavite's business taxation?
a. Mr. Cavite is subject to either VAT or percentage tax
b. Mr. Cavite pays excise tax in addition to VAT or percentage tax
c. Mr. Cavite pays excise tax in addition to VAT and percentage tax
d. Mr. Cavite will pay excise tax without regard to whether he is a VAT or non-VAT taxpayer.
9. A person engaged in business is subject to 3% business tax. He has inventories of goods in his possession
costing P77,600 which he intends tosell to earn a mark-up of 25% of cost net of the 3% business tax. He shall
invoice the sale of the P77,600 goods at
a. P100,000
b. P103,000
c. P 97,000
d. P 110,000
10. A business wants to make a P10,000 profit from the sale of an inventory costing P30,000. The business is
subject to 3% percentage tax. At what amount shall the business invoice the sale?
a. P 41,237
b. P 41,200
c. P 40,000
d. P 38,800
11. A person who imports goods or properties will more likely pay
a 3% percentage tax on the importation
b. a 12% VAT on the importation
c. either 3% or 12% tax on the importation
d. no consumption tax
12. A person who is not regularly engaged in trade or business made a casual sale of a property for P100,000.
What will be the invoice price of the sale?
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. P100,000
b. P103,000
c. P112,000
d. Either B or C
13. Alison is regularly engaged in the sales of goods. He will pay
a . Value added tax only
b. Percentage tax only.
c. Either A or B
d. Neither A nor B
14. Mr. Ventura is subject to 3% percentage tax. He made a total collection of P206,000 during a month and
paid P103,000 in purchases. Compute his percentage tax
a. P0
b. P 3,000
c. P6,180
d. P12,000
15. A business taxpayer purchased goods worth P120,000 from non-residents and sold goods worth P140,000
for P180,000. What is the concept of "value
added" for VAT purposes?
a. P200,000
b. P140,000
c. P 80,000
d. P 60,000
16. In the immediately preceding problem, what is the basis of percentage tax?
a. P200,000
b. P140,000
c. P120,000
d. P180,000
17. Assuming the same data in the above problem, what is the basis of the VAT
on importation?
a. P200,000
b. P140,000
c. P120,000
d. P180,000
18. Mr. Coroneti imported P300,000 equipment for business use and a P1,200,000 car for personal use. What
is the amount subject to the VAT on
importation?
a. P0
b. P 300,000
c. P 1,200,000
d. P1,500,000
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
Multiple Choice - Problem Part 2
Basic Case 1
1. A business taxpayer had the following purchases and receipts:
Import of goods or services
P 190,000
Domestic purchase of goods or services
100,000
Domestic sales of goods and services
150,000
Export sales of goods or services
50,000
Compute the total amount subject to consumption tax to the business.
a. P500,000
b. P400,000
c. P350,000
d. P340,000
2. In the immediately preceding problem, determine the amount subject to consumption tax if the taxpayer is
not engaged in business
a. P490,000
b. P390,000
c. P200,000
d. P190,000
Basic case 2
3. A VAT-registered taxpayer recorded the following sales and purchases, exclusive of VAT, during the month:
Sales
Purchases
P 300,000
200,000
What would be the output VAT?
a. P 48,000
b. P 36,000
c. P24,000
d. P12,000
4. What is the input VAT?
a P 48,000
b. P 36,000
c. P24,000
d. P12,000
5. What is the VAT payable?
a. P36,000
b. P24,000
c. P12,000
d. P0
6. Assuming the taxpayer is a non-VAT taxpayer paying 3% percentage tax, the percentage tax shall be
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. P12,000
b. P 9,000
c. P6,000
d. P 3,000
Basic Case 3
A business taxpayer recorded the following transactions during the month:
Philippines
Abroad
Total
Sales
P 350,000
P 200,000
P 550,000
Purchases
P 150,000
P100,000
P250,000
Total
P 500,000
P 300,000
P800,000
Assuming the taxpayer is a VAT-registered taxpayer.
7. Compute the output VAT.
a. P0
b. P 24,000
c. P 36,000
d. P 42,000
8. Compute the VAT on importation
a. P0
b. P12,000
c. P18,000
d. P32,000
Assuming the taxpayer is a non-VAT taxpayer
9. Compute the percentage tax.
a. P0
b. P6,000
c. P 9,000
d. P 10,500
10. Compute the VAT on importation.
a P0
b. P 3,000
c. P12,000
d. P18,000
Basic Case 4
Sindangan Company, a VAT-registered taxpayer, purchased P400,000 worth of goods and sold the same for
P800,000.
11. Assuming that the business operation of Sindangan Company is limited to Philippine residents, what is the
total business tax it will report on its sales?
a. P 96,000
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. P 48,000
c. P 24,000
d. P0
12. Assuming that the purchases were imports and the sales were exports, compute respectively the business
tax and total consumption tax.
a. P 96,000; P144,000
b. P 24,000; P144,000
c. P 24,000; P72,000
d. P 0; P48,000
CHAPTER 2 - VALUE ADDED TAX ON IMPORTATION
True or False 1
F 1. The VAT on importation is a business tax.
T 2. The final withholding VAT is a business tax.
F 3. The VAT on importation is 12% of the value added on importation.
F 4. The VAT on importation is 12% of the receipts from the sale of services abroad.
F 5. Importation is subject to either VAT or percentage tax.
F 6. The final withholding VAT is 12% of the contract price of purchased services from within the Philippines.
F 7. The sale of services abroad is subject to 12% final withholding VAT.
F 8. The VAT on importation is paid to the Bureau of Internal Revenue.
T 9. The final withholding VAT on services is paid to the Bureau of Internal Revenue.
F 10. The importation of any agricultural or marine products is VAT exempt.
T 11. The importation of professional instruments and implements is exempt from VAT
F 12. The importation of any product intended for human consumption is VAT- exempt.
F 13. The importation of ingredients which are intended for the manufacture of goods for human consumption
is VAT-exempt.
F 14. The importation of professional instruments and implements in commercial quantities is VAT-exempt.
T 15. The importation of equipment, machinery and spare parts for marine vessels is VAT-exempt.
True or False 2
F 1. Resident foreigners are not subject to the VAT on importation.
F 2. All agricultural or aquaculture inputs are VAT-exempt.
T 3. The sale of processed agricultural products is vatable.
T 4. The importation of books and newspapers is VAT-exempt.
F 5. The importation of life-saving equipment is VAT-exempt.
T 6. The lease of aircrafts or vessels from non-residents is exempt from the final withholding VAT.
F 7. The purchase of services from foreign consultants is exempt from final withholding VAT.
T 8. The importation of fuel, goods, and supplies by international carriers is VAT exempt.
F 9. The importation of agricultural machineries by farmers is exempt.
T 10. The importation of agricultural machineries by agricultural cooperatives is VAT-exempt.
F 11. The VAT on importation is payable only by those engaged in business.
F 12. The final withholding VAT on importation of services is payable even by those not engaged in business.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
T 13. The VAT on importation and the final withholding VAT can be claimed as Input VAT creditable against
Output VAT.
T 14. In economic reality, the VAT on importation and the final withholding VAT are taxes paid by non-resident
sellers.
F 15. Qualified exempt importation is exempt from VAT only if made by an exempt person.
Multiple Choice: Theory - Agricultural or marine food products: Part 1
1. Which is subject to value added tax?
a. Sheep
b. Sheep wool
c. Cut sheep meat
d. All of these
2. Which agricultural product is VAT-exempt on importation?
a. Charcoal
b. Wood
c. Lumber
d. Corn
3. Which importation is subject to VAT?
a. Importation from abroad
b. Purchase of goods from economic zones in the Philippines
c. Both A and B
d. Neither A nor B
4. Which is not subject to VAT on importation?
a. Importation of goods for personal use
b. Importation of goods for business use
c. Purchase of goods from Ecozone entities
d. Purchase of goods from other domestic sellers
5. Which of the following is subject to the VAT on importation when imported?
a. Books
b. Table sugar
c. Mushroom
d. ordinary salt
6. Which non-food agricultural product is exempt from VAT on importation?
a. Chicken manure
b. Eggs
c. Live hogs
d. Cattle
7. Which of the following is not exempt from VAT?
a. Grapes
b. Oranges
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
c. Orchids
d. Kiwi fruits
8. Which seedling is vatable?
a. Grafted mango seedlings
b. Pomelo seedlings
c. Narra seedlings
d. Guava seedlings
9. Which agricultural produce is exempt from VAT?
a. Rubber
b. Abaca hemp
c. Copra
d. Firewood
10. Which is vatable?
a. Bamboo shoots
b. Banana hearts
c. Banana fruits
d. Bamboo poles
11. Which is VAT-exempt?
a. Cotton soft wood
b. Cotton seeds
c. Cotton wool
d. None of these
12. Which is VAT-exempt?
a. Coconut lumber
b. Coconut brooms sticks
c. Coconut shells
d. Coconut meat
13. Which is subject to VAT on importation?
a. Wheat
b. Coffee bean
c. Barley
d. Cocoa
14. Which agricultural product is subject to VAT?
a. Honey
b. Rattan cane
c. Sugarcane
d. Sugar beets
15. Which is subject to VAT on importation?
a. Cocoon silk
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. Pineapple silk
c. Furniture
d. All of these
16. Seedlings of this tree are exempt from VAT on importation.
a. Rubber tree
b. Paper tree
c. Palm oil tree
d. Mahogany tree
17. Which of the following when imported is subject to VAT?
a. Rubber
b. Corn
с. Cacao
d. Peanuts
18. Which of these seeds is not VAT-exempt?
a. Corn seeds
b. Mustard seeds
c. Flower seeds
d. Cabbage seeds
19. Which of the following feeds is subject to VAT on importation?
a Formulated horse feeds
b. Corn grits
c. Swine feeds
d. Broiler feeds
20. Feeds of the following animals are considered as specialty feeds, except for
a. Zoo animals
b. Aquarium fish
c. Livestock
d. Fighting cocks
Multiple Choice: Theory - Agricultural or marine food products: Part 2
1. Which is VAT-exempt?
a. Peacock feathers
b. Eggs
c. Hamsters
d. Leather
2. Which is vatable on importation?
a. Tea leaves
b. Tobacco leaves
c. Cayenne pepper
d. Chinese cabbage
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
3. Which of these is VAT exempt on importation?
a. Almonds
b. Blueberries
c. Ginseng roots
d. All of these
4. Which is not exempt from VAT?
a. Sunflower seeds
b. Beeswax
c. Peanuts
d. None of these
5. Which is not generally considered as pet under the regulation?
a. Rabbits
b. Zoo animals
c. Race horses
d. Fighting cocks
6. Which of these is non-vatable?
a Lovebirds
b. Parrots
c. Goldfish
d. Milkfish
7. Which is not a VAT-exempt poultry?
a. Ducks
b. Geese
c. Turkeys
d. Game fowl roosters
8. Which of these animals is vatable when imported?
a. Cows
b. Rabbits
c. Goats
d. Race horses
9. Which is a vatable agricultural input?
a. Fertilizers
b. Pesticides
c. Seeds
d. Seedlings
10. The following are generally considered as pets which are vatable when
imported except for
a. Janitor fish
b. Goldfish
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
c. Catfish
d. Koi fish
11. Which of these is taxable with VAT on importation?
a. Yellowfin tuna
b. Pink salmon
c. Blue marlin
d. Butterfly fish
12. Which of the following seafood is considered as vegetable and therefore
VAT-exempt?
a. Kelp
b. Sea lettuce ("Green nori")
c. Sea grapes
d. All of these
13. Which of these is vatable?
a. Sea shells
b. Octopuses
c. Squids
d. Shrimps
14. Examples of mollusk and shellfish:
A. Crabs
B. Oysters
C. Lobsters
D. Clams
Which of these is subject to VAT on importation?
a. A and D
b. B and C
c. All of these
d. None of these
15. Which of these agricultural products is not considered as being in its original state?
a. Kopra
b. Muscovado sugar
c. Refined sugar
d. Ordinary salt
16. By revenue regulation, which of the items below is not considered in
a. Marinated fish
b. Dried fish
c. Frozen meat
d. Smoked fish
17. Which product is non-taxable with VAT on importation?
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. Fresh cow's milk
b. Olive Oil
c. Butter
d. Parmesan cheese
18. Which of the items below is taxable with VAT?
a. Shrink-wrapped meat
b. Vacuum-packed vegetables
c. Tetra-packed fresh fruit juice
d. Canned fruits
19. Which is not considered as simple processing?
a. Freezing
b. Stripping
c. Broiling
d. Marinating
20. The following advanced technological means of packaging are deemed not to alter the nature of
agricultural marine food products thereby retaining
their original state. Which is the exception?
a. Canning
b. Vacuum-packing
c. Plastic shrink wrapping
d. Tetra packing
Multiple Choice: Theory - Other exempt importation
1. Which is not exempt from VAT on importation?
a. Importation of books
b. Importation of school supplies
c. Importation of magazines
d. All of these
2. Which importation is not VAT-exempt?
a. Importation of personal and household effects of residents coming to resettle in the Philippines
b. Importation of personal and household effects of foreigners coming to
settle permanently in the Philippines
c. Importation of personal and household effects which are subject to customs duties
d. All of these
3. The importation of professional instruments and implements may be subject to VAT when the
a. volume is not in commercial quantity
b. goods accompany the person or arrive within 30 days before or after his/her arrival.
c. importation involves vehicles and machineries.
d. All of these
4. Which importation is exempt from VAT?
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
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
5. The importation of which transport medium is exempt from VAT?
a. Sea or air
b. Land
c. A and B
d. None
6. Examples of Transport vehicles:
A Bus
B. Cars
C. Vessels
d. Aircraft
Which of these is not exempt from VAT when imported?
a. C and D
b. A and B
c. All of these
d. None of these
7. Which importer is exempt from VAT on importation of fuel, goods and supplies?
a. Domestic carriers
b. International carriers
c. Domestic carriers on their international operations
d. Either B or C
8. Which of the following items is subject to VAT on importation to an individual who is intending to settle in
the Philippines?
a. Vehicles
b. Professional instruments
c. Household effects
d. Personal effects
9. The importation of fuel, goods and supplies is not exempt from VAT when used in
a. Domestic operation
b. International shipping operations
c. International transport operations
d. Any of these
10. Which is vatable?
a. Importation of life saving equipment
b. Importation of safety or rescue equipment
c. Importation of spare parts, steel or other metal plates for marine vessels
d. None of these
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
11. The importation of vessel or aircraft for domestic operations is
a. vatable.
b. always VAT exempt.
c. VAT exempt if the importer complies with maximum service life set by
law.
d. vatable if the importer complies with maximum service life set by law.
12. The importation of fuels, goods and supplies for domestic shipping or air transport operations is
a. vatable.
b. always VAT exempt.
c. vatable if the importer is a domestic carrier.
d. VAT-exempt if the importer is a domestic carrier.
13. 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
14. Who has the burden of proving exemption from VAT on importation?
a. The government
b. The importer-buyer
c. The seller
d. Both A and C
15. Which is a qualified exempt importation?
a. Importation by a cooperative of farm equipment
b. Importation by a cooperative of rice
c. Importation of books
d. Importation of marine food products
16. Which is not a qualified exempt importation?
a. Importation of fuels or supplies by a person engaged in domestic transport operations
b. Importation of fuels or supplies by an international carrier
c. Importation of cargo vessels and aircraft by those engaged in domestic
transport operations
d. Importation of cargo vessels and aircraft by those engaged in international transport operations.
17. Which of these is non-vatable?
a. Purchase of services from a foreign service provider who is not engaged in business
b. Purchase of goods from a foreign service provider who is engaged in business abroad
c. Purchase of goods from economic zone enterprises
d. None of these
18. Who shall pay the VAT on importation when a VAT-exempt entity subsequently sells an imported article or
goods to a non-exempt entity?
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. The exempt buyer
b. The non-exempt buyer
c. Both A and B
d. Neither A nor B
19. Importation is not subject to VAT when
a made by a VAT-registered business.
b. made by a non-VAT-registered business.
c. it involves exempt goods.
d. coursed through an exempt importer.
20. Which is not included in landed cost?
a. Dutiable value
b. Custom's duty
c. Excise tax
d. VAT
21. Which is not included in the landed cost?
a. Purchase price
b. All incidental cost of bringing the goods to the Customs warehouse
c. Taxes other than VAT paid prior to the withdrawal of the goods
d. Cost of transporting the goods from the Customs warehouse to the importer's warehouse or residence
Multiple Choice - Problem 1
1. Oceanizers, Inc. purchased the following from abroad:
abroad:
Sea shells and coral decor Р 320,000
Tuna and salmon 120,000
Total P440,000
What is the amount of taxable importation?
a Р0
b. P120,000
c. P200,000
d. P320,000
2. Mr. A imported various personal and household effects with a value aggregating P400,000. P320,000 of
these was subjected to a 8% customs duty by the BOC. What is the VAT on importation?
a. P0
b. P 41,472
c. P42,240
d. P48,000
3. A bookstore company imported the following items:
Landed Cost
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
Books
Professional instruments
School supplies
Total
P 350,000
P200,000
P350,000
P900,000
3. What is the total VAT on importation?
a. P0
b. P 66,000
c. P72,000
d. P108,000
4. Mr.C, a VAT-registered food retailer, imported the following from China:
Landed cost
Fruits
P 250,000
Vegetables
P180,000
Frozen meat
P50,000
Marinated milkfish
P100,000
Total
P580,000
Compute the VAT on importation
a. P0
b. P 12,000
c. P 51,600
d. P 69,600
5. Alexis Furnitures, a percentage taxpayer, imported the following household equipment:
Landed cost
Machineries, for business use
P1,150,000
Heating system, for home use
P250,000
Total
P1,400,000
Compute the VAT on importation.
a. P0
b. P 27,000
c. P 150,000
d. P 168,000
6. Danes Agri Corp imported the following:
Seeds
Fertilizers
Farming equipment
Herbicides and pesticides
Total
Compute the VAT on importation.
Landed cost
P 400,000
P750,000
P450,000
P250,000
P1,850,000
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. P0
b. P 42,000
c. P 72,000
d. P 84,000
7. Home Appliance Company imported the following for personal use:
Furniture
P 600,000
Rattan
250,000
Lumber
450,000
Compute the VAT on importation,
a. P 30,000
b. P 72,000
c. P 156,000
d. P 204,000
8. Mr. Huligan imported rice from Vietnam. Details of his importation show the following:
Total invoice value
Freight and insurance in transit
BOC and other charges
P 1,000,000
50,000
20,000
Compute the VAT on importation.
a. P0
b. P 120,000
c. P 126,000
d. P 128,400
9. An agricultural supply dealer imported the following:
Corn grits
Hog feeds
Specialty feeds
P 200,000
350,000
300,000
Compute the VAT on importation.
a. P0
b. P36,000
c. P42,000
d. P 102,000
10. The following data relates to the importation of cigarettes by Mr. Shinto:
Total invoice value
BOC charges
Customs duties
Excise taxes 300,000
P 1,000,000
300,000
200,000
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
Compute the VAT on importation.
a. P 120,000
b. P 156,000
c. P 180,000
d. P 216,000
Multiple Choice - Problems 2
1. 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
b. P 145,200
c. P 129,600
d. P0
2. In the immediately preceding problem, assuming that the importation is made by an agricultural
cooperative, what is the VAT on importation?
a. P158,400
b. P 144,000
c. P129,600
d. P0
3. Mr. Smile, a professional practitioner, imported the following
Calculators and computers for his firm
Books
Total
P 900,000
600,000
P1,500,000
How much is subject to VAT on importation?
a. P0
b. P 900,000
c. P1,200,000
d. P1,500,000
4. Mr. Juan Manuel Marquez arrived in the Philippines with an immigration visa. He had with him the following
Clothing shoes, and apparel
Professional instruments and implements
Personal car
Total costs of personal belongings
Compute the total amount subject to VAT on importation.
a. P0
b. P 200,000
c. 300,000
d. P 550,000
P100,000
150,000
300,000
P550,000
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
5. Mr. Xhi, a non-VAT taxpayer, made the following domestic purchases of
goods:
Purchase of scrap metals from a PEZA-locator
Purchase of machine from a VAT supplier
P200,000
800,000
What is the imposable VAT on importation?
a. P0
b. P 24,000
с. Р96,000
d. P 120,000
6. Atlantis Shipping Company imported P3,000,000 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. P0
b. P 144,000
c. P216,000
d. P360,000
7. 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
b. P 227,040
c. P 232,400
d. P 239,040
8. 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. P0
b. P18,960
c. P 35,280
d. P 38,160
9. Shanum Company had the following data regarding its importation:
Invoice price in US Dollars
Other costs to bring goods to the Philippines
BOC charges
Customs duties is 10% of dutiable value
Peso-Dollar Exchange rate
P 42.80 : $1
$ 12,000
P 145,000
100,000
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
Compute the VAT on importation.
a. P0
b. P 81,643.20
c. P91,032.00
d. P98,935.20
10. 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?
a. P 25,500
b. P 30,540
c. P 35,100
d. P 35,700
CHAPTER 3 - INTRODUCTION TO BUSINESS TAXATION
True or False- Part 1
F 1. Once employed, one cannot be considered engaged in business.
F 2. All sales by a businessman are considered made in the course of business.
T 3. A business involves habitual engagement in a commercial activity.
T 4. "Commercial activity" means provision of goods or services to the public for a profit.
F 5. To be construed as being engaged in business, one must be employed.
T 6. A self-employed individual is engaged in business.
T 7. An employee is not engaged in business.
F 8. All casual sales of properties are considered not made in the course of business.
T 9. The sale of ordinary assets by a business is considered made in the course of business.
F 10. The sale of capital assets by a business is also considered made in the course of business being incidental
to business operations.
F 11. A business which is not registered is exempt from business taxes.
T 12. Government agencies and instrumentalities and non-profit organizations or associations may be
considered as businesses on their unrelated operations; hence, these are subject to business tax.
F 13. The absence of a profit motive may preclude an activity from being
considered as business.
F 14. Government agencies and instrumentalities and non-profit organizations or associations are generally
considered as businesses.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
F 15. A company director is considered to be engaged in business.
True or False - Part 2
F 1. Marginal income earners are exempt from both business tax and income.
F 2. An employed professional is engaged in business.
T 3. Self-employed professionals rendering services to clients are engaged in business
F 4. Agents and brokers are considered as employees; hence, they are not considered engaged in business.
T 5. Consultants and movie artists are considered engaged in business.
F 6. Businesses for mere subsistence are not considered business because they are non-profit
T 7. Businesses for mere subsistence have gross receipts not exceeding P100,000 per year.
T 8. The owner of a business for mere subsistence is called a marginal income earner.
F 9. A professional, consultant, or artist can qualify as a marginal income earner as long as his receipts do not
exceed P100,000 in any 12-month period.
T 10. A sale made by a non-resident is presumed to be made in the course of business despite irregularity of
sales transactions.
F 11. A non-profit organization is subject to business tax on all of its receipts if it engages in activities subject
to business tax.
F 12. Exemption from income tax means exemption from business tax.
F 13. A non-profit organization will be exempt from business tax if it uses the income generated from activities
subject to business tax for non-profit purposes
T 14. An individual, trust, estate, partnership, corporation, joint venture, cooperative or association will pay
business tax.
T 15. Only sales outlets are required to pay the annual registration fee.
T 16. The Certificate of Registration shall be exhibited in a conspicuous place in the principal place of business,
F 17. The husband and the wife are taxable as a single person; hence, they pay under a consolidated business
tax return.
T 18. Businesses are required to register in the revenue district office (RDO) which has jurisdiction over their
principal place of business.
F 19. Businesses pay an annual registration fees of P1,000 annual registration fee.
F 20. Every distinct establishment with or without sales operation shall pay the
True or False - Part 3
T 1. The term "goods or properties" includes real properties held primarily for sale, lease or use in the ordinary
course of business.
T 2. The term "goods or properties includes the right or privilege to use patent copyright, design, secret
formula, trademark and other property or right.
T 3. Businesses are classified as sellers of goods or sellers of services for purposes of business taxes.
F 4. Sellers of goods are taxable on gross receipts while sellers of services are taxable on gross selling price.
F 5. The sale of radio, television, satellite transmission and cable television time
is a sale of service not a sale of goods or properties.
F 6. Real estate brokerage is considered a sale of goods or properties rather than sale of services.
F 7. A contractor is a seller of goods or property not a seller of services.
T 8. Leasing or distribution of cinematographic films is a sale of service.
F 9. Dealers in securities and lending investors are sellers of goods rather than sellers of services.
F 10. The sale of electricity by generation, transmission and distribution
companies is considered sale of goods or properties.
T 11. The term gross selling price excludes taxes on the sale.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
T 12. Excise tax is part of the gross selling price.
T 13. Sales returns and allowances are deductible against gross selling price.
T 14. Gross selling price includes cash, accounts and installment sales.
T 15. Constructive receipts are part of gross receipts.
T 16. Constructive receipts are monies which are placed in the control of the seller of services without
restrictions.
T 17. Only discounts determinable at the point of sale are deductible against gross selling price
T 18. The term "gross receipts" includes client or customer advances for unperformed jobs.
T 19. Gross receipts include only cash received and excludes uncollected income.
F 20. Promissory notes and other evidences of indebtedness submitted by clients or customers are part of
gross receipts.
True or False Part 4
F 1. Non-VAT taxpayers pay their quarterly tax in three monthly payments.
F 2. Loans or agency monies received by the business are part of gross receipts.
T 3. Receipts that do not redound to the benefit of the taxpayer are not included in gross receipts.
T 4. There are three types of business taxes: VAT, percentage tax and excise tax.
T 5. There are two types of business taxpayers: VAT and Non-VAT taxpayers.
T 6. Normally, VAT and percentage tax are mutually exclusive.
T 7. Excise tax is an addition to either VAT or percentage tax for businesses manufacturing or importing
excisable articles.
F 8. The accounting period for business tax is called the taxable year.
T 9. VAT taxpayers pay their quarterly tax in two monthly and one quarterly payment
T 10. The taxable quarters of an individual are patterned after that of the calendar quarter.
T 11. The taxable quarters of a corporation adopting a fiscal year for income tax purposes shall be
synchronized with its fiscal year.
F 12. Corporations pay quarterly VAT while individuals pay VAT annually.
F 13. VAT taxpayers use BIR Form 2551 while non-VAT taxpayers use BIR Form 2550.
T 14. A few percentage taxpayers are required to pay their tax quarterly while most pay their taxes monthly.
T 15. Exempt sales will not be subject to VAT or percentage tax.
True or False Part 5
F 1. Services specifically subject to percentage tax are subject to VAT if not subjected to percentage tax.
T 2. Sales from goods or services, other than exempt sales and services subject
to percentage tax, are vatable.
F 3. The term "vatable sales" means sales automatically subject to VAT.
F 4. All services specifically subject to percentage tax are taxed at a rate of 3%.
F 5. All taxpayers with vatable sales or receipts in the past 12-months aggregating P1,919,500 from whatever
type of sales are subject to VAT.
F 6. A person who wishes to register as a VAT taxpayer despite not meeting the VAT threshold is called a
"registrable person."
F 7. The VAT payable is computed as output VAT less 3% percentage tax.
F 8. If the aggregate sales or receipts from all sources (exempt, specifically subject to percentage tax, and
others) exceed P3,000,000, the person is subject to VAT
F 9. Franchise grantees of radio or television broadcasting companies which
exceeded P1,000,000 in annual sales must register as VAT taxpayer.
F 10. Persons who optionally register as VAT taxpayers can cancel their VAT registration within three years.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
T 11. Franchise grantees of television or radio broadcasting companies cannot cancel their VAT registration.
F 12. Registrable persons shall be subject to VAT. They shall pay VAT with the
benefit of an input VAT credit plus the percentage tax.
Multiple Choice - Theory: Part 1
1. 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 inco
not exceeding P100,000
2. 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
3. Which of the following is not subject to business tax even if made by a registered business?
a. Sale of goods
b. Sale of services
c. Sale of properties considered as ordinary assets
d. Sale of properties considered as capital assets
4. Which is not engaged in business?
a. A corporate director
b. A broker
c. An agent
d. A security dealer
5. Which of these is least likely to be subjected to business tax?
a. Sale of stocks held as inventory
b. Sale of bonds held as inventory
c. Sale of stocks held as investment
d. None of these
6. Which is considered engaged in business even if not regularly engaged in trade?
a. A non-resident seller who exports to the Philippines
b. An importer who imports goods into the Philippines
c. A seller who makes a one-time sale of real property
d. Any seller who sells goods or services at a price above P100,000 during the year
7. Which of the following are considered engaged in business?
A. Government agencies
B. Non-profit organization
C. Sales agents
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
D. Consultants
a. A and B
b. C and D
c. B and C
d. None of these
8. Which of these is always presumed to be made in the course of business; hence, it is subject to business tax
under the regulations?
a. Export sales
b. Importation
c. Domestic sales
d. All of these
9. The business tax on exempt sales is in
a. VAT
b. Percentage tax
c. A or B
d. None of these
10. The consumption tax on importation is
a. VAT
b. Percentage tax
c. A or B
d. None of these
11. The consumption tax on domestic sales is
a. VAT
b. Percentage tax
c. A or B
d. None of these
12. The business tax on services specifically subject to percentage tax is
a. VAT
b. Percentage tax
c. A or B
d. None of these
13. Which is more likely to qualify as a marginal income earner?
a. Artist
b. Consultant
c. Sales agent
d. Operator of a single unit tricycle
14. Statement 1: Sellers of goods are subject to percentage tax.
Statement 2: Sellers of services are subject to VAT.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
15. 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
b. Neither statement
c. Statement 1 only
d. Statement 2 only
16. Statement 1: An employed taxpayer will pay an annual registration fee.
Statement 2: A self-employed taxpayer will pay an annual registration fee.
Which statement is correct?
a Statement 1
b. Statement 2
c. Both statements
d. Neither statement
17. The term "gross selling price" excludes
a. The contract price of the goods sold
c. Delivery charges
d. Sales returns and allowances
b. Discounts which are contingent upon future events
18. 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 provider.
c. Advances made by the client for services yet to be rendered
d. Cash collections for service rendered.
19. 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
20. Which is part of gross receipts?
a. Amounts received which will be remitted to other persons
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. Receipt of notice from a debtor to offset the consideration of the service for the debt of the service
provider
c. Receipt from bank loans
d. Receipt from issuance of stocks or issuance of certificates of indebtedness
Multiple Choice - Theory: Part 2
1. A non-VAT registered service provider shall pay
a. 3% percentage tax on its gross receipts
b. 12% VAT on its value added
c. 12% VAT on its export sales or receipts
d. 3% percentage tax on its export sales
2. Which must be present to construe the existence of a business?
a. Regularity of transaction
b. Offering of services or goods to the public for a profit
c. Actual presence of profit during the period
d. Both A or B
3. A person who made a one-time or casual sale of properties is
a. Exempt from business tax.
b. Subject to percentage tax.
c. Subject to value added tax.
d. Subject to either percentage tax or value added tax.
4. AVAT-registered person shall pay
a. 3% percentage tax and VAT
b. 12% VAT on its sales or receipts
c. 12% VAT on its value added
d. 12% VAT on its export sales
5. Who are subject to VAT?
a. Those who optionally register as VAT taxpayers.
b. Those who are mandatorily required to register as VAT taxpayers,
c. Those who are registrable to VAT.
d. Any of these
6. Who are not required to register to the VAT system?
a. Those who are below the VAT threshold
b. Those whose only sales are exempt sales
c. Those who only derive receipts from services specifically subject to percentage tax
d. Any of these
7. A non-VAT registered seller of goods shall pay on logie
a. 3% percentage tax on its gross receipts and to dobro
b. 12% percentage tax on its value added ad mortis
c. 3% percentage tax on its sales
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
d. 12% VAT on its gross receipts
8. A VAT-registered seller of goods shall be subject to
a. 12% output VAT on sales
b. 12% output VAT on gross receipts
c. 3% percentage tax on sales
d. 3% percentage tax on gross receipts
9. Who is entitled to claim (deduct) input VAT against output VAT?
a. VAT registered persons only
b. VAT registrable persons only
c. Non-VAT registered persons
d. All of these
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 exceeds the VAT threshold, future receipts from
these services are
a. exempt from percentage tax.
b. still subject to the same percentage tax.
c. subject to VAT
d. Subject to 3% percentage tax.
12. A VAT-registered person who did not exceed the VAT threshold will pay
a. VAT
b. Percentage tax
c. Both A and B
d. Either A or B at his discretion
13. Once the vatable sales or receipts exceed the VAT threshold, future monthly sales from vatable sales or
receipts shall be subject to
a. 3% percentage tax
b. Percentage taxes of various rates.
c. 12% VAT
d. 0% VAT.
14. A marginal income earner shall pay
a. 3% percentage tax
b. 12% VAT
c. Either A or B
d. Neither A nor B
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
15. The export sales of VAT-registered taxpayers are
a. subject to zero-rated VAT.
b. exempt from business tax.
c. subject to 12% VAT
d. subject to 3% percentage tax.
16. The export sales of non-VAT registered taxpayers are
a. subject to zero-rated VAT.
b. exempt from business tax
c. subject to 12% VAT.
d. subject to 3% percentage tax.
17. 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
18. 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
19. A non-VAT registered person who exceeds the VAT threshold shall pay
a. VAT
b. Percentage tax
c. Both A and B
d. Either A or B at his discretion
20. A non-VAT registered person who did not exceed the VAT threshold shall pay
a. VAT
b. 3% Percentage tax
c. Percentage tax at various rates
d. Either A or B at his discretion
21. What is the general VAT threshold?
a. P1,919,800
b. P1,919,500
c. P3,000,000
d. P10,000,000
22. Which is a special VAT threshold?
a. P1,919,800
b. P1,919,500
c. P3,000,000
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
d. P10,000,000
23. The mandatory or voluntary registration as VAT taxpayers under the special threshold is
a. revocable anytime.
b. revocable after the lapse of three years. In
c. revocable within a year.
d. perpetually irrevocable.
24. 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.
25. The VAT registration upon commencement of operation based upon expectation of exceeding the VAT
threshold shall be
a. revocable anytime.
b. revocable after the lapse of three years.
c. revocable within a year if sales do not actually exceed the VAT threshold.
d. perpetually irrevocable.
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CHAPTER 4 - EXEMPT SALES OF GOODS, PROPERTIES AND SERVICES
EXERCISE DRILLS
Indicate whether the sale of the following items is exempt or vatable:
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
True or False 1
T 1.The sale of processed agricultural products is vatable.
T 2. The sale of fruits and vegetables is exempt from business tax.
F 3. The sale of fertilizers, seeds, and pesticides is exempt from VAT.
T 4. Exempt sales are exempt from both the VAT and percentage tax.
F 5. Frozen meat is considered a processed agricultural food product
F 6. A fish pond operator is subject to 3% percentage tax.
F 7. A farmer is subject to business tax on farming occupation.
F 8. All sales of agricultural or marine food products are subject to business tax
T 9. The services provided by agricultural contract growers are vatable.
T 10. The employment of chemical treatment to agricultural or marine food products is considered state
altering.
F 11. The sale of bread is exempt from business tax.
F 12. The services of an agricultural contract grower are subject to VAT.
F 13. Restaurants are exempt from VAT.net
T 14. A fruit vendor is exempt from business tax.
F 15. A manufacturer of canned sea foods is exempt from VAT.
True or False 2
T 1. The transport services of an international carrier is exempt from VAT.
T 2. Agricultural cooperatives are exempt from VAT. TETES
T 3. Electric cooperatives are subject to VAT.
T 4. The sale of commercial lots where the selling prices do not exceed P1,919,500 a unit is exempt.
F 5. Bookstores are totally exempt from VAT.
F 6. Schools are subject to VAT.
F 7. Hospitals are subject to VAT.
F 8. The export sales by VAT taxpayers are exempt from VAT.
F 9. The export sales of non-VAT taxpayers are subject to zero-rated VAT.
F 10. Consultants are exempt from VAT because their services are akin to employment.
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F 11. The leasing of residential units is exempt from VAT if the annual rentals do not exceed P15,000 per unit
F 12. Domestic airliners are exempt from VAT on their transport of passengers.
F 13. The sale of a residential dwelling by a non-dealer is subject to VAT if the selling price per unit does not
exceed P3,199,200.
T 14. The sale of an adjacent lot to the same buyer shall be treated as one.
F 15. The sale of adjacent dwellings to different buyers shall be aggregated as one.
Multiple Choice - Theory: Part 1
1. Which of the following sale is not subject to business tax?
a. Sale of a car by a dealer
b. Casual sale of a car by a non-dealer
c. Sale of real property by a dealer
d. Sale of office equipment by a business
2. Which of these pay business taxes?
a. Vegetables dealer
b. Fruit dealer
c. Gold trader
d. Fisherman
3. Which is taxable with VAT?
a. Sale of cotton in original state
b. Sale of milkfish in original state
c. Sale of muscovado sugar
d. Sale of mustard seeds
4. Which is exempt from business tax?
a. Bakery
b. Manufacturer of canned fruits
c. Manufacturer of noodles
d. Meat vendor
5. Exempt sales are not subject to
a. VAT
b. Percentage tax
c. Both A and B
d. Neither A nor B
6. All of the following are exempt agricultural produce, except
a. Palay
b. Corn
c. Garlic
d. Tobacco
7. Which of the following is considered as not in its original state?
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a. Frozen fish
b. Dried fish
c. Marinated fish
d. None
8. Which is exempt from business tax?
a. Sale of boiled peanuts
b. Sale of peanut brittle
c. Sale of coco lumber
d. Sale of flowers
9. Which of the following sale is exempt from business tax?
a. Sale of palay
b. Sale of furniture
c. Sale of pottery
d. Sale of textile
10. The sale of this agricultural or marine product is exempt from business tax
a. Mackerel
b. Silk
c. Leather
d. Pearl
11. Which of the following establishments may qualify for exemption from
business tax?
a. Hotel
b. Inn
c. Boarding house
d. Resort
12. Which of the following is least likely subject to VAT?
a. Banana cake
b Cassava chips
c. Chocolate
d. Corn grits
13. The sale of which of the following is exempt from business tax?
a. Wine
b. Vinegar
c. Fish sauce
d. Boiled eggs
14. The sale of this agricultural supply is exempt from business tax
a. Fertilizer
b. Farm machineries
c. Farm tools
d. All of these
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15. Which is subject to VAT when sold?
a. Seeds
b. Fingerlings
c. Feeds
d. None of these law
16. Which is not exempt from business tax?th and
a Miller of palay into rice
b. Miller of corn into corn grits
c. Miller of sugar cane into refined sugar
d. Miller of sugar cane into raw sugardos al doillw
17. Which is exempt from business tax?
a. Agricultural contract growers
b. Food processor
c. Paper manufacturer
d. All of these
18. Which of the following transactions is not subject to business tax?
a. Sale of game fowl
b. Sale of specialty feeds
c. Sale of genetic materials for poultry
d. Sale of aquarium fish
19. Which of the following animals is not considered as a pet?
a. Domestic animal
b. Livestock
c. Race horse
d. Aquarium fish
20. Which of the following sales is not exempt from business tax?
a. Sale of pets
b. Sale of unprocessed agricultural food products
c. Sale of processed marine foods
d. Sale of unprocessed non-food agricultural products
Multiple Choice - Theory: Part 2
1. Which is subject to business tax?
a. A private hospital
b. A non-profit hospital
c. A government hospital
d. None of these
2. Which is not subject to business tax?
a. A purely employed professional
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b. A professional practitioner
c. A self-employed individual
d. All of these
3. All of these pay business tax, except
a. Stock broker
b. Insurance agent
c. Consultant
d. Employee
4. Which of the following pays business tax?
a. Regional operating headquarters
b. Regional administrative headquarters
c. Both A and B
d. Neither A nor B
5. Which is exempt from business tax?
a Receipts from rental of aircraft
b. Receipts from rental of vessels
c. Sale of aircraft or vessels
d. None of these
6. Which is an exempt medical service?
a. Services of surgical doctors
b. Services of dentists
c. Services of pediatricians
d. Hospital services
7. The gross receipts or sales of the hospital from which of the following sources is not exempt from business
tax.
a. Medicines
b. Medical services
c. Dental services
d. Veterinary services
8. Which of these is exempt from business tax?
a. Sale of aircraft for domestic transport
b. Sale of aircraft for international transport
c. Both A and B
d. Neither A nor B
9. Which of these is subject to business tax?
a. Sale or lease of sea vessels for domestic transport
b. Sale or lease of sea vessels for international transport
c. Both A and B
d. Neither A nor B
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10. Which is exempt from business tax?
a. Private school
b. Non-profit school
c. Government school
d. All of these
11. Which of these receipts by a school is more likely to be subject to business tax?
a Tuition fee
b. Miscellaneous fee
c. Computer fee
d. Rent income
12. Which of the following items is exempt from business tax?
a. Sale of books
b. Sale of newspapers
c. Sale of ballpen and notebooks
d. Sale of magazines
13. Which is not an accrediting agency for a school to be exempt from business tax?
a. Department of Education
b. Department of Health
c. Technical Education and Skills Development Authority
d. Commission on Higher Education
14. Which of the following activities related to books is exempt from business tax?
a. Printing
b. Sale
c. Publication
d. All of these
15. Which of the following statements is correct?
a. The sale of real property by any person is subject to business tax.
b. The sale of real property is vatable only when the seller is a realty dealer.
c. The sale of property held for sale, lease or use in the course of business is subject tax.
d. The casual sale of real property used in business is subject to business tax.
16. The sale of real property by a person not engaged in business is
a subject to business tax.
b. exempt from business tax.
c. partially subject to business tax.
d. automatically subject to VAT.
17. Which of the following may not be subject to business tax when sold?
a. Property held for sale
b. Property held for lease
c. Property held for use
d. Property held as investment
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18. What is the price limit for the exemption of residential lot?
a. P1,000,000
b. P1,500,000
c. P1,919,500
d. P3,199,200
19. What is the price limit for the exemption of residential dwellings?
a P1,000,000
b. P1,500,000
c. P1,919,500
d. P3,199,200
20. The lease of residential units is exempt from business tax provided that rent per month per unit is
a. more than P12,800.
b. less than P15,000 (NOT MORETHAN 15K)
c. not more than P12,800
d. not less than P15,000.
Multiple Choice - Theory: Part 3
1. Realty dealers, developers or lessors are usually registered as
a. Excise taxpayers
b. Percentage taxpayers
c. VAT taxpayers
d. Any of these
2. Which of these is vatable?
a. Properties classified as ordinary assets
b. Properties classified as capital assets
c. Both A and B
d. Neither A nor B
3. Which is exempt under certain price conditions?
a. Residential lot
b. Residential dwellings
c. Low-cost housing unit
d. All of these
4. The rental limit on residential dwellings does not apply to
a. an apartment
b. a house for rent
c. a dormitory
d. motels
5. Which carrier has an exemption from business tax?
a. Domestic carrier
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b. International carrier
c. Both A and B
d. Neither A nor B
6. An international carrier is not involved in
a. land transport
b. sea transport
c. air transport
d. Any of these
7. An international carrier is owned by a
a. Domestic corporation.
b. Foreign corporation.
c. Either A or B
d. Neither A nor B
8. Which of the following activities by any carrier is a foreign consumption exempt from Philippine business
tax for being rendered outside the Philippines?
a. Inbound transport of passengers and baggages to the Philippines
b. Outbound transport of passengers and baggage or cargoes for abroad
c. A and B
d. None of these
9. The receipts from outgoing transport of domestic carriers is
a. subject to zero percent tax.
b. subject to zero percent VAT.
c. exempt from business tax.
d. subject to excise tax.
10. To an international carrier, the receipts from inbound flights is
a. subject to percentage tax.
b. subject to VAT.
c. subject to VAT for passenger and percentage tax for cargoes.
d. exempt.
11. Statement 1: Cooperatives are generally subject to VAT.
Statement 2: Cooperatives are generally subject to percentage tax.
Which is correct?
a Statement 1
b. Statement 2
c. Both statements
d. Neither statement
12. The sale by non-VAT registered persons to entities in the Philippines with
indirect tax exemption is considered
a. A domestic consumption subject to VAT.
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b. A domestic consumption subject to percentage tax.
c. A foreign consumption exempt from business tax.
d. A foreign consumption subject to zero-rated VAT.
13. As a rule, all cooperatives are exempt from business tax, except
a. agricultural cooperatives
b. electric cooperatives.
c. credit cooperatives.
d. None of these
14. Which of these entities do not have indirect tax exemption?
a. Philippine Amusement and Gaming Corporation (PAGCOR)
b. Development Bank of the Philippines (DBP)
c. International Rice Research Institute (IRRI)
d. Embassies
15. he export sales of non-VAT taxpayers are
a. exempt
c. subject to 12% VAT.
b. subject to percentage tax.
d. subject to 0% VAT.
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CHAPTER 5 - PERCENTAGE TAX
True or False 1
F 1. To be subject to VAT, one has to be registered under the VAT system.
F 2. "VAT-exempt sales are subject to percentage tax.
F 3. A seller is subject to percentage tax if he is non-VAT registered even if his sales or receipt exceed the VAT
threshold.
T 4. The 3% general percentage tax applies to non-VAT registered taxpayers.
F 5. A seller of service which is specifically subject to percentage tax is subject to VAT if its 12-month sales or
receipts exceeded the VAT-threshold.
F 6. A seller is subject to percentage tax even if he registered as VAT taxpayer if his annual sales do not exceed
the VAT threshold.
T 7. Common carriers are vatable on their transport of cargoes or baggage.
T 8. Domestic sea or air carriers are vatable on their transport of passengers or cargoes.
F 9. International carriers are vatable on their transport of cargoes or baggage.
T 10. Franchise grantees of private franchises are vatable.
True or False 2
T 1. Franchise grantees of transport operations are subject to percentage tax.
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F 2. Winnings from cockpits are subject to percentage tax.
F 3. Franchise grantees of the government on utilities are subject to percentage tax.
F 4. The percentage tax of banks is called "premiums tax.
F 5. The overseas communication tax applies to both incoming and outgoing dispatch of messages or
communication.
F 6. The sale of water by water utility franchise grantees is subject to VAT.
T 7. The sale of electricity by electric utility franchise grantees is subject to VAT.
T 8. The sale of stocks directly to buyers is subject to percentage tax.
F 9. The sale of stocks by a dealer through the PSE is subject to percentage tax.
T 10. The follow-through offering of listed enterprises is exempt from percentage tax
Multiple Choice - Theory: Part 1
1. The percentage tax rates on services specifically subject to percentage tax ranges from
a. ½ of 1% to 3%
b. ½ of 1% to 30%
c. 1% to 3%
d. 1% to 30%
2. To be subject to the general percentage tax, a taxable person must not be
a. VAT-registered
b. Non-VAT-registered.
c. Operating below the VAT threshold.
d. All of these
3. Which domestic common carrier is specifically subject to percentage tax?
a. Common carrier by land
b. Common carrier by air
c. Common carrier by sea
d. All of these
4. From which of the following sources does the 3% common carriers tax specifically apply?
a. Transport of passengers
b. Transport of goods
c. Both A and B
d. Neither A nor B
5. The percentage tax specifically imposed on certain domestic transporters is
a. Common carrier's tax
b. Skipper's tax
c. Transporter's tax
d. Gross receipt tax
6. Which is not specifically subject to a percentage tax?
a. International sea or air carrier
b. Domestic common carrier by land
c. Domestic common carrier by sea
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d. A and B
7. From which of the following sources is the gross receipt of an international carrier subject to percentage
tax?
a. Outgoing transport of passengers
b. Outgoing transport of cargoes
c. Incoming transport of passengers or cargoes
d. None of these
8. A domestic carrier which is also engaged in international transport operation is subject to
a. VAT
b. Percentage tax
c. Excise Tax
d. VAT and Percentage tax
9. On transport of excess baggage, cargoes or mails, an international carrier
shall pay
a. Percentage tax if it is below the VAT threshold.
b. Percentage tax even if it is above the VAT threshold.
c. VAT regardless of whether it is below or above the VAT threshold.
d. no business tax.
10. Which is a VAT-exempt receipt to a bus operator?
a. Receipts from passengers
b. Receipt from cargoes
c Receipt from baggage
d. None of these
11. To an operator of a domestic sea transport vessel, which of the following isa vatable?
a Fares from passengers
b. Fares from baggage
c. Fares from cargoes and mails
d. All of these
12. To an international carrier, which is subject to percentage tax?
a. Transport of passengers
b. Transport of cargoes, mails or baggage
c. A and B
d. Neither A nor B
13. Which is not specifically subject to common carrier's tax?
a. Bus
b. Taxi
c. Jeepney
d. Truck
14. Which is more likely exempt from business tax?
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a. Tricycle
b. Jeepney
c. Car for hire without chauffeur
d. Pedicab
15. To an operator of a domestic aircraft, which is vatable?
a. Fares from passengers
b. Fares from baggage
c. Fares from cargoes and mails
d. All of these
Multiple Choice - Theory: Part 2
1. Which of these is vatable?
a. City taxis
b. Sea vessels
c. Provincial buses
d. City buses
2. Which is subject to 3% percentage tax?
a. Kalesa
b. Bangka
c. Bulldozer
d. Car for hire
3. A jeepney operator with gross receipts from passenger fares exceeding P3,000,000 in any 12-month period
is subject to
a. 3% percentage tax.
b. 8% percentage tax.
c. 12% VAT.
d. 0% VAT
4. Franchise grantees of telephone, telegraph, and other communication equipment are subject to percentage
tax on
a. Overseas dispatch of message
b. Domestic dispatch of message
c. Both A and B
d. Neither A nor B
5. Which is not exempt from the overseas communication tax?
a. PEZA locators
b. Government
c. Diplomatic services
d. News services
6. The overseas communication tax is
a. 10% of revenue.
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b. 10% of gross receipts.
c. 3% of revenue.
d. 3% of gross receipts
7. Which is a vatable receipt to a franchise telephone franchise grantee?
a. Receipt from domestic dispatch of message
b. Receipt from incoming calls
c. Receipt from outgoing calls
d. Both A and B
8. Which of the following franchisees is subject to the franchise tax?
a. Electricity
b. Transportation
c. Water utility
d. Telephone
9. The franchise tax on radio or television franchisees is
a. 2% of gross receipt.
b. 3% of revenue.
c. 2% of revenue.
d. 3% of gross receipt.
10. A radio or television broadcasting company with annual gross receipt not exceeding P9,000,000 shall pay
a. VAT
b. 3% percentage tax
c. 2% percentage tax
d. no business tax.
11. What is the business tax liability of gas and water utilities with gross receipts not exceeding P10,000,000?
a VAT
b. 3% percentage tax
c. 2% percentage tax
d. Exempt
12. What is the business tax liability of gas and water utilities with gross
receipts exceeding P10,000,000?
a. VAT
b. 3% percentage tax
c. 2% percentage tax
d. Exempt
13. A radio or television broadcasting company with annual gross receipts of P12,000,000 shall pay
a. VAT
b. 3% percentage tax
c. 2% percentage tax
d. no business tax.
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14. The gross receipt tax on long-term interest income is
a. 7%
b. 5%
c. 3%
d. 1%
15. Which is subject to the gross receipt tax?
a. Banks
b. Quasi-banks
c. Pawnshops
d. All of these
Multiple Choice - Theory: Part 3
1. The gross receipts of banks pertain to
a. Principal collection
b. Interest collection
c. Principal and interest collection
d. None of these
2. Which is subject to percentage tax?
a. Life insurance
b. Hull insurance
c. Fire insurance
d. All of these
3. The premiums tax on life insurance applies to
a. Direct premium
b. Re-insurance premium
c. Refunded premium
d. All of these
4. Which is part of gross receipts for purposes of the premiums tax on life insurance?
a. Check
b. Bills and coins
c. Promissory notes
d. All of these
5. The gross receipt tax on banks from other items of gross income aside from interest income is
a. 7%
b. 5%
c.3%
d. 1%
6. Statement 1: Reinsurance premium is exempt from the percentage tax
Statement 2: Reinsurance premium is exempt from VAT.
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Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
7. Agents of foreign insurance are subject to
a. 2% premiums tax
b. 5% premiums tax
c. 4% premiums tax
d. 10% premiums tax
8. Which is not subject to amusement tax?
a. Places of boxing exhibitions
b. Places of professional basketball games
c. Cockpits
d. Golf course
9. The premiums tax on insurance premium is
a. 2%
b. 3%
c. 5%
d. 7%
10. The percentage tax for operators of race tracks is
a.10%
b. 15%
c. 18%
d. 30%
11. Operators of discos or cabarets are subject to an amusement tax of
a.10%
b. 15%
c. 18%
d. 30%
12. The general percentage tax on winnings from a horse race is
a. 3%
b. 4%
c. 5%
d. 10%
13. Which winning is subject to percentage tax?
a. Winnings from lotto
b. Winnings from derby
c. Winnings from horse race
d. Winnings from gambling
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14. Which of the following events is not exempt from amusement tax?
a. World championship
b. Oriental championship
c. National championship
d. None of these.
15. Which is incorrect with respect to the requisites of exemption of receipts from professional boxing?
a. Both contenders must be Filipinos
b. The promoter must be a Filipino or corporation with at least 60% Filipino ownership
c. The competition must be a world or oriental championship
d. All of these.
Multiple Choice – Theory: Part 4
1. Which of the following sales is subject to stock transaction tax?
a. The sale by an investor of a listed stock directly to buyer.
b. The sale by a listed corporation of shares directly to buyer.
c. The sale by an investor of a listed stock through the PSE
d. The sale by a listed corporation of shares directly to buyer.
2. The IPO tax is payable by
a. The buyer of IPO shares
b. The issuing corporation
c. Both buyer and issuing corporation
d. The Philippine Stock Exchange
3. The stock transaction tax is withheld and remitted by
a. The Philippines Stock Exchange
b. The stock broker
c. The owner of stocks
d. The buyer of the stocks
4. Statement 1: All initial public offerings are subject to IPO tax
Statement 2: A follow-through offering is exempt from IPO tax.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
5. Statement 1: The percentage of block sale in primary offering is determined
using the outstanding shares after the IPO.
Statement 2: The percentage of stock sale in secondary offering is
determined using the outstanding shares before the IPO.
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Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
6. A public corporation is a corporation at least 50% in the value of its outstanding capital stock is owned by
a. less than 20 shareholders.
b. more than 20 shareholders.
c. 20 or more shareholders.
d. at least 20 shareholders.
7. If the block sale of primary shares exceeds 1/3 of the outstanding shares
after the IPO, the IPO tax is
a. 4%
b. 2%
c. 1%
d. ½ of 1%
8. What is the tax rate on the sale of stocks through the facilities of the PSE?
a. 4%
b. 2%
c. 1%
d. ½ of 1%
9. The percentage tax on double forecast, quinella, or trifecta bets on horse race is
a. 3%
b. 4%
c. 5%
d. 10%
10. Which is subject to premiums tax?
a. Health insurance premiums
b. Reinsurance premiums
c. Property insurance premiums
d. Fire insurance premiums
11. All of the following pays monthly percentage tax, except
a. Franchise grantees of gas and water
b. Domestic carriers and keepers of garage
c. Proprietors of cockpits
d. Life insurance companies
12. Which is specifically subject to percentage tax?
a. Credit cooperatives
b. Property insurance companies to this
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c. International carriers
d. Domestic shipping companies
13. Which is the correct percentage tax on the following service providers?
a. Operators of jai-alai - 30%
b. Keepers of garage - 5%
c. Franchisees of water utility - 3%
d. Life insurance companies - 5%
14. Interest income on loans is specifically subject to percentage tax if earned by a
a. Lending investor
b. Dealer in security
c. Quasi-banking institution
d. All of these
15. The gross receipt tax does not apply to
a. Bangko Sentral ng Pilipinas.
b. rural banks.
c. urban banks.
d. industrial banks.
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CHAPTER 6 - INTRODUCTION TO THE VALUE ADDED TAX
DRILL EXERCISES
For each of the following items, indicate the following:
Exempt – for entity exempt from business tax
% tax – for those specifically subject to percentage tax
Vatable – for those subject to either VAT or general percentage tax
True or False 1
T 1. A person who exceeded the VAT-threshold in any 12-month period must register as a VAT taxpayer.
T 2. The VAT applies on receipts or sales other than those exempted and those specifically subject to
percentage tax.
T 3. A person with vatable sales or receipts not exceeding the VAT-threshold may register as a non-VAT
taxpayers.
T 4. A person with vatable sales or receipts not exceeding the VAT-threshold may register as a VAT-taxpayer.
T 5. A person who commences business with an expectation to exceed the VAT- threshold must register as a
VAT taxpayer.
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F 6. A registrable person is exempt from VAT.
T 7. AVAT-registered person is exempt from VAT on VAT-exempt sales.
T 8. A non-VAT taxpayer shall not bill VAT on his sale.
F 9. A VAT-registered person is liable to VAT on exempt sales and services specifically subject to percentage
tax.
F 10. The threshold for franchise grantees of electricity is P10,000,000.
T 11. The VAT threshold for sellers of goods or services is P3,000,000.
T 12. The VAT threshold for franchise grantees of gas and water is P10,000,000.
T 13. The VAT threshold applicable to professional practitioners is P3,000,000.
T 14. Exempt sales shall not be billed with an output VAT.
F 15. A sale to the government shall not be billed with output VAT since it is
exempt from VAT.
True or False 2
F 1. Export sales shall be billed with output VAT.
F 2. The export sale of a VAT-taxpayer is an exempt sale.
F 3. A non-VAT-registered person who invoiced VAT on his sale shall be subject to 12% VAT without the benefit
of an input VAT 3% percentage tax, and 25% surcharge.
T 4. Exempt sales which are billed as regular sales shall be considered as regular vatable sales.
F 5. The VAT payable of a VAT-registrable person is the output VAT without benefit of Input VAT plus 3%
percentage tax.
T 6. No input VAT traceable to exempt can be claimed sales as tax credit.
F 7. No input VAT traceable to government sales is claimable as tax credit.
F 8. A VAT-registered person shall be subject to a final withholding VAT of 12% on sales to the government.
F 9. The VAT payable of any person is always 3% of the value-added on the sales of goods.
T 10. The claimable input VAT on government sales is 7% of the sales.
T 11. The VAT payable on zero-rated sales is always zero.
F 12. There is no way VAT payable could be negative in a particular month or quarter.
F 13. VAT is paid in three monthly installments similar to the percentage tax.
T 14. Exempt sales must be indicated as such; otherwise, they will be regarded as regular sales.
F 15. The standard input VAT is 5% of government sales.
Multiple Choice - Theory: Part 1
1. All of these are vatable, except
a. Engineering contractors
b. Lawyers
c. Employee
d. Brokers
2. Which is not VAT-exempt?
a Importation of agricultural or marine food products
b. Gross receipts of professional practitioners
c. Receipts from taxicabs
d. Gross receipts of hospitals
3. Which is vatable?
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a. Sale of fertilizers
b. Sales of fruit
c. Sale of bamboo handicrafts
d. Sale of vegetables
4. All of these businesses are vatable, except
a. Non-life insurance business
b. Banks
c. Security dealers
d. Merchandisers
5. Which is vatable?
a. Fruit dealer
b. Department store
c. Cooperative
d. Meat vendor
6. Which of the following will pay VAT?
a. Farmer
b. Food processor
c. Rice or corn miller
d. Fruit dealer
7. Which will not pay VAT?
a. International carrier
b. Domestic air carrier
c. Domestic sea carrier
d. All of these
8. Which of the following is vatable? IDEAS
a. An operator of cockpits
b. A disco.
c. A bowling alley
d. An operator of a race track
9. Which is vatable?
a. Local water districts
b. Gasoline stations
c. Internet service providers
d. Schools
10. Which is vatable?
a. Sale of buses and jeepney
b. Sale of vessels
c. Sale of aircraft
d. Lease of vessels or aircraft
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11. Which will not pay VAT on its receipts?
a. Hospitals
b. Real property dealers
c. Bookstores
d. Taxicab operators
12. Which is vatable?
a. Sales of agricultural or marine food products
b. Gross receipts of medical practitioners
c. Sales of books
d. Sales of fertilizers, seeds and seedlings
13. Which statement is correct?
a. Husband and wife are considered separate taxpayers for business tax purposes.
b. For purposes of the VAT threshold, both exempt sales and receipts from services subject to percentage tax
must be included. on
c. A VAT-registered taxpayer must pay VAT on services subject to percentage tax.
d. All of these
14. What is the general lock-in period for those who voluntarily register as VAT taxpayers?
a. 3 years
b. 5 years
c. 1 year
d. perpetual
15. To franchise grantees of radio or television, VAT-registration shall be
a. revocable in 3 years.
b. irrevocable in 3 years.
c. revocable in 1 year.
d. irrevocable perpetually.
16. Which is not vatable as a separate entity?
a. A branch
b. A subsidiary company
c. A spouse
d. A parent company
17. Statement 1: Sellers of services are subject to VAT on gross receipts.
Statement 2: Sellers of goods are subject to VAT on gross selling price.
Which is correct?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2
18. Statement 1: As a rule, percentage tax is paid monthly.
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Statement 2: VAT is paid monthly and quarterly.
Which is false?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2
19. Statement 1: "Gross receipt" means
collections and advances by clients.
Statement 2: "Gross selling price” means gross sales including delivery
charges and excise tax on the sales if any.
Which is correct?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2
20. Statement 1: Discounts that are contingent to a future event are deductible
from gross selling price.
Statement 2: Expenses of the service provider that are reimbursed by the
client forms part of the gross receipt.
Which is incorrect?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2
Multiple Choice - Theory: Part 2
1. Which is non-vatable?
a. Exempt sales billed as regular sales by VAT persons
b. Export sales of VAT-registered persons
c. Regular sales of registrable persons
d. Export sales of non-VAT-registered persons
2. Statement 1: Input VAT is creditable only by VAT-registered taxpayers.
Statement 2: Input VAT is deductible by non-VAT taxpayers against their
gross income for purposes of income tax.ME
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
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3. Statement 1: A VAT taxpayer who purchases goods from non-VAT suppliers
will effectively pay a VAT equivalent to the output VAT.
Statement 2: No output VAT shall be billed on export sales and exempt sales.
Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
4. What is the tax payable by a non-VAT taxpayer who issues a VAT invoice or VAT official receipt?
a. Output VAT plus 3% percentage tax
b. Output VAT less input VAT, plus 3% percentage tax and 50% surcharge
c. Output VAT plus 3% percentage tax and 50% surcharge
d. 3% percentage tax
5. What is the business tax payable by a person who is VAT-registrable?
a. The output VAT
b. The input VAT
c. Output VAT less Input VAT
d. Output VAT plus 3% percentage tax
6. The claimable input VAT is 12% of purchases from
a. VAT-registered taxpayers.
b. non-VAT-registered taxpayers.
c. A or B
d. None of these
7. Which is a source of input VAT?
a. Purchase of agricultural or marine food products from VAT-sellers
b. Purchase of agricultural or marine food products from non-VAT sellers
c. Purchase of vatable goods or services from non-VAT suppliers
d. Purchase of vatable goods or services from VAT suppliers
8. Which is not a sales category for VAT taxpayers?
a. Exempt sales
b. Zero-rated sales
c. Sales to the government
d. Sales to non-profit institutions
9. What is the VAT due and payable
a. Output VAT less Input VAT
b. Output VAT less Input VAT plus 3% percentage tax
c. Output VAT + 3% percentage tax
d. Output Vat + 3% percentage tax plus surcharge
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10. Which is subject to withholding VAT?
a. Regular sales of real properties
b. Zero-rated sales
c. Sales to the government
d. Exempt sales
11. A VAT taxpayer cannot claim input VAT credit on
a. Regular sales
b. Zero-rated sales
c. Government sales
d. Exempt sales
12. Which is a possible source of input VAT?
a. Importation
b. Purchase from VAT-sellers
c. Purchase from non-VAT sellers
d. A and B
13. A VAT taxpayer can claim the actual input VAT credit on
a. Regular sales
b. Zero-rated sales
c. Government sales
d. A and B
14. A VAT taxpayer may claim only partial or full input VAT credit on
a. Regular sales
b. Zero-rated sales
c. Government sales
d. A and B
15. The output VAT on government sales is
a. 12% of sales
b. 0% of sales
c. None
d. 12% of value added
16. The output VAT on export sales is
a. 12% of sales
b. 0% of sales
c. None
d. 12% of value added
17. The output VAT on exempt sales is
a. 12% of sales
b. 0% of sales
c. None
d. 12% of value added
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18. No input VAT is creditable on
a. Government sales
b. Regular sales
c. Export sales
d. Exempt sales
19. The claimable input VAT on government sales in
a. 12% of purchases from VAT suppliers
b. 12% of purchases from non-VAT suppliers or VAT suppliers
c. 7% of purchases from VAT suppliers
d. 7% of sales
20. Statement 1: The VAT due and payable on regular sales is always positive,
Statement 2: The VAT due and payable on export sales is always negative,
Which statement is generally correct?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2
21. Statement 1: Sellers always pay VAT on government sales.
Statement 2: Sellers will not pay VAT on export sales.
Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
22. Which is a correct statement regarding the VAT?
a. The taxable quarter of any taxpayer must be aligned to the calendar year.
b. The taxable quarter of an individual taxpayer must be aligned to the calendar year.
c. The taxable quarter of a corporate taxpayer must be aligned to the calendar year.
d. All of these
23. Statement 1: The VAT returns for the first two months of the quarter are
prepared on a monthly basis.
Statement 2: The VAT return on the third month of the quarter reflects a monthly balance.
Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
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24. Statement 1: VAT paid in the first two months of the quarter is deductible against the Output VAT for the
entire quarter.
Statement 2: The VAT paid in a quarter is deductible against the output VAT of future quarters of the taxable
year.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
25. The monthly VAT return is referred to as
a. BIR Form 2551M
b. BIR Form 2550M
c. BIR Form 2551Q
d. BIR Form 2550Q
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CHAPTER 7 - THE REGULAR OUTPUT VAT
True or False 1
F 1. Sellers of services are subject to VAT on their gross sales or receipts.
F 2. Sellers of goods are subject to VAT on gross receipts. property sold or disposed of
F 3. Sellers of properties are subject to VAT on the fair market value of the
F 4. Gross receipts include agency monies and bank loans received by the taxpayer.
T 5. When the discount exceeds 30% of the actual market value, the selling price is considered unreasonably
lower.
F 6. If the selling price exceeds the fair value, the basis of the output VAT is the fair value.
F 7. If the selling price is below fair value, the basis of the output VAT is the fair value.
F 8. If the selling price is unreasonably lower, the basis of the output VAT is the selling price.
F 9. "Gross receipt" means collections including evidences of indebtedness such as promissory notes given by
the client.
T 10. Advances given by the client are included in gross receipts.
F 11. Client expenses reimbursed by the client to the business taxpayer are part of gross receipt.
T 12. Out-of-pocket expenses of the service provider reimbursed by the client are part of gross receipt.
F 13. Only dealers in real properties are subject to VAT on the sale of real properties.
T 14. A person not engaged in business is not subject to VAT on his sale of goods or properties.
F 15. For purposes of the VAT, fair value of real property means the higher of independent appraisal value and
zonal value.
F 16. If the VAT is based on the fair value of the property, the same is presumed to be inclusive of the VAT.
F 17. The VAT on the installment sale of goods may be reported in installment
F 18. The VAT on the sale of real property is always reported in installment.
F 19. The installment reporting of output VAT on services is as allowed so long as the initial payments do not
exceed 25% of the agreed contract price.
F 20. The installment reporting of VAT must be over the estimated life of the
property in months or 60 months whichever is lower.
True or False 2
T 1. The sale of properties considered ordinary assets is subject to output VAT.
T 2. The sale of real property on the deferred payment basis, not on the installment basis, shall be subject to
VAT similar to a cash sale.
T 3. Interest and penalties are subject to VAT in the months they are collected.
T 4. The sale of capital assets such as investments is not subject to output VAT.
T 5. The donation of business properties considered ordinary assets by the business owner is a transaction
"deemed sale".
F 6. The distribution of cash dividends is a deemed sale subject to output VAT.
F 7. The distribution of property dividend in the form of stocks of another corporation is subject to output
VAT.
F 8. The sales of all ordinary assets are exempt from VAT.
F 9. The exchange of investments in payment of debt is a deemed sales transaction subject to VAT.
F 10. The exchange of residence in payment of debt is subject to VAT as a deemed sale transaction.
F 11. Consignment is deemed sold if not returned by the consignee in 30 days.
T 12. The consignee is subject to VAT on the commission income on sales of consigned goods.
T 13. The consignor is subject to VAT on the sales of consigned goods by its consignees.
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T 14. The vatable inventories and properties of a VAT taxpayer upon retirement or cessation of business are
subject to VAT as deemed sales.
T 15. The output VAT deemed sales upon retirement or cessation of business shall be based on the market
price or cost of goods whichever is lower.
T 16. The commissioner shall determine the market value in cases of transactions deemed sales and sales with
unreasonably lower gross selling prices, sale transaction possession shall be deemed sold at the date of
change.
F 17. The change in corporate control over a corporation is considered a deemed
F 18. When a business changes its trade name, vatable items or properties in its
T 19. The consolidation of a corporation with another corporation is not
F 20. The merger between two corporations shall result in a deemed sale considered a deemed sale
transaction.
Multiple Choice - Theory: Part 1
1. What is the tax basis of the output VAT on sales of services?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher
2. What is the tax basis of the output VAT on sales of goods?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher
3. What is the tax basis of the output VAT on exchange of properties?
a. Gross selling price
b. Gross receipts
c. Fair value of properties received
d. Fair value or gross selling price whichever is higher
4. What is the tax basis of the output VAT on sales of real properties?
a. Selling price
b. Gross receipts
c. Fair value
d. Fair value or selling price whichever is higher
5. What is the tax basis of the output VAT on sales of goods with unreasonably lower selling price?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher
6. What is the tax basis of the output VAT on installment sales?
a. Gross selling price
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b. Installment received
c. Fair value of property sold
d. Fair value or gross selling price whichever is higher
7. What is the tax basis of the output VAT on deemed sales?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher
8. Which of the following selling prices is considered unreasonably lower
Fair value Selling price Discount
a. P 200,000 P 240,000
-Noneb. P 250,000 Р 172,500
P 77,500
c. P 400,000 P 300,000
Р 100,000
d. P500,000 P 380,000
P 120,000
9. Which of these is excluded in the gross selling price?
a. Excise tax
b. Output tax
c. Contract price
d Delivery charges
10. Which of the following is excluded in gross receipts?
a. Cash collection
b. Check collection
c. Promissory note given by the buyer
d. None of these
11. Which is not considered in the determination of the tax base of the VAT on sale of real properties?
a. Selling price
b. Zonal value
c. Assessed value
d. Appraisal value
12. Which of the following is subject to the Output tax?
a. Sale of books
b. Sale of agricultural or marine food products
c. Sale of non-food agricultural or marine products
d. Sale of educational services by a school
13. Which is subject to Output tax?
a. Gross receipts of domestic common carriers by land
b. Gross receipts of international common carriers
c. Gross receipts of banks
d. Gross receipts of non-life insurance companies
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14. Which is subject to the 12% regular output tax?
a. Sale of residential dwelling with P1,500,000 unit price
b. Gross receipts from residential dwelling with P15,000 monthly rental
c. Receipts from publishing of books
d. Gross receipts of hospital
15. Which is not subject to the 12% output tax?
a. Gross receipts from restaurant
b. Gross receipts from professional practice
c. Gross receipts from race track operations
d. Sale of medicines
Multiple Choice - Theory: Part 2
1. Which of the following is subject to output tax if sold by a person not engaged in business?
a. Sale of personal residence
b. Sale of car
c. Sale of investment in stocks
d. None of these
2. Which of the following when sold will result in an output VAT?
a. Vegetables
b. Furniture
c. Fruits
d. Rice
3. A real property is sold by a dealer for P1,900,000. The property had a zonal value of P2,000,000, assessed
value of P1,800,000 and independent appraisal value of P2,400,000.
What is the "gross selling price for VAT purposes?
a. P1,800,000
b. P1,900,000
c. P2,000,000
d. P2,400,000
4. Which of the following is not subject to output tax when sold by a realty dealer?
a. Sale of properties held for sale
b. Sale of properties used in business
c. Sale of investment in stocks
d. Exchange of properties held for sale in settlement of debt
5. The output VAT on the installment sale of property may be reported in installment if
a. the ratio of initial payment exceeds 25% of the selling price.
b. the ratio of initial payment exceeds 25% of the fair value.
c. the ratio of initial payment does not exceed 25% of the selling price.
d. the ratio of initial payment does not exceed 25% of the fair value.
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6. Which is not a deemed sales transaction?
a. Distribution of property dividend
b. Dacion en pago
c. Consignment of goods when actual sale is made within 60 days
d. Cessation of status as VAT taxpayer
7. Which is a deemed sales transaction subject to VAT?
a. Retirement of business by a non-VAT taxpayer
b. Dacion en pago of properties by a person not engaged in business
c. Distribution of property dividend by a VAT taxpayer
d. All of these
8. Which of the following dividend declaration is a deemed sale subject to VAT?
a. Distribution of stock dividends
b. Distribution of investments as property dividends
c. Distribution of cash dividends
d. Distribution of properties held for sale as dividends
9. Which of the following properties is not subject to VAT in a foreclosure sale (i.e. dacion en pago)?
a. Cars held for sale
b. Machineries
c. Corporate building
d. Vacant lot not used in business
10. Which is a deemed sale transaction?
a. Change in corporate name
b. Merger or consolidation of corporations
c. Sale of the entire business
d. Placement of an investment by a shareholder
11. Statement 1: If the output VAT is erroneously billed, the amount shown in
the invoice is deemed exclusive of VAT.
Statement 2: If the output VAT is not separately indicated in the invoice, it shall be computed as 12/112 of the
invoice price
Which statement is false?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
12. Statement 1: By revenue regulation, the VAT shall be displayed separately0from the selling price in the
invoice.
Statement 2: If the seller failed to indicate the VAT on the invoice, the saleshall be presumed exempt.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
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d. Neither statement
13. Statement 1: Only VAT taxpayers are generally subject to the output tax.
Statement 2: Non-VAT taxpayers never pay the 12% output tax.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
14. Which is subject to the 12% regular output VAT?
a. Sale of silver to the Bangko Sentral ng Pilipinas
b. Sale of services to a non-resident person
c. Sale of office supplies to the Asian Development Bank
d. Export sale by a non-VAT taxpayer
15. Which of the following receipts from a domestic common carrier are not subject to regular output tax?
a. Receipts from transport of passengers by land
b. Receipts from transport of cargoes by land
c. Receipts from transport of passengers by sea
d. Receipts from transport of cargoes by air
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CHAPTER 8 - OUTPUT VAT: ZERO RATED SALES
True or False 1
F 1. To be zero-rated, all forms of export sales must be paid for in acceptable foreign currencies.
F 2. VAT exemption results in total tax relief while zero-rating results in partial tax relief.
F 3. Input taxes on zero-rated sales are deductible as part of costs or expenses.
T 4. Input taxes on zero-rated sales are claimable as tax credit or tax refund.
T 5. As a rule, effectively zero-rated sales require prior application with the BIR for zero-rating
F 6. Sales to tax-exempt persons will be subject to 12% VAT in default of an approved application for zerorating.
T 7. The foreign currencies must be inwardly remitted and accounted for under the rules of the BSP to be zerorated.
F 8. The 60-day rule on deemed sales of consignment applies to export sales.
F 9. The sale of gold to the BSP must be paid for in acceptable foreign currencies to be subject to zero-rating.
F 10. The sale to a local export oriented enterprise is subject to zero-rating only if paid for in acceptable
foreign currencies.
F 11. Legal title over exported goods must pass abroad to be subject to zero- rating
F 12. Export sales that are not paid for in acceptable foreign currencies are subject to the 12% VAT.
F 13. The export sales by non-VAT registered person are exempt from VAT but are subject to the 3%
percentage tax.
T 14. When the remittance of the foreign currency-denominated sale is not accounted for under BSP rules, the
same shall be considered VAT-exempt.
F 15. An export-oriented enterprise is an entity that exports at least 70% of its total annual production.
True or False 2
F 1. The direct export by an export trader shall be considered an export sale
subject to 12% VAT.
T 2. The sale of an export trader to a fellow export trader is subject to zero-rated VAT
F 3. The commission income from export sales by export traders is exempt from
T 4. The sale to a bonded manufacturing warehouse of an export-oriented enterprise is subject to effective
zero-rating.
T 5. The sales of goods or services to export-processing zones are subject to an automatic zero-rating without
the need for a BIR application for effective
F 6. The sales to diplomatic missions are exempt from VAT.
T 7. The sales to a BOI-registered manufacturer are subject to zero-rated VAT as long as 100% of its annual
production is actually exported.
T 8. The sale of goods or services to a domestic carrier for its international operations is subject to zero-rated
VAT.
F 9. The sale of goods or services to a domestic carrier for its domestic operations is exempt from VAT.
T 10. The transport of domestic carriers of passengers, baggage and mails from the Philippines to a foreign
country is subject to zero-rated VAT.
T 11. The transport of passengers by an international carrier from the Philippines to a foreign country is
exempt.
12. The transport of cargoes, baggage or mails by an international carrier from the Philippines to a foreign
country is subject to zero-rated VAT.
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T 13. The sale of locally manufactured goods to overseas Filipinos is subject to an effective zero-rating if paid
for in acceptable foreign currencies.
T 14. Sales to the Asian Development Bank are subject to zero-rated VAT.
F 15. The sale to embassies with VEC and embassy personnel with VEIC is not subject to the zero-rated VAT.
Multiple Choice - Theory: Part 1
1. Which statement is correct?
a. Zero-rated sales are taxable, but will not result in an output VAT.
b. Zero-rated sales are non-taxable; hence, these will not result in an output VAT
c. VAT zero-rating and VAT exemption are synonymous concepts.
d. All of these
2. Which is correct regarding the treatment of input VAT?
a. Input VAT on zero-rated sales is deductible from gross income.
b. Input VAT on zero-rated sales is creditable against output VAT or refundable.
c. Input VAT on zero-rated sales is both deductible from gross income and creditable against output VAT.
d. Input VAT on exempt sales is refundable or creditable.
3. Which of the following requires prior BIR application for effective zero-rating?
a. Sales to PEZA locators
b. Direct export sales
c. Foreign currency denominated sales
d. Sales to export-oriented enterprises
4. What sale is not subject to zero-rating?
a. Sale to a senior citizen
b. Sale to a registered export trader
c. Sale to a bonded manufacturing warehouse of an export trader
d. Sale to an export processing zone
5. Which is not a constructive export?
a. Direct export to a foreign country
b. Sale to ecozones
c. Sales to diplomatic missions
d. Sales to export-oriented enterprises and
6. Which is non-vatable?
a. Sales to a domestic shipping company loans
b. Sales to an international carrier
C. Sale of goods to a BOI-registered manufacturer which exports 80% of its annual production
d. Sales to senior citizens
7. Statement 1: The export of VAT-exempt goods is subject to zero-rated VAT.
Statement 2: The domestic sale of VAT-exempt goods is subject 12% VAT.
Which is incorrect?
a. Statement 1
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b. Statement 2
c. Both statements
d. Neither statement
8. Which is subject to a zero-rated VAT?
a. Sale of fruits and vegetable to an embassy personnel with VEIC
b. Sale of fruits and vegetables to senior citizens
c. Sale of fruits and vegetables to persons with disability
d. Sales of any goods to the government
9. What is the requirement for zero-rating of sales to BOI-registered enterprises?
a. At least 70% of production must be exported
b. More than 70% of production must be exported
c. 100% of production must be exported
d. More than 100% of production must be exported
10. What is the requirement for zero-rating of sales to a PEZA-registered enterprise?
a. The goods must be actually imported
b. Export sales must exceed 70% of annual production
c. Production must be 100% exported
d. None
11. What is the requirement for zero-rating of sales to an export-oriented enterprise?
a. The goods must be actually imported
b. Export sales must exceed 70% of annual production
c. At least 70% of production must be exported
d. Production must be 100% exported
12. Which is not subject to zero-rating?
a. Sale under the internal export program of the government
b. Export of automobiles to a local export-oriented enterprise
c. Sale of goods to an international transport operator
d. Sale to the USAID
13. Which is correct with constructive export?
a. Must be paid for in acceptable foreign currencies
b. Must be actually exported
c. Must be sold to a non-resident
d. None of these
14. Which of the following is not subject to zero-rated VAT?
a Sales to diplomatic missions
b. Sale of gold to the BSP
c. Export sales paid for in the local currency
d. All of these
15. Prior BIR application for effective zero-rating is not required for
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a. direct export to a foreign country.
b. sales to tax exempt persons.
c. sales to international air transport operations.
d. sales to an export-oriented enterprise.
16. Which of the following may not qualify as export sale?
a. Export by an export producer
b. Export by an export producer to another export producer
c. Sale to an export trader
d. None of these
17. Which is not a constructive export?
a. Sale to a bonded manufacturing warehouse of an export-oriented enterprise
b. Sale to export processing zones
c. Sales to diplomatic missions
d. Sale to a foreign customer abroad
18. A non-large taxpayer shall file the application for effective zero-rating with the
a. Regional director where the taxpayer is registered
b. Revenue district officer having jurisdiction over their principal place of business
c. Audit Information, Tax Exemption and Incentive Division
d. International Tax Affairs Division
19. An approved application for effective zero-rating is given
a. a retrospective effect
b. a prospective effect
c. A and B
d. no effect.
20. An approved application for zero-rating is valid for
a. one quarter only.
b. 2 years
c. 3 years
d. 5 years
Multiple Choice - Theory: Part 2
1. The sale of services to the following cannot qualify for zero-rating
a. Sale to a resident person doing business in the Philippines
b. Sale to a non-resident person engaged in business abroad
c. Sale to a non-resident not engaged in business abroad
d. Sale to a resident export-oriented enterprise dan if rendered abroad.
2. Statement 1: Services to non-residents are always subject to zero-rated VAT
Statement 2: Services to residents may be subject to zero-rating if paid for in acceptable foreign currencies.
Which is incorrect?
a. Statement 1
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. Statement 2
c. Both statements
d. Neither statement
3. Which is correct?
a. All service rendered in the custom's territory is subject to the 12% VAT
b. Service rendered to an ecozone entity is subject to 12% VAT.
c. Service rendered abroad is subject to 0% VAT.
d. Service rendered abroad is exempt from any business tax.
4. 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
5. 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
6. 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
7. Which is not subject to zero-rating?
a. Services to an export-oriented enterprise loco
b. Sale of services to a BOI-registered enterprises
c. Sale of services to PEZA locators
d. Sale of services to embassies with VEC
8. 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
9. 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
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10. 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
11. 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
12. 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
13. 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
14. 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
15. Which of the following power generation plants is not 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
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CHAPTER 9 - INPUT VAT
True or False 1
T 1. Only VAT-registered taxpayers can claim input VAT.
T 2. There is no input VAT from purchases made from non-VAT-registered suppliers.
T 3. The total consideration paid by purchasers to VAT taxpayers includes the selling price and the VAT.
F 4. Registrable persons can claim input VAT.
T 5. Those who cannot claim input VAT can deduct those input VAT as part of their costs or expenses.
F 6. Input VAT can be claimed as a tax credit or a deduction at the option of the taxpayer.
T 7. The term creditable input VAT means input VAT deductible from output VAT.
F 8. Exempt persons who issue VAT invoices can claim input VAT.
F 9. Input VAT is computed as 12/112 of the selling price of the seller.
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T 10. Input VAT may come from importation and domestic purchase.
T 11. The purchase of exempt goods and services has no input VAT.
T 12. If the VAT is not separately billed, it shall be computed as 12/112 of the selling price in the sales
document.
F 13. Input taxes on purchases for personal consumption are creditable against output VAT.
T 14. Only input VAT for purchase of goods or services in the course of business is creditable.
T 15. Input VAT needs to be evidenced by a VAT invoice or official receipt to be creditable.
True or False 2
F 1. The transitional input VAT is 2% of the vatable beginning inventory.
T 2. The input VAT on importation is creditable upon release of the goods from the Customs custody.
F 3. The input VAT on domestic purchase of goods is deductible upon payment.
F 4. The input VAT on purchases of services is claimable in the month the services are rendered not when paid.
T 5. Persons transitioning to the VAT system shall submit an inventory of goods.
T 6. The input VAT on the purchase of real properties may be paid in installment
F 7. The input VAT on depreciable capital goods or properties must be amortized over a period of 60 months.
F 8. The input VAT on depreciable capital goods or properties with aggregate acquisition costs exceeding P1M
must be amortized over a period of 60 months.
T 9. The input VAT on non-depreciable vehicles is disallowed as tax credit.
F 10. The presumptive input VAT is 4% of the agricultural and marine purchases.
F 11. Traders of sardines, mackerel, milk, and cooking oil can claim presumptive input VAT.
F 12. The standard input VAT is 5% of sales to the government
F 13. The standard input VAT is 7% of the purchases sold to the government.
T 14. There is a deductible expense when the actual input VAT exceeds the standard input VAT on government
sales.
T 15. There is a reduction in costs or expenses or an item of gross income when the standard input VAT
exceeds the actual input VAT on government sales.
T 16. The excess of the input VAT over the output VAT is referred to as input VAT carry-over.
T 17. Input VAT carry-over is included as part of the creditable input VAT of the following month.
T 18. The input VAT carry-over in a quarter is deductible in the following quarter.
F 19. The input VAT carry-over cannot be credited over a period of 3 years.
T 20. The Input VAT carry-over in a prior quarter can be carried over as input VAT in the first month of the
following quarter.
F 21. The Input VAT carry-over in the second month of a quarter is creditable on the third month of that
quarter.
Multiple Choice - Theory: Part 1
1. Which is creditable?
a. Input VAT incurred on personal purchases
b. Input VAT evidenced by an ordinary receipt
c. Input VAT on exempt sales
d. Input VAT traceable to vatable sales
2. Which is a likely source of a creditable input VAT?
a. Purchase of goods from persons not-engaged in business
b. Purchase of goods from non-VAT registered persons engaged in business
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c. Purchase of goods from aliens who are not engaged in business abroad
d. None of these
3. Partial credit for input VAT is allowed on
a. Government sales
b. Regular sales
c Export sales
d. Exempt sales
4. Full input VAT credit is allowed on
a. Regular sales
b. Export sales
c. Exempt sales
d. A and B
5. No input VAT credit is allowed on
a. Export sales
b. Government sales
c. Exempt sales
d. All of these
6. Which of the following input VAT can be claimed as tax refund?
a. Input VAT traceable to exempt sales
b. Input VAT traceable to regular sales
c. Input VAT traceable to sales to the government
d. Input VAT traceable to export sales
7. The input VAT on purchases of non-VAT-registered taxpayers shall be claimable as
a. Tax credit within two years
b. Deduction against gross income for income tax purposes
c. Deduction against output VAT
d. Any of these at the option of the taxpayer
8. Who can claim the VAT on importation as a tax credit?
a. An importer of goods for personal consumption
b. An importer of goods who is exempt from the VAT on importation
c. An importer of goods for business use
d. Any of these
9. The transitional input VAT is whichever is the
a. lower of 2% of beginning vatable inventory or the actual input VAT thereon.
b. higher of 2% of beginning vatable inventory or the actual input VAT thereon.
c. lower of 2% of total beginning inventory or the actual input VAT thereon.
d. higher of 2% of total beginning inventory or the actual input VAT thereon.
10. Which is included in the basis of the transitional input VAT?
a. Vatable goods and properties purchased from VAT suppliers
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b. Vatable goods and properties purchased from non-VAT-suppliers
c. Vatable goods only purchased from VAT or non-VAT suppliers
d. A and B
11. Which is included in the VAT basis of the 2% transitional input VAT?
a. inventory of processed foods
b. inventory of fruits and vegetables
c. inventory of non-food goods
d. A and C
12. Which of the following properties may be included in the basis of the 2% transitional input VAT?
a. Building subject to periodic provision for depreciation
b. Land and other properties not subject to depreciation
c. Land or building classified as inventory held for sale
d. Land or building classified as property held for use
13. Which of the following input VAT may be amortized?
a. Input VAT on the sale of services
b. Input VAT on the purchase of goods on installment
c Input VAT on the purchase of non-depreciable property
d. Input VAT on the purchase of depreciable property
14. The amortization of input VAT on certain properties is allowed when the aggregate acquisition costs
a. exceeds P1M.
b. do not exceed P1M.
c exceeds P1,919,500.
d. exceeds P10M.
15. The input VAT on purchases of real properties may be claimed in installment if
a. the VAT seller is subject to VAT on the installment payments.
b. the sale of the real property is qualified as a deferred payment sale.
c. the seller is a realty dealer.
d. the seller is a non-realty dealer.
Multiple Choice - Theory: Part 2
1. The amortization period for depreciable capital goods or properties shall be
a. whichever is longer between the actual useful life in months or 60 months.
b. whichever is shorter between the actual useful life in months or 60 months.
c. 60 months if the useful life of the capital goods or properties does not exceed 5 years
d. 60 months, without regard to the actual useful life in months.
2. Statement 1: The input VAT on non-depreciable vehicles shall be claimed in
Statement 2: The input VAT on construction in progress shall be claimed in the month purchased, the month
billing is paid.
Which is correct?
a. Statement 1
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b. Statement 2
c. Both statements
d. Neither statement
3. The withheld final VAT is
a. 7% of the sales made to government.
b. 5% of the sales made to government.
c. 7% of the input VAT traceable to the government.
d. 5% of the purchases on sales made to the government.
4. Which of the following cannot claim presumptive input VAT?
a. Processor of sardines
b. Manufacturer of grease oil
c. Manufacturer of packed noodle based instant meals
d. Processor of milk
5. The presumptive input VAT is
a. 2% of primary agricultural input.
b. 2% of primary marine input.
c. 4% of primary agricultural or marine input.
d. 4% of primary agricultural input.
6. The standard input VAT is equivalent to
a. 7% of the sales made to government.
b. 5% of the sales made to government.
c. 7% of the input VAT traceable to the government.
d. 5% of the purchases on sales made to the government
7. The withheld final percentage tax is
a 7% of the sales made to government.
b. 3% of the sales made to government.
c. 5% of the sales made to the government
d. 3% of the purchases on sales made to the government.
8. If the standard input VAT exceeds the actual input VAT traceable to government sales, the excess is
a. an item of gross income subject to income tax.
b. an item of deduction against gross income in income tax.
c. claimable as a tax credit against other national taxes.
d. ignored since it has no further use.
9. Statement 1: VAT-registered persons do not pay VAT on zero-rated sales.
Statement 2: VAT-registered persons always pay VAT on government sales.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statement
d. Neither statement
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10. Statement 1: The excess of the output VAT over creditable input VAT is paid to the government.
Statement 2: The excess of creditable input VAT over output VAT is claimed as a tax credit or tax refund.
Which statement is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
11. The excess of creditable input VAT over output VAT is
a VAT payable
b. VAT refundable
c. Input VAT carry-over
d. Standard input VAT
12. Which of the following Input VAT carry-over is creditable against output VAT of the quarterly VAT return?
a. Those arising from the first month of the quarter
b. Those arising from the second month of the quarter
c. Those arising from the prior quarter
d. All of these
13. Which of the following is creditable against the input VAT of the quarterly VAT return?
A Input VAT from the first month of the quarter
b. Input VAT from the second month of the quarter
c. Input VAT from the third month of the quarter
d. All of these
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CHAPTER 10 - VAT STILL AND MISCELLANEOUS REQUIREMENTS
True or False
F 1. Traders who import wheat shall pay advanced VAT.
F 2. The importation of sugar cane is subject to advanced input VAT.
T 3. A manufacturer of refined sugar shall pay advanced VAT before pulling out the refined sugar at the point
of production.
T 4. Millers who imports wheat shall pay advanced VAT.
T 5. The owner of naturally grown timber shall pay advanced VAT prior to its transport to buyers.
F 6. Traders of refined sugar and flour shall pay advanced VAT.
T 7. Millers of refined sugar and flour shall pay advanced VAT.
T 8. A non-VAT-registered person who transport naturally grown timber for sale shall pay advanced
percentage tax in lieu of the VAT.
T 9. Unclaimed advanced VAT may be claimed as tax credit.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
F 10. Unutilized advanced VAT may be claimed as tax refund.
F 11. Unutilized advanced VAT may only be claimed as tax credit certificate.
T 12. Unutilized input VAT can be refunded upon termination of the business of the taxpayer.
T 13. A VAT overpayment may be carried over in the succeeding periods.
F 14. Advanced VAT is an input VAT.
F 15. The quarterly VAT due of the taxpayer is paid within 20 days following the end of the quarter.
Multiple Choice - Theory
1. Which is not subject to payment of advanced input VAT?
a. Milk
b. Refined sugar
c. Flour
d. Timber
2. Which is a correct statement regarding the advanced input VAT?
a. The advanced input VAT is synonymous to the VAT on importation
b. The advanced input VAT is the final VAT due from the seller.
c. The advanced input VAT is a down payment of the VAT on the ultimate sale of refined sugar, flour or
timber.
d. The advanced input VAT is in lieu of the actual input VAT traceable to the sales of refined sugar, flour, or
timber.
3. Which of the following tax credit can be claimed through a tax credit certificate?
a. input VAT on export sales
b. Advanced input VAT
c. Input VAT on sales to the government
d. A and B
4. Which of the following is not subject to the requirement to pay advanced VAT?
a. Wheat traders
b. Millers of flour
c. Sugar refineries which process sugar for their own accounts
d. Owners of harvested timber
5. Which of the following can be claimed as VAT refund?
a. Input VAT on export sales
b. Advanced input VAT
c. Input VAT on sales to the government
d A and B
6. Which is not a tax credit against net VAT payable?
a. Advanced VAT
b. Monthly VAT payments
c. Standard input VAT
d. Final withheld VAT
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7. Which industry is not subject to VAT?
a. Mining
b. Construction
c. Banking
d. Air transport
8. Which is not a VAT compliance requirement?
a VAT invoicing
b. Transactional Recording
c. Filing of monthly summary list
d. None of these
9. The summary list is required for
a. large taxpayers
b. Non-large taxpayers
c. Non-VAT taxpayers
d. All VAT taxpayers
10. What is the effectivity of the request for cancellation of VAT registration?
a. On the day of the request is approved
b. On the day following the date the request was approved
c. On the month following the month the cancellation was approved
d. On the quarter following the quarter when the cancellation was approved
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CHAPTER 11 - EXCISE TAX
True or False 1
F 1. Excise Tax is payable at the point of sale.
F 2. Imported excisable goods taxable to excise tax at the point of sale.
F 3. Excise tax is imposed after consumption.
F 4. Excise tax is a direct tax rather than an indirect tax.
T 5. The introduction of excisable goods to the customs' territory is subject to excise tax.
F 6. The transshipment of excisable goods to duty-free shops, Freeport zones and ecozones are generally
subject to excise tax.
F 7. The transshipment of sin products inside ecozones are subject to excise tax.
F 8. An exemption from excise tax mean exemption from other business taxes.
F 9. Since it is merely an additional tax, excise tax is normally lower in tax rates.
T 10. Just like other taxes, ad valorem taxes are not indexed to inflation.
F 11. The timing of taxation of excise tax is the same with business taxes.
T 12. The excise tax return may be filed in any authorized agent banks, revenue collection officer or duly
authorized city or municipal treasurers.
F 13. All excise taxes are levied at the point of production or importation.
F 14. All exports of excisable goods are exempt from excise tax.
F 15. All specific taxes are subject to a 4% annual rate adjustment.
True or False 2
F 1. Specific excise taxes are normally indexed to inflation at 4% per year.
F 2. Locally produced goods are always subject to ad valorem tax.
F 3. Imported excisable goods are subject to tax on landed costs.
F 4. Excise tax is normally imposed upon sellers of excisable goods.
T 5. Goods with unpaid excise taxes shall expose the owner of the same to the excise taxes.
F 6. The excise tax on the sale of imported goods is collectible from the first buyer of the goods.
T 7. When exempt persons import excisable goods, the same shall not be subject to excise tax but when the
same resells the goods to non-exempt person, the buyer shall be subject to excise tax.
T 8. To be exempt from excise tax, wines and distilled spirits must first be denatured to be unfit for human
consumption when intended to be used for processing of cigars and cigarettes.
F 9. Excise tax is payable at the point of sale.
T 10. The excise tax and VAT on importation are the same in the timing of
imposition on imported goods.
F 11. Imported excisable goods taxable to excise tax at the point of sale.
F 12. Excise tax and the VAT on importation are levied upon landed costs.
F 13. Imported articles are subject to specific taxes while domestically produced articles are subject to ad
valorem taxes.
T 14. The excise tax on excisable goods shall be refundable or creditable only when the goods are exported as
integrated part of processed goods.
T 15. The net retail price shall be determined by a price survey.
T 16. The excise tax on imported car shall be based on the retail price of the car.
F 17. The excise tax on imported gold shall be based on the net retail price of the
gold.
F 18. The excise tax imposed on mineral products is purely ad valorem tax.
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F 19. All excise taxes on cigars and cigarettes are specific taxes.
T 20. All taxes on petroleum products are specific taxes.
T 21. There is only one type of service subject to excise tax.
Multiple Choice 1
1. Excise tax shall apply to certain goods intended for:
a.
b.
c.
d.
Domestic consumption
Yes
Yes
No
No
Foreign consumption
Yes
No
Yes
No
2. Excise tax shall apply to certain goods that are
Locally produced
Imported
a.
Yes
Yes
b.
Yes
No
c.
No
Yes
d.
No
No
3. Excise tax that are imposed based on weight or volume capacity or other physical unit of measurement
a. Specific tax
b. Ad valorem tax
c. Quantitative tax
d. Metrical tax
4. The excise tax on certain excisable goods is a tax on
a. Person - the owner or producer of certain goods
b. Property - the goods produced on manufactured
c. privilege - the right to enter into the business of producing or importing certain articles
d. Privilege - the right to transport certain goods
5. Taxes imposed on substance known to harm health
a. Sin tax
b. Sumptuary tax
c. Green tax
d. Vanity tax
6. Taxes imposed to restrain luxury
a. Sin tax
b. Sumptuary tax
c. Green tax
d. Vanity tax
7. Which could not be considered a green tax?
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a. Tax imposed upon mineral products
b. Tax imposed upon petroleum products
c. Tax imposed upon jewelry
d. Tax imposed upon quarry materials
8. Which could not be considered a vanity tax
a. Tax imposed upon jewelry
b. Tax imposed upon champagne
c. Tax imposed upon automobiles
d. Tax imposed upon cosmetic surgery
9. Sin taxes is not be imposed on
a. Wines
b. Cigars
c. Cosmetic surgery
d. Sweetened beverages
10. The excise tax on certain goods or services is not a
a. direct tax.
b. national tax.
c. indirect tax.
d. tax on domestic consumption.
11. Which of the following does not properly describe excise tax on certain goods or services?
a. Sin tax
b. Vanity tax
c. Environmental tax
d. Thumb Tax
12. Excise tax on locally produced excisable goods shall be paid
a. Within 15 days from the removal of the goods
b. Upon removal of the goods
c. Before the removal of the goods
d. Upon sale of the goods
13. The tax due on non-metallic mineral or mineral product, or quarry resources, shall be due and payable
a. Within 15 days from the removal of the goods
b. Upon removal of the goods
c. Before the removal of the goods
d. Upon sale of the goods
14. The excise tax on locally produced or extracted metallic mineral or mineral products,
a. Within 15 days from the removal of the goods
b. Upon removal of the goods
c. Before the removal of the goods
d. Upon sale of the goods
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15. Whether metallic or non-metallic mineral or mineral product, the excise tax on imported goods shall be
paid to become
a. Within 15 days from importation
b. Within 10 days after removal of the goods from Customs.
c. Before the removal of the goods from Customs.
d. Upon sale of the goods to the Customs territory.
16. Filing of an excise tax bond is required on
a. Excise tax on non-metallic minerals and mineral products
b. Excise tax on metallic mineral and mineral products
c. Excise tax on mineral products
d. Excise tax on indigenous petroleum or natural gas
17. In the case of indigenous petroleum, natural gas or liquefied natural gas, the excise tax thereon shall be
paid by the
a. Seller of the goods
b. First buyer of the goods
c. Producer of the goods
d. The person who is in possession of the same
18. When domestic products that are removed from their place of production without payment of the excise
tax, the tax shall be paid by the
a. last seller.
b. owner having possession thereof.
c. buyer and seller equally.
d. producer of the goods.
19. Who is required to pay the excise tax on excisable goods?
a. Producer
b. Possessor of excisable goods with unpaid excise tax
c. Importer
d. Any of these
20. What is the tax basis on goods subject to ad valorem tax?
a. Gross selling price at the place of production
b. Gross selling price of the resellers of the goods
c. Production cost plus a minimum 10% margin
d. Gross selling price at the place of production or in other places of sold by the owner in other places
Multiple Choice 2
1. Who is the taxpayer on locally produced excisable goods?
a. Importer
b. Producer
c. Wholesaler
d. Consumer
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2. Which statement is correct?
a. Excise tax normally don't have a deadline of payment
b. Excise tax is payable on top of value added tax but not of percentage tax.
c. Business for subsistence are exempt from excise tax.
d. Excise tax are imposed at the point of consumption.
3. Which is not subject to excise tax?
a Quarry resources
b. Precious metals
c. Prostitution
d. Sweetened beverages
4. Which of the following is not considered a taxable sin product?
a. Liquors
b. Marijuana
c. Tobacco leaves
d. Sweetened beverages
5. Statement 1: Excise tax rates are relatively more burdensome compared
other business taxes.
Statement 2: Excise tax rates covers a small range products or services
Which is true?
a. Both statements are true.
6. Both statements are false
c. Only statement 1
d. Only statement 2
6. Statement 1: Excise tax, customs duties and the VAT on importation is similarly collectible at the point of
importation.
Statement 2: Excise tax and the VAT on importation are
similarly imposed upon landed costs.
Which is false?
a. Neither statement
b. Both statement
c. Statement 1
d. Statement 2
7. Statement 1: The regulatory aspect of specific taxes on certain sin products will best be preserved when
their tax rates adjust for inflation.
Statement 2: There is no need to adjust ad valorem taxes since they ride with inflation
Which is true?
a. Statement 1
b. Statement 2
c. Both statement
d. Neither statement
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8. Which is subject to purely specific tax?
a. Cigar
b. Distilled spirits
c. Cigarettes
d. Yacht
9. Which statement is false?
a. Cigarettes are subject to specific taxes.
b. All excisable petroleum products are subject to specific taxes.
c. All excisable jewelries are subject to ad valorem tax.
d. All excisable automobiles are subject to specific tax.
10. Which of the following mineral products is subject to specific tax?
a. Coal and coke
b. Copper and gold
c. Indigenous petroleum
d. Granite
11. HKG, Inc. produced and withdrawn 1,000,000 units of excisable goods X which is subject to P1/unit excise
tax. HKG, Inc. uses goods X to manufacture Product Y which is sold domestically and abroad. 50,000 units of
Product Y was produced out of which 30,000 units were exported.
Which is incorrect?
a. Excise tax is payable only on the 400,000 units of goods X.
b. HKG, Inc. shall pay P1,000,000 in excise tax.
c. HKG, Inc. shall claim tax credit or refund for P600,000.
d. None of these
12. No excise tax credit or refund is allowed to the export of which of the following commodities?
a. Mineral products
b. Coal
c. Coke
d. Petroleum products
13. Which of the following requires a payment of bond?
a. Removal of wines and distilled spirits for tobacco leaf treatment
b. Removal of spirits for rectification
c. Removal of fermented liquor to bonded warehouses
d. All of these
14. The excise tax on excisable goods exported is claimable by refund or tax credit. Which is an exception to
this rule?
a. Sin products
b. Non-essential goods
c. Mineral products
d. Petroleum products
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
15. Who is ultimately liable for the rectification of spirits?
a. Distiller
b. Rectifier
c. both distiller and rectifier
d. transporter
16. Which is subject to payment of excise taxes?
a. Removal of damaged liquor
b. Removal of tobacco products entirely unfit for chewing or smoking
c. Removal of petroleum coke to be used as fuels of power plants
d. Removal of bunker fuel for the production of excisable products.
17. Who will pay excise tax?
a. Manufacturer of denatured alcohol
b. Manufacturer of vinegar
c. Manufacturer of plastic
d. Hospitals performing cosmetic surgery
18. What is the threshold alcohol content that when exceeded shall reclassify wines into distilled spirits?
a. 10%
b. 14%
c. 25%
d. 30%
19. The excise tax on locally produced or manufactured products that are
exported shall be claimed by the producer as
a. tax refund
b. tax credit
c. expense
d. A or В
20. The tax refund or tax credit on exported products shall not be allowed on
a. All metallic products
b. All mineral products
c. Coal and coke
d. B and C
21. A manufactured cigarette and sold the same to B.B exported the goods abroad to a foreign retailer, C.
Who is entitled to claim refund for the excise tax?
a. A
b. B
с. С
d. None of them
22. Which is not a sin product?
a. Chewing tobacco
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. Distilled spirits
c. Cigarettes
d. Jewelry
23. Which of the following product is subject to both ad valorem and specific tax?
a. Distilled spirits
b. Cigars and cigarettes
c. Automobiles
d. A and B
24. Which of the following agricultural products is subject to excise tax?
a. Tobacco rolls
b. Ground coffee
c. Refined sugar
d. All of these
25. The excise tax on minerals does not apply to?
a. Diamond and sapphire
b. Gold, chromite, copper, silver or iron
c. Natural gas
d. Indigenous petroleum
26. Indigenous petroleum does not include
a. Mineral oil or gas
b. Hydrocarbon gas
c. Bitumen or crude asphalt
d. Coal, peat and bituminous shale or stratified deposits
27. The term "quarry resources" does not include
a. Marble and volcanic cinders
b. Granite and basalt
c. Rock phosphate
d. Metallic rocks or mineralized rocks
28. These refers to things produced and prepared in marketable state by simple treatment processes of
washing or drying without undergoing any chemical
change or process or manufacturing by the lessee, concessionaire or owner
a. Minerals
b. Mineral products
c. Quarry resources
d. Metallic minerals
29. Which statement is false?
a. Manufacturer's and importers are subject to ad valorem tax on their net selling price, net of excise tax and
ad valorem tax
b. To be considered hybrid vehicles, the vehicle must be able to run using solely electric motor.
c. Automobiles used exclusively within Freeport zone shall be exempt from excise tax.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
d. Buses, trucks, cargo vans and jeepneys shall be considered as automobiles for purposes of the excise tax.
30. Which is false?
a. The tax on non-essential goods is 20% of wholesale value for manufacturers.
b. The tax on non-essential goods is 20% of landed cost on importers.
C. The 20% tax on jewelry applies to genuine precious metals jewelry including imitations such as platings and
alloys of such metals.
d. Only vessels intended for pleasure such as yatch are subject to the tax to the exclusion of cargo or
passenger vessels.
31. Which is subject to the 20% jewelry tax?
a. Dental gold alloys or gold tooth filling
b. Silver plated wares
c. Gold plated frames or mountings for eyeglasses
d. Pearls
32. Which of the following services is subject to excise tax?
a. Dermal fillers,
b. Invasive cosmetic procedures and surgeries
c Acupuncture rejuvenation therapy
d. Collagen induction therapy
33. Petroleum products sold to the following shall be subject to excise tax.
a. Government agencies and GOCCs
b. Economic zones
c. International carriers
d. Asian Development Bank
34. Mosquada Company has three cigar processing plants located in Bauang, La Union, Baguio City and
Dagupan City, Pangasinan. Mosquada's head office is
in Baguio City. Which is true with respect to filing of excise tax?
a. Only one consolidated return needs to be filed in Baguio City.
b. One return shall be filed for each factory or place of production.
c. Mosquada can choose to file the return at any of the RDOs having location of the plants
d. Mosquada shall file the return where it warehouses its production.
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BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
CHAPTER 12 - INTRODUCTION TO TRANSFER TAXATION
True or False 1
T 1. A transfer is either bilateral or unilateral.
T 2. Unilateral transfers are subject to transfer tax.
T 3. Bilateral transfers are subject to income tax.
F 4. Unilateral transfers include sales and barters.
F 5. Bilateral transfers include inheritance and donations.
F 6. Donations inter-vivos are subject to estate tax.
F 7. A donation mortis causa is subject to donor's tax.
T 8. The transferee in a donation is referred to as a donee.
T 9. The transferee in a succession is referred to as an heir.
T 10. The transferor in a donation inter-vivos is a donor.
F 11. The transferee in a donation mortis causa is a decedent.
T 12. Complex transfers are subject to both income tax and transfer tax.
T 13. What constitutes an adequate consideration" is a question of fact.
T 14. Both the transfer and exchange element of a complex transfer are subject to transfer tax.
T 15. Transfer tax supports income taxation.
True or False 2
F 1. Transfer tax is intended to recoup future reduction in business taxes.
T 2. Transfer tax can be viewed as a mode of redistribution of wealth to society.
F 3. The dominant view of transfer tax is the ability to pay theory.
T 4. Transfer tax is a tax on the privilege to transfer property gratuitously.
T 5. Transfer taxes are national taxes.
F 6. Transfer tax is a form of specific tax.
F 7. Transfer tax is an indirect tax
T 8. Transfer tax is a revenue tax.
F 9. Transfer taxpayers are classified into two groups: residents and non- residents.
F 10. Non-resident aliens are subject to tax only on transfers of Philippine
T 11. Citizens are subject to tax on transfers of properties regardless of location.
F 12. Aliens are subject to tax only on transfers of properties situated in the Philippines.
T 13. Residents are subject to tax on transfers of properties regardless of location.
T 14. Non-residents are taxed only on transfers of property located in the Philippines.
T 15. The reciprocity rule on intangible personal property applies only to non- resident aliens.
True or False 3
F 1. The reciprocity rule may apply to movable personal property located in the Philippines.
F 2. The reciprocity rule applies to intangible properties of any alien located in the Philippines.
T 3. Franchises are subject to transfer tax in the place where they are exercised.
T 4. The shares and bonds of domestic corporations are presumed situated in the Philippines for purposes of
transfer taxation.
F 5. Shares and bonds of foreign corporations are always presumed situated abroad for transfer tax purposes.
T 6. For purposes of transfer tax, the interest in a business partnership organized abroad is presumed situated
abroad.
T 7. Cash is considered an intangible property.
F 8. Shares of stocks and bonds are tangible personal properties.
F 9. Donations inter-vivos are subject to transfer tax at the point of death of the donor.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
T 10. Donations mortis causa are subject to transfer tax at the death of the decedent
T 11. Donations inter-vivos are inspired by the generosity of the donor.
T 12. A donation mortis causa is effected by the death of the decedent.
T 13. As a rule, all properties of the donor existing at the point of death constitute his donation mortis causa.
F 14. All forms of gratuitous transmission of property while the donor is living is considered donation intervivos.
T 15. Transfers in contemplation of death are donations made inter-vivos but are actually donation mortis
causa.
T 16. The transfers of property which conveys title to the property only upon death of the donor are donations
mortis causa.
T 17. Estate tax rates are higher than donor's tax rates.
T 18. Incomplete transfers are not subject to tax upon physical transfer of the property.
T 19. Incomplete transfers which are pre-terminated by the death of the transferor are subject to estate tax.
T 20. When incomplete transfers are completed during the lifetime of the transferor, the transfer is subject to
donor's tax.
Multiple Choice - Theory: Part 1
1. Which is subject to transfer tax?
a. Gratuitous transfers
b. Onerous transfers
c. Complex transfers
d. A and C
2. Which is subject to transfer tax?
a. Sale
b. Barter
c. Donation
d. Loan
3. A property is transferred for less than full consideration when it is sold
a. above the fair value of the property.
b. below the fair value of the property.
c. at the fair value of the property.
d. at any price which is deemed unacceptable to the seller.
4. Gratuity is not characterized by
a. Absence of consideration
b. Presence of adequate consideration
c. Presence of inadequate consideration
d. A and C
5. Transfers for full or adequate consideration is subject to
a. Income tax
b. Transfer tax
c. Both A and B
d. Neither A nor B
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
6. Transfer for inadequate consideration is subject to
a. Income tax
b. Transfer tax
c. Both A and B
d. Neither A nor B
7. The transfer for adequate consideration is
a. Exempt from transfer tax
b. Exempt from income tax
c. Subject to transfer tax
d. B and C
8. The gratuitous component of a transfer for inadequate consideration is
a. Subject to income tax
b. Exempt from income tax
c. Exempt from transfer tax
d. A and B
9. Who is the taxpayer in donor's tax?
a. Donor
b. Trustee
c. Donee
d. Beneficiary
10. Who is the taxpayer in estate taxation?
a. Decedent
b. Estate
c. Administrator
d. Executor
11. Which is not a rationalization of transfer taxation?
a. Tax evasion
b. Tax recoupment
c. State partnership
d. All of these
e. more of these
12. Transfer tax is imposed to partially recover future reduction in income tax which will arise from the split of
income producing property to few or several taxpayers.
What theory statement does the statement describe?
a. Tax evasion theory
b. Tax recoupment theory
c. Benefit received theory
d. Wealth redistribution theory
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
13. The government enforces the transfer of property by donation and succession. By exercising these
privileges, the transferor must have to be taxed. What theory does the statement describe?
a Tax evasion theory
b. Tax recoupment theory
c. Benefit received theory
d. Ability to pay theory
14. The transfer of wealth should be taxed so that it will benefit the entire society. Which theory does the
statement describe?
a. State partnership theory
b. Ability to pay theory
c. Wealth redistribution theory
d. Tax recoupment theory
15. Wealth accumulation could not be possible without the government's indirect participation. The transfer
of wealth should be subject to tax because it is just fair for the government to take its just share on the
wealth. The statement describes
a. State partnership theory
b. Ability to pay theory
c. Wealth redistribution theory
d. Tax minimization theory
16. Transfers can be structured in such a way to avoid payment of income tax. Thus, the gratuitous component
of transfers must be taxed. The statement describes
a. Tax evasion theory
b. Tax recoupment theory
c. Benefit received theory
d. Ability to pay theory
17. Which is not a characteristic of transfer tax?
a. Privilege tax
b. National tax
c. Local tax
d. Direct tax
18. Transfer taxes are not B OR D
a. Fiscal taxes
b. Progressive taxes
c. Ad valorem taxes
d. Transaction taxes
19. Transfer taxes are
a. Regressive taxes
b. Indirect taxes
c. Specific taxes
d. Revenue taxes
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
20. Who is subject to transfer tax?
a. Transferor
b. Both transferor and transferee
b. Transferee
d. None of these
21. Statement 1: All Philippine transfers are subject to transfer taxes.
Statement 2: All foreign transfers are subject to transfer taxes.
Which statement is generally correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
22. Statement 1: The amount of transfer tax is dependent upon the value of the thing transferred
Statement 2: Donor's tax is imposed upon the properties of a decedent while estate tax is imposed on a
donor.
Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
Multiple Choice - Theory: Part 2
1. Transfer tax on donation mortis causa applies to a
a. Natural person
b. Juridical person
c. Both A and B
d. Neither A nor B
2. Transfer tax on donation inter-vivos applies to a
a. Natural person
b. Juridical person
c. Both A and B
d. Neither A nor B
3. Which is taxable on all transfers regardless of location?
a. Resident citizen
b. Resident alien
c. Non-resident citizen
d. All of these
4. Which is not subject to estate tax?
a. Resident alien
b. Non-resident alien
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
c. Domestic corporation
d. Non-resident citizen
5. Which is not subject to transfer tax on transfer of properties located abroad?
a. Resident citizen
b. Resident alien
c. Non-resident alien
d. Non-resident citizens
6. A non-resident alien is
a. Exempt from transfer taxes.
b. Subject to transfer tax on Philippine properties.
c. Subject to transfer tax on global properties.
d. Subject to transfer tax only on transfers of tangible properties.
7. Which of the following may be exempt on transfers on the basis of reciprocity?
a Resident alien
b. Non-resident citizen
c. Non-resident alien
d. B and C
8. Which properties does the reciprocity exemption cover?
a. Intangible personal property located abroad.
b. Intangible personal property located in the Philippines
c. Tangible and intangible properties located abroad
d. Tangible and intangible properties located in the Philippines
9. Which of the following is an intangible personal property?
a. Franchise
b. Stocks
c. Bonds
d. All of these
10. Which of these is subject to tax only on transfers of properties situated in the Philippines?
a. A citizen of Japan residing in the Philippines
b. A citizen of the Philippines residing in Hong Kong
c. A citizen of America residing in Korea
d. A citizen of the Philippines residing in the Philippines
11. Which of these is taxable on global transfers of properties?
a. An American residing in the Philippines
b. A Filipino residing in Malaysia
c. A Sudanese residing in Bahrain
d. A Chinese residing in the Philippines
a. A and B
b. B and D
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
c. C only
d. A, B and D
12. Which is subject to donor's tax?
a. Donation mortis causa
b. Donation inter-vivos
c. Sale for an adequate consideration
d. Both B and C
13. Which is not a characteristic of a donation inter-vivos?
a. inspired by the generosity of the transferor
b. inspired by the thought of death of the transferor
c. zero consideration
d. insufficiency of consideration
14. Which of these is a donation mortis causa?
a Donation in contemplation of death note de
b. Donation to take effect upon death
c. Revocable donation pre-terminated by death
d. All of these
15. Which of the following donations made during the lifetime of the donor is subject to donor's tax?
a. Donation inspired by motives associated with life
b. Donation made during the lifetime of the decedent inspired by the thought of the decedent's death
c. Donation made in contemplation of death
d. All of these
16. Which of the following is not a motive associated with life?
a. To settle family dispute
b. To save on transfer tax
c. To see children financially independent
d. To relieve the donor of the burden of management of the property
17. Donation made on the decedent's last will and testament is
a. a donation mortis causa.
b. a donation inter vivos
c. subject to income
d. subject to donor's tax
18. Which of the following forms of non-taxable transfers will not be subject to transfer tax?
a. Void transfer
b. Quasi-transfer
c. Incomplete transfer
d. A and B
19. Which of the following forms of non-taxable transfers may be subject to transfer tax in the future?
a. Void transfer
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. Quasi-transfer
c. Incomplete transfer
d. All of these
20. Which is incorrect regarding the taxation of incomplete transfers which are eventually completed?
a. They are subject to estate tax.
b. They are subject to donor's tax.
c They are subject to both donor's tax and estate tax
d. They are subject to either donor's tax or estate tax.
21. Which is a complete transfer?
a. Conditional transfer
b. Transfer in contemplation of death
c. Irrevocable transfers
d. Transfer with reservation of certain rights until death
22. A conditional donation may be completed by B OR D
a. Fulfillment of the condition specified by the transferee
b. Waiver of the condition by the transferor
c. Lapse of the right to revoke
d. A and B
23. Conditional transfers and revocable transfers which are still pending completion at the point of the
transferor's death are
a. donation inter-vivos.
b. subject to donor's tax.
c. subject to estate tax.
d. subject to income tax.
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BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
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BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
CHAPTER 13-THE CONCEPT OF SUCCESSION AND ESTATE TAX
True or False 1
T 1. Succession is a mode of acquisition of property similar to donation.
F 2. Inheritance refers to the property which will be transmitted to the heirs.
F 3. The right to succession is transmitted from the moment of death of the decedent.
F 4. A decedent with a last will and testament is said to be intestate.
F 5. The succession over properties of a decedent who prepared a will but covers only a portion of his estate is
called mixed succession.
F 6. A person who prepared a will is referred to as the executor.
F 7. A person who died with a will is said to be testate.
T 8. The succession by operation of law is called intestate succession.
F 9. The will may be prepared by the heirs of the decedent.
F 10. The will may be prepared after the death of the decedent.
F 11. A testator can designate any heirs even if in violation of his legitime.
T 12. In intestate succession, the surviving spouse is treated as a legitimate child qualified for a share while
illegitimate children are allowed half-share each.
F 13. The computation of the estate requires understanding of the legitime.
True or False 2
F 1. A debt can be inherited by heirs.
F 2. Only testamentary dispositions are subject to estate tax.
T 3. Successions whether testamentary, intestate, or mixed are subject to estate
T 4. The decedent's successors in interest are referred to as the heirs.
F 5. With a last will and testament, the decedent can name any person which he wants as heir.
F 6. In testamentary disposition, the heirs must always be relatives of the decedent.
F 7. The secondary compulsory heirs shall inherit only in default of concurring heirs.
T 8. The concurring heirs shall inherit together with the primary heirs, or in their default, the secondary heirs.
F 9. In default of concurring heirs, relatives in the collateral line up to the 5th degree shall inherit.
F 10. In default of compulsory heirs, the government shall inherit the estate of the
Multiple Choice - Theory 1
1. IT is a mode of gratuitous acquisition of property out of the generosity of a person
a. Succession
b. Donation
c. Loan
d. None of these
2. It is a mode of gratuitous acquisition of property by the death of a decedent
a. Donation
b. Succession
c. Inheritance
d. Testate
3. The donor in a donation mortis causa is
a. dead
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. living
c. either living or dead.
d. in a coma.
4. Which is not a form of succession?
a. Testamentary
b. Compulsory
c. Intestate
d. Mixed
5. It is succession in the absence of a will.
a. Testamentary
b. Intestate
c. Mixed
d. None of these
6. It is succession by will and operation of law.
a. Testamentary
b. Intestate
c. Mixed
d. None of these
7. It is written document which sets forth how the decedent's property will be distributed after death
a. Will
b. Testamentary disposition
c. Intestate disposition
d. Mixed.
8. Which is not an element of succession?
a. Decedent
b. Estate tax
c. Estate
d. Heirs
9. It is the property, rights and obligations of the decedent not extinguished by his death
a. Estate
b. Estate tax
c. Codicil
d. Legitime
10. They are the successors in interest of the decedent.
a. Heirs
b. Estate
c. Devisees
d. Legatees
11. It is a donee of a real property in a last will and testament.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a. Heir
b. Devisee
c. Legatee
d. Successor
12. IT is a donee of personal property in a last will and testament.
a. Heir
b. Devisee
c. Legatee
d. Successor
13. Who is not a compulsory heir?
a. An adopted child
b. Children of a deceased child
c. The surviving spouse
d. A brother
14. Who will inherit among the following?
a. A legitimate child
b. Parents
c. Grandchildren
d. First cousin
15. Which of the following heirs will not inherit?
a. lllegitimate child
b. Surviving spouse
c. Nephew
d. Legitimate child
Multiple Choice - Theory 2
1. Which will not inherit from the following group?
a. Grandchild from a deceased son of the decedent
b. A daughter of the decedent
c. Grandson from a living daughter of the decedent
d. An illegitimate child of the decedent
2. Who may not inherit under an intestate succession?
a. Grandparents
b. Grandchildren
c. First Cousin
d. Best friends
3. Who will be disinherited from the following?
a. Widow
b. Legitimate children
c. Illegitimate children
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
d. Parents
4. Who shall inherit from the following group?
a. Legitimate child
b. Parents
c. Grandparents
d. Brothers and sisters
5. Who shall inherit from the following potential heirs?
a. 1st cousins
b. Brothers and sisters
c. Niece sand nephews
d. Second cousins
6. This is a person appointed by the court to manage the distribution of the estate
a. Administrator
b. Executor
c. Guardian
d. Trustee
7. This is a person handpicked by the decedent to implement his will.
a. Administrator
b. Executor
c. Guardian
d. Trustee
8. There are several estate tax laws in the history of estate taxation in the Philippines. Which applies to a
particular decedent?
a. The estate tax law in effect when the properties of the decedent are being accumulated
b. The estate tax law in effect at the date of the decedent's death
c. The estate tax law in effect at the date the last will and testament was prepared
d. The estate tax law in effect upon determination of the legal heirs
9. Which is correct regarding estate tax?
a. A privilege tax
b. A national tax
c. A final tax
a. A fiscal tax
10. Statement 1: Succession will not effect until and unless the estate tax is paid.
Statement 2: Estate tax is payable even in the absence of relatives who may inherit the estate.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
11. Statement 1: No estate tax is due if the net taxable estate is negative.
Statement 2: Once there is death, the estate tax is always payable. Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
12. Statement 1: A resident citizen is taxable on his estate wherever situated.
Statement 2: A non-resident citizen is taxable only on his estate situated in the Philippines
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
13. Statement 2. A resident alien is taxable only on his estate situated in the Philippines
Statement 2: A non-resident alien is taxable only on his estate situated in the Philippines
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
14. The reciprocity exemption on intangible personal properties situated in the Philippines is applicable only to
a. Non-resident citizen
b. Non-resident alien
c. Resident alien
d. All of these
15. Which is correct?
a. Estate tax is determined per piece of property transferred to the heir
b. Estate tax is collected by the local government.
c. Estate tax is a property tax.
d. Estate tax is an excise tax.
16. A decedent died intestate with P1,000,000 net estate. If he has four legitimate children and two
illegitimate children, how much shall each legitimate and each illegitimate child respectively receive?
a. P0; Р0
b. P100, P50,000
c. P 200,000; P100,000
d. P 166,667; P166,667
17. A married decedent died intestate leaving behind P1,500,000 of his separate property and P6,000,000
common properties with his surviving spouse. If he has three children and one illegitimate child. How much
shall
each legitimate child receive?
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
a P1,666,667
b. P1,000,000
c. P 666,667
d. P 333,333
18. In the immediately preceding problem, compute the total properties of the surviving spouse after partition
of the properties.
a. P 3,000,000
b. P 4,000,000
c. P 4,666,667
d. P 3,666,667
CHAPTER 13-A-ESTATE TAX GROSS ESTATE
True or False 1
T 1. The list of properties of the decedent existing at the point of death must be
established in determining gross estate.
F 2. Gross estate consists of all real properties and tangible personal properties whether situated, at the point
of death.
F 3. The gross estate of a non-resident citizen includes tangible properties wherever situated.
F 4. The gross estate of a non-resident alien includes only tangible properties situated in the Philippines.
F 5. The gross estate of a resident alien includes only real properties wherever situated.
F 6. The list of properties of the decedent must be counted at the date of death.
F 7. Properties owned by the decedent which are exempted by law are initially included in gross estate, but
are removed by way of deduction from gross estate.
F 8. Properties not owned by the decedent may be included in gross estate.
T 9. Taxable transfers consist of properties passed to other persons before death but are still owned by the
decedent at the point of death.
T 10. The motives of the donation shall be the basis of its taxation.
F 11. Properties are valued at the higher of the fair value and acquisition cost.
T 12. Newly-acquired properties are valued at acquisition cost.
T 13. Where the law or regulations do not prescribe for fair value rules, fair value rules of generally accepted
accounting principles may be sought.
F 14. Listed stocks are valued at their par value.
T 15. Non-listed common stocks are valued at their book value. 10
True or False 2
F 1. Transfers inter-vivos made before death are included in gross estate.
F 2. Income earned after death is included in gross estate.
T 3. Income earned before death is included in gross estate.
T 4. The payment for obligations and expenses after death is added back to the amount of gross estate.
T 5. Taxable transfers are included in gross estate.
F 6. Properties held by the decedent as a trustee must be included in gross estate.
7. Properties held by the decedent which must be transmitted to an heir in
accordance with the desire of a predecessor are excluded from gross estate.
F 8. The proceeds of an irrevocable life insurance is included in gross estate.
F 9. Properties held by the decedent as a fiduciary heir are included in gross estate.
T 10. The proceeds of life insurance which is revocably designated must be included in gross estate.
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T 11. The proceeds of life insurance is included in gross estate if the beneficiary is the estate, the executor or
administrator.
T 12. The separate properties of the surviving spouse are excluded from gross estate.
T 13. Transfers made for adequate considerations are excluded from gross estate.
T 14. The merger of the usufruct in the owner of the naked title is a transfer excluded from gross estate.
F 15. The gross estate includes only the separate properties of the decedent.
F 16. The proceeds of group insurance is included in gross estate.
T 17. The proceeds of GSIS policy and SSS benefits are included in gross estate.
T 18. Benefits from the USVA are exempt from estate tax.
T 19. Donations mortis causa to accredited non-profit institutions are exclusions in gross estate.
T 20. Transfers in contemplation of death are included in gross estate.
T 21. If the fair value of the property transferred mortis causa for an inadequate consideration declines below
the amount of the consideration at the date of death, no amount is included in gross estate.
T 22. Revocable transfers and conditional transfers are included in gross estate at the fair value of the
property at the date of their transfer to the transferees.
F 23. Properties passing under special power of appointment are included in gross estate.
T 24. The gross estate is valued at the point of death.
T 25. If a consideration is paid by the transferee in a taxable transfer, the amount to include in gross estate
shall be the excess of the fair value of the property at the date of death over the consideration given.
Multiple Choice - Theory: Part 1
1. The gross estate of resident or citizen decedents does not include
a. Properties located abroad
b. Properties located in the Philippines
c. Intangible personal property located abroad
d. Properties not owned
2. Gross estate means
a. Properties, whether or not owned by the decedent, existing at the point of death
b. Properties owned by the decedent at the point of death
c. Present properties in the possession of the decedent at the point of death
d. Any of these
3. As a rule, all decedents are taxable on world estate, except
a. non-resident alien.
b. non-resident citizen.
c. resident alien
d. non-residents
4. As a rule, the gross estate of non-resident alien decedents includes
a. Intangible personal properties located abroad
b. Real properties located abroad
c. Intangible personal properties located in the Philippines
d. Tangible personal properties located abroad
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5. Which has reciprocity exemption?
a. Resident alien
b. Non-resident alien
c. Non-resident citizen
d. All of these
6. Which property is covered by the reciprocity exemption?
a. Intangible personal property abroad
b. Intangible personal property in the Philippines
c. Tangible personal property abroad
d. Tangible personal property in the Philippines
7. Which of these properties may be excluded from gross estate by reason of reciprocity?
a. Cash
b. Car
c. Paintings
d. Land
8. Which is not deducted from the inventory list of properties in arriving at
the gross estate?
a. Properties held as a trustee
b. Properties held as a fiduciary heir
c. Properties held under a general power of appointment
d. Properties held under a special power of appointment
9. If inventory-taking of properties is conducted after the death of the decedent, which is deducted from the
inventory list?
a. Income accruing after death
b. Expenses paid after death
c. Income accruing before death
d. Expenses paid before death
10. Which is not added to the inventory list of properties in computing gross estate?
a. Transfer in contemplation of death
b. Revocable transfers
c. Transfers under general power of appointment
d. Merger of the usufruct in the owner of the naked title
11. Which is a correct statement?
a. The merger of the usufruct in the owner of the naked title is a transmission subject to estate tax,
b. The transfer from the first heir to the second heir in accordance with the wishes of a predecessor is a
taxable transfer subject to estate tax.
c. The proceeds of life insurance taken by the decedent for himself/herself is always included in gross estate
if the beneficiary is the estate, executor or administrator.
d. The trustor need not include a property transferred in a revocable trust in his gross estate.
12. Which of these transfers is subject to estate tax?
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a Transfer of properties for a full consideration
b. Transfer of the inheritance from the fiduciary heir to the fideicommissary
c. Transfer of the property held in trust by a trustee to the beneficiary
d. Transfer mortis causa for less than full and adequate consideration
13. Which of these properties is subject to estate tax?
revoked by the decedent before his/her death
a. Properties which were initially transferred in revocable trusts but were
b. Properties transferred under revocable trust which the decedent failed to revoke at the time of his/her
death
c. Properties transferred under conditional donations wherein the donee has not yet fulfilled the terms of
donation at the date of death of the decedent
d. All of these.
14. The proceeds of life insurance designated by the decedent to his/her child included in the gross estate.
a. if the designation is revocable.
b. if the designation is irrevocable.
c. without regard to the designation as revocable or irrevocable.
d in all circumstances.
15. The proceeds of life insurance designated by the decedent to his/her estate is included in gross estate
a. if the designation is revocable
b. if the designation is irrevocable.
c. without regard to the designation as revocable or irrevocable.
d. in all circumstances.
16. The proceeds of life insurance designated by the decedent to his wife is excluded in gross estate and
a. if the designation is revocable.
b. if the designation is irrevocable.
c. without regard to the designation as revocable or irrevocable.
d. under no circumstances.
17. The proceeds of life insurance designated by the decedent to his/her executor is excluded in gross estate
a. if the designation is revocable.
b. if the designation is irrevocable.
c. without regard to the designation as revocable or irrevocable.
d. under no circumstances.
18. Which is an inclusion in gross estate?
a. Separate properties of the surviving spouse
b. common properties of the spouses
c. Separate properties of the heirs
d. Properties acquired from group insurance
19. Which is not included in gross estate?
a. Revocable transfers
b. Transfers in contemplation of death /
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c. Transfer under special power of appointment
d. All of these
20. Which is not included in the gross estate of the husband?
a. Capital properties
b. Common properties
c. Paraphernal properties
d. All of these
21. Which is not included in the gross estate of the wife?
a. Capital properties
b. Common properties
c. Paraphernal properties
d. None of these
22. Which of the following donations in the last will and testament is excluded
a. Donation to a favorite child. in gross estate of the decedent?
b. Donation to an ex-girlfriend.
c. Donation to a charitable institution
d. Donation to the government
23. Which proceeds of insurance is included in gross estate of the decedent?
a. Proceeds of life insurance irrevocably designated to the decedent's child
b. Proceeds of group insurance
c. Proceeds of property insurance
d. All of these
24. If the decedent failed to specify the designation of the beneficiary of his life
insurance policy
a. The proceeds is exempt if he did not changed the beneficiary during his lifetime
b. The proceeds is taxable whether or not he changed the beneficiary during his lifetime.
c. The proceeds is exempt because it is considered a revocable designation.
d. The proceeds is taxable because it is considered a revocable designation
25. Which is not an exclusion in gross estate?
a. Accruals from SSS
b. GSIS benefits
c. War damage payments
d. Private retirement benefits
26. Which of the following bequests to a social welfare or charitable institution is subject to estate tax?
a. Bequests to be used for administrative purposes
b. Bequests restricted by the decedent for program expenses of the institution
c. Bequests to accredited non-profit institutions
d. All of these
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27. Statement 1: For taxable transfers, the value to include in gross estate shall be the fair value of the
property at the point of death
Statement 2: For taxable transfers made for an insufficient consideration, the total fair value of the property
at the point of death shall be included in gross estate. Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
Multiple Choice - Theory: Part 2
1. Mr. A devised in his will a piece of land to Mrs. B. Mrs. B shall enjoy usufructuary right over the property
and shall pass the same to Mr. C upon her death.
Who shall include the property in his or her gross estate upon death?
a. Mr. A
b. Mrs. B
c. Mr. C
d. Mr. A and Mr. C
2. Mrs. A appointed Ms. B as fiduciary heir over an agricultural land which Ms. B shall turn over to Mr.Cupon
Ms. B's death.
Which is incorrect?
a. The land must be included in Mrs. A's gross estate upon her death.
b. The land must be excluded in Ms. B's gross estate upon her death.
c. The land must be excluded in Mr. C's gross estate upon his death.
d. None of these
3. Mr. A designated his wife as the revocable beneficiary of the proceeds of his life insurance. Which is
correct?
a. The proceeds must be included in the gross estate of Mr. A
b. The proceeds must be excluded in the gross estate of Mrs. A upon her death.
c. The proceeds must be treated as donation subject to donor's tax.
d. The proceeds must be excluded in the gross estate of Mr. A.
4. Mr. A designated Mr. K, the executor of his estate, as his irrevocable beneficiary to the proceeds of his life
insurance
Which is correct?
a. The proceeds of the life insurance policy shall be included in the gross estate of Mr. A
b. The proceeds of the life insurance policy shall be excluded in the gross estate of Mr. A.
c. The proceeds of life insurance is a donation subject to donor's tax.
d. The proceeds is exempt from both donor's tax and estate tax.
5. Which of the following is excluded in the gross estate of Mr. X?
a. Separate property of Mr. X
b. Common property of Mr. and Mrs. X
c. Separate property of Mrs. X
d. B and C
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6. Mr. A made an irrevocable donation in trust in favor of Mr. C. Mr. C died two years after receiving the
donation.
Which is correct?
a. The property shall be included in the gross estate of Mr. C.
b. The property shall be included in the gross estate of Mr. A.
c. The property shall be excluded in the gross estate of Mr. C.
d. None of these
7. What is a best way to minimize estate tax exposure?
a. Invest your money in a corporation
b. Donate the properties to relatives before death
c. Understate your gross estate and do not pay estate tax
d. Invest property in life insurance and make the designation of the beneficiary as irrevocable
8. Which of these transfer mortis causa will more likely to be included in gross estate of the decedent?
Fair value at transfer
Selling price at transfer
Fair value at death
a.
P100,000
P150,000
P200,000
b.
P 150,000
P150,000
P300,000
c.
P200,000
P150,000
P140,000
d.
P300,000
P200,000
P280,000
9. Which is excluded in gross estate?
a. Fringe benefits
b. De minimis benefits
c. GSIS benefits
d. PhilHealth benefits
10. Which of the following properties is excluded from gross estate even if present at the point of death?
a. Revocable transfer
b. Conditional transfer
c. Transfer by bona fide sale
d. Proceeds of group insurance
11. Which may be exempt from estate tax?
a. Proceeds of building fire insurance
b. Proceeds of car insurance
c. Proceeds of crop insurance
d. Proceeds of life insurance
12. Which is not included in gross estate?
a. Decedent interest to properties
b. Taxable transfers
c. Proceeds of life insurance irrevocably designated to the estate
d. Income of properties of the decedent after death
13. The decedent owns an agricultural land with the following values:
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Zonal value
Assessed value
Independent appraised value
Offer price of a willing buyer
P 2,000,000
P 1,500,000
P 3,200,000
P 4,000,000
The agricultural land shall be included in gross estate at
a. P1,500,000
b. P 2,000,000
c. P 3,200,000
d. P 4,000,000
14. The decedent owns 200,000 shares of Saint Peter Corporation, a listed company
Date of death
Date of interment
Book value per share
P 23.50
P 23.55
Closing price
P 48.20
P 49.50
Average trading price
P 48.00
P 49.60
The 200,000 shares shall be included in gross estate at
a. P 4,700,000
b. P 9,640,000
c. P 9,600,000
d. P 9,900,000
15. The decedent had $2,000 in his possession at his death on November 2, 1019. He was buried on November
12, 2019. The following were the
exchange rates:
November 2, 2019
November 2 to November 12, 2019 average rate
November 12, 2019
P 42.50: $1
P 43.25: $1
P 42.75: $1
At what amount shall the $2,000 be included in the gross estate of the decedent?
a. P 86,500
b. P85,500
c. P85,000
d.P0
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CHAPTER 13 B - ESTATE TAX: GROSS ESTATE OF MARRIED DECEDENTS
True or False 1
T 1. The spouses can stipulate the conjugal partnership of gains as their property regimes even in the current
time.
F 2. The property regime of the spouses may be agreed upon during the marriage.
F 3. In default of agreement as to the property relation between the spouses, the absolute separation of
property is presumed.
F 4. Fruits accruing during the marriage are conclusively presumed common
while fruits accruing before the marriage are conclusively presumed exclusive.
F 5. The absolute community of property applies on fruits prospectively from the date of marriage.
T 6. The conjugal partnership of gains operates retrospectively and prospectively.
T 7. Properties for exclusive personal use of either spouses are exclusive
properties under absolute community of properties.
F 8. All fruits, accruing before or after the marriage, are conjugal properties.
T 9. Fruits accruing from common properties are common properties under conjugal partnership of gains.
T 10. Fruits accruing from separate properties are common properties under conjugal partnership of gains.
F 11. All fruits before the marriage are conjugal properties.
F 12. All fruits during the marriage are communal properties.
F 13. Real properties are common properties under absolute community of properties.
F 14. Personal or movable properties are separate properties under absolute community of properties.
F 15. Properties received by way of gifts are exclusive properties.
True or False 2
F 1. Properties received by way of inheritance are exclusive properties.
T 2. All properties brought into the marriage are separate under the conjugal partnership of gains.
F 3. Generally, all properties brought into the marriage are community properties.
F 4. The properties of a spouse with a descendant from a prior marriage are exclusive properties.
T 5. The fruit of inherited properties are exclusive under absolute community of properties.
F 6. The fruit of donated properties are exclusive properties under conjugal partnership of gains.
F 7. The fruits of labor of either spouse are exclusive under the absolute community of property.
T 8. The gross estate of a decedent includes his separate properties and their common properties with his
surviving spouse.
F 9. Marriages celebrated after August 3, 1988 are conclusively presumed under the absolute community of
property.
T 10. In default of an agreement between the spouses, marriages celebrated before August 3, 1988 are
presumed under the conjugal partnership of gains.
T 11. Issues of property regime are irrelevant to a single decedent.
T 12. In taking inventory, properties are generally presumed common unless proven as exclusive of either
spouse.
F 13. The proceeds of separate property sold during the marriage can become a conjugal property.
T 14. The proceeds of separate property sold during the marriage is always a separate property under absolute
community of property.
T 15. Jewelry is generally considered community property.
T 16. Jewelry inherited during the marriage is exclusive property.
T 17. The sale of a separate property may produce a separate property and a conjugal property.
F 18. The sale of a conjugal property may produce a separate property and a conjugal property.
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F 19. The properties of a spouse with a descendant from a prior marriage are communal properties.
F 20. The properties of a spouse without any descendant from a prior marriage are communal properties.
Multiple Choice - Theory: Part 1
1. Statement 1: Under absolute community of property, properties are presumed community unless proven
otherwise.
Statement 2: Under conjugal partnership of gains, properties are presumed conjugal unless proven otherwise.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
2. In determining the property regime of the spouses, which is given primacy?
a. Agreement
b. Conjugal partnership of gains
c. Absolute community of property
d. Absolute separation of property
3. Which is not a property regime?
a. Absolute separation of property
b. Conjugal partnership of gains
c. Absolute community of property
d. Pooling of interest
4. Which is a conjugal property?
a. Property inherited during marriage
b. Property inherited before marriage
c. Property received from exercise of profession during marriage
d. Property received from a donation during marriage
5. Which of these is an exclusive property?
a. Fruits arising from properties inherited during marriage
b. Fruits of properties acquired before marriage
c. Properties acquired from personal labor of the wife
d. Properties donated to both of the spouses
6. Which is a community property?
a. Properties received as inheritance during marriage
b. Properties representing fruits of community properties
c. Properties representing fruits from donated properties
d. Fruits of inheritance during marriage tool
7. Which is a common property under absolute separation of property?
a. Salaries of the husband
b. Business profits of the wife get
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c. Donation or inheritance receive by either spouses
d. Business interest jointly financed by both spouses
8. Which of these donations or inheritance is a common property?
a. Donations designated by the donor for the wife or
b. A devise to the husband
c. A donation designated by the donor for the husband and the wife
d. An inheritance from the mother of the wife
9. Which is not a common property?
a. Revocable donation to both spouses
b. Irrevocable donation in trust for both spouses
c. Direct and irrevocable donation for both spouses
d. All of these
10. Which is not a separate property under conjugal partnership?
a. Professional income of the husband
b. Rental income from separate properties
c. Income of common properties
d. All of these
11. Which is incorrect regarding fruits of separate properties during the marriage?
a. Exclusive under conjugal partnership of gains
b. Exclusive under absolute community of property
c. Exclusive under absolute separation of property
d. None of these
12. Fruits accruing before the marriage are
a. Common under conjugal partnership of gains
b. Common under absolute community of properties
c. Exclusive under absolute community of properties
d. A and C
13. The income of donated properties before marriage are
a. Exclusive properties under conjugal partnership
b. Exclusive under absolute community of property
c. Common properties under conjugal partnership of gains
d. A and C
14. Property inheritance during the marriage is
a. Exclusive under conjugal partnership
b. Exclusive under absolute community of property
c. Common properties under conjugal partnership of gains
d. A and B
15. The property inheritance before the marriage is
a Separate property under conjugal partnership
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b. Separate property under absolute community of property
c. Common property under absolute community of property
d. A and C
Multiple Choice - Theory: Part 2
1. Which is incorrect under the absolute community of property?
a. Jewelry received as an inheritance during marriage is an exclusive property.
b. Jewelry received as a donation before marriage is a common property.
c. Jewelry acquired from income of separate property is an exclusive property
d. None of these
2. The income of properties acquired from the personal hard work of either spouse is
a. Exclusive under absolute separation of properties
b. Common properties under absolute community of property
c. Exclusive under conjugal partnership
d. A and B
3. The husband has numerous pricey personal apparels. These are
a. Exclusive properties under conjugal partnership
b. Common properties under absolute community of property
c. Common properties under absolute separation of property
d. None of these
4. The gain on sale of a separate property during the marriage is
a. Separate property under conjugal partnership of gains
b. Separate property under absolute community of property
c. Common property under conjugal partnership of gains
d. A and B
5. The gain on sale of common properties is
a. Exclusive under conjugal partnership of gains
b. Common under absolute separation of property
c. Common under absolute community of property
d. None of these
6. Which is not considered a separate property of the recipient spouse?
a. Acquisition of property as a trustee
b. Acquisition of property as a fiduciary heir
c. Acquisition of property as a usufructuary
d. All of these
7. Which is a paraphernal property under absolute community of property?
a. Property inherited by the husband
b. Property inherited by the wife
c. Property earned from separate properties of the husband
d. Property from the exercise of profession by the wife
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8. Which is a paraphernal property under the conjugal partnership of gains?
a. Property brought into the marriage by the wife
b. Income of properties donated to the wife during the marriage
c. Income from the separate industry of the husband
d. Income from the separate industry of the wife
9. Which of these is a capital property under conjugal partnership of gains?
a. Properties brought into the marriage by the wife
b. Properties inherited by the husband
c. Fruits of properties donated to the husband
d. Properties for exclusive use of the husband
10. Which is a capital property under the absolute community of property?
a. Properties before marriage of the wife with a descendant in a prior marriage
b. Fruits of separate property of the wife
c. Properties for exclusive personal use of the husband
d. Compensation income of the husband
11. Which is excluded in gross estate?
a. Separate property of the decedent
b. Common property of the spouses
c. Separate property of the surviving spouse
d. A and C
12. Which is excluded in the gross estate of a deceased husband under the absolute community of property?
a. Fruits of properties inherited by the wife during marriage
b. Fruits of common properties during the marriage
c. Fruits of properties of the spouses before their marriage
d. Properties inherited by the husband
13. Which is excluded in the gross estate of a deceased wife under the conjugal partnership of gains?
a. Business income of the husband
b. Professional income of the wife
c. Property received by way of inheritance by the wife
d. Property brought into the marriage by the husband
14. Which will not be included in gross estate regardless of the property regime of the spouses?
a. Accruals from SSS
b. Jewelry
c. Properties for exclusive use of the spouses
d. Fruits of separate properties
15. Which is excluded in the gross estate of the husband under the conjugal partnership of gains?
a. Properties inherited by the wife
b. Properties brought into the marriage by the husband
c. Income from properties inherited by the wife
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d. Properties acquired by the wife from her own labor
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CHAPTER 14- ESTATE TAX DEDUCTIONS FROM GROSS ESTATE
True or False 1
T 1. Items of deduction must be supported by documents.
T 2. As a rule, deductions are allowed if they are taken from gross estate or are chargeable to gross estate.
T 3. Double deduction is not allowed in estate taxation.
T 4. For married decedents, deductions are presumed common unless proven to be exclusive.
F 5. Vanishing deduction is a special deduction.
F 6. The share of the surviving spouse is 22 of the husband's exclusive property.
T 7. Ordinary deductions normally result in reduction in the hereditary estate.
T 8. Special deductions do not reduce the hereditary estate of the heirs.
T 9. Special deductions are allowed only to resident or citizen decedents.
F 10. Non-resident decedents cannot claim the full amount of ordinary deductions.
F 11. Obligations of the surviving spouse are deductions against gross estate.
T 12. The deduction for share of surviving spouse does not apply to unmarried decedents.
F 13. The estate tax liability of the decedent is deductible in the computation of the net taxable estate.
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F 14. The vanishing deduction is applicable only if the previous estate paid estate tax.
T 15. The vanishing deduction is applicable only to properties inherited by the decedent within five years
before his death.
True or False 2
F 1. An unpaid funeral expense may be deducted through claim against the estate.
F 2. Non-resident decedents cannot claim standard deductions.
F 3. Non-resident alien decedents cannot claim deductions for the share of the surviving spouse.
F 4. Only taxes and obligations accruing after death are deductible from gross estate.
T 5. The loss of separate properties of the decedent is not deductible against common properties of the
spouses.
T 6. The loss of separate properties of the surviving spouse is not deductible against gross estate.
T 7. The standard deduction is claimable by a resident or citizen decedent without the need to prove
entitlement to the deduction.
F 8. A family home is a claimable deduction up to P500,000.
F 9. Standard deduction up to P10,000,000 can be claimed as special deduction.
T 10. Non-resident alien decedents cannot claim deduction for transfer for public purpose for properties
located abroad.
F 11. Losses of property before the death of the decedent are deductible.
T 12. Non-resident aliens cannot deduct special deductions except standard deductions.
F 13. Non-resident alien decedents can claim only a proportion of losses,
indebtedness, taxes, and transfers for public purpose.
T 14. Resident alien decedents can claim deduction for family home.
F 15. Vanishing deductions is applicable only on properties situated in the
Philippines.
Multiple Choice - Theory: Part 1
1. Which is correct regarding deductible obligations of the estate?
a. It must always be notarized.
b. It must be incurred before filing of the estate tax returns
c. It must be paid before the filing of the estate tax
d. It must be incurred before the death of the decedent.
2. Which of the following losses is not deductible?
a. Losses of properties compensated for by insurance
b. Losses arising from fires
c. Losses arising from theft or embezzlement
d. Losses arising from storms or shipwreck
3. Which of these do not diminish the hereditary estate of the decedent?
a. Judicial expense
b. Transfer for public use
c. Medical expense paid before death
d. Funeral expense
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4. Which of the following decedents cannot claim special deductions for family home?
a. Resident citizen
b. Resident alien
c. Non-resident alien
d. Non-resident citizen
5. Which is not considered in computing the share of surviving spouse?
a. Claim against the estate
b. Transfer for public use
c. Standard deduction
d. Vanishing deductions
6. In computing the actual share in common properties, funeral expenses are deductible against
a. Separate property of the surviving spouse
b. Separate property of the decedent
c. Common property of the spouses
d. Share of the surviving spouse
7. Which of the following is an incentive deduction?
a. Family home
b. Standard deduction
c. Vanishing deduction
d. All of these
8. In computing taxable net estate, claims against the estate are deductible against
A. exclusive property of the decedent
B. common property of the spouses
Which best completes the statement?
a. A only
b. B only
c. Either A or B
d. Neither A nor B
9. Which is not an ordinary deduction?
a. Family home
b. Vanishing deduction
c. Share of surviving spouse
d. Casualty losses of estate properties
10. Which ordinary deduction is least likely deducted against common properties?
a. Losses of conjugal property
b. Claim against the estate
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c. Communal properties previously taxed
d. Transfer for public use
Multiple Choice - Theory: Part 2
1. Losses of separate properties of the surviving spouse are deductible against
a. Separate property of the decedent
b. Common property of the spouses
c. Both A and B
d. Neither A nor B
2. Which of the following losses is claimable as deduction against gross estate?
a. Losses claimed in the income tax return of the estate
b. Losses occurring before the death of the decedent
c. Losses occurring after six months of the decedent's death
d. Losses of separate properties of the decedent
3. Which is deductible by a non-resident alien decedent?
a. Transfer for public use
b. Family home
c. Medical expenses
d. Funeral expenses
4 The maximum allowable amount of standard deduction is
a. P200,000
b. P500,000
c. P 5,000,000
d. P 10,000,000
5. Losses may be deducted if VOID
a. paid.
b. unpaid.
c. incurred within 6 months before death.
d. incurred within one year before death.
6. What is the maximum amount of deductible casualty losses?
a. None
b. P500,000
c. P1,000,000
d. 10% of gross estate
7. The allowable deductible amount of family home is
a. 5% of gross estate
b. P 2,000,000
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c. P 5,000,000
d. P 10,000,000
8. If the family home is a conjugal or community property, what is the maximum allowable deduction?
a. 5% of gross estate
b. P2,500,000
c. P 5,000,000
d. P10,000,000
9. The allowable amount of standard deduction is
a. 5% of gross estate
b. P200,000
c. P 500,000
d. P 5,000,000
10. Which statement is incorrect?
a. Claims against insolvent persons are presented in gross estate and deductions against gross estate.
b. Claims against insolvent persons are presented separately from losses.
c. Non-resident alien decedents can claim deductions for losses, indebtedness, and taxes.
d. Properties subject to mortgage are presented in gross estate at an amount net of the mortgage.
11. Which obligation is deductible against gross estate?
a. Bank loans acquired for the medication of the decedent
b. Income tax of the decedent before death
c. Sole obligation of the surviving spouse
d. Real property tax of the separate property of the surviving spouse
12. Which of these taxes is deductible against gross estate?
a. Income tax paid before death
b. Income tax of the estate
c. Real property tax accruing after death
d. Real property tax accruing before death
13. Non-resident alien decedents can claim prorated amounts for the following deductions, except
a. Taxes
b. Losses
c. Indebtedness
d. Vanishing deductions
14. Which is not a requisite of vanishing deductions?
a. If the property is acquired by inheritance, the prior estate must have paid the estate tax.
b. If the property is acquired by inheritance, the prior estate must have not claimed vanishing deduction.
c. The decedent must have acquired the property by way of inheritance or donation
d. The decedent must have acquired the property by purchase.
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15. Vanishing deduction is allowed if the property subject to vanishing deduction is acquired
a. one year before death
b. more than one year before death.
c. within five year before death.
d. more than five year before death.
16. A decedent died in a wild fire which totally gutted his home. Which is correct?
a. If the property is insured, the insurance reimbursement is included in gross estate and the loss is reported
as a deduction
b. If the property is not insured, the insurance reimbursement is included in gross estate and a deduction for
loss is claimed.
c. No deduction is allowed with or without insurance reimbursement.
d. With or without reimbursement, a loss is claimable.
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CHAPTER 15 - ESTATE TAX PAYABLE
Multiple Choice - Theory
1. The taxable estate of the following includes all properties wherever situated, except a
a. Resident citizen
b. Non-resident alien
c. Resident alien
d. Non-resident alien
2. Which of the following is normally deductible against common properties?
a. Medical expenses
b. Standard deductions
c. Funeral expenses
d. Vanishing deductions
3. Which is not considered in the computation of the share of the surviving spouse?
a. Medical expenses
b. Family home
c. Obligations
d. Standard deductions
4. Which is included in the net taxable estate?
a. Family home in excess of P10,000,000
b. Separate property of the surviving spouse
c. Amount paid for medical expenses of the decedent
d. Share of the surviving spouse
5. Which is excluded in the computation of the net taxable estate and in the computation of the net
distributable estate?
a. Share of the surviving spouse
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b. Vanishing deductions
c. Estate tax
d. Family home
6. Which is included in net taxable estate?
a. Excess of family home fair value above P10M
b. Losses of properties occurring before death
c. Losses of properties occurring within 12 months after death
d. Claims against the estate
7. Statement 1: No estate tax is due on an estate with P5,000,000 worth of properties.
Statement 2: An estate with only a family home worth P15,000,000 as its property will not pay estate tax.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
8. Statement 1: An estate with several properties but with a negative taxable estate is not required to file an
estate tax return.
Statement 2: The BIR shall be notified of the death of the decedent if he has properties exceeding P1,000,000.
Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
9. Which of these is required to file an estate tax return?
a. An estate consisting solely of P100,000 shares of stocks.
b. An estate which includes a motor vehicle worth P200,000.
c An estate with a real property worth P1,000,000.
d. All of these
10. Which decedent cannot claim deduction for tax credit? B or D
a. Resident citizen
b. Non-resident alien
c. Resident alien
d. Non-resident alien
11. Which is correct regarding the deduction for the share of the surviving spouse?
a. One-half of the gross estate after ordinary deductions
b. One half of the common properties plus the separate properties of the
c. One-half of the net common properties
d. It is the actual share which the surviving spouse gets of the common surviving spouse properties.
12. Who is directly liable to pay the estate tax?
a. The decedent
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b. The heir's
c. The estate administrator or executor
d. The surviving spouse
13. A CPA Certification is required if the gross estate
a. exceeds P1,000,000
b. exceeds P2,000,000.
c. exceeds P5,000,000.
d. contains registrable properties without regard to the value of the estate.
14. A decedent died with a gross estate of P4,000,000. Which of the following is required?
a. Notice of death
b. Estate tax return
c CPA certification
d. All of these
15. The estate tax return shall be filed within
a. 30 days from the date of death.
b. 45 days from the date of death.
c. 6 months from the date of death.
d. 1 year from the date of death.
16. What is the maximum extension allowable in filing of the estate tax return?
a. 5 years
b. 2 years
c. 2 months
d. 30 days
17. What is the maximum period of extension in paying the estate tax?
a. 5 years
b. 2 years
c. 6 months
d. 30 days
18. The estate tax return of a non-resident alien decedent is filed with
a. An accredited agent bank
b. Revenue district office
c. Collection agent
d. Office of the Commissioner
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CHAPTER 16 - INTRODUCTION TO DONOR'S TAX
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True or False 1
T 1. Donor's tax is a tax on the gratuitous disposition of property by a living
donor.
F 2. Donor's tax is a property tax.
F 3. Donees and benefactor of donees have the primary obligation to pay the donor's ax.
F 4. The amount of donor's tax is paid depends on the value of the property donated.
F 5. Donor's tax is applicable to donation mortis causa made inter-vivos.
T 6. Donor's tax is intended to minimize loopholes in both income tax and estate
tax.
F 7. Donor's tax is also imposed to counter evasion from business tax.
T 8. A donor must be at least 18 years of age to make a valid donation.
F 9. Donation may be implied when the transferor is not claiming the return of his property.
F 10. Donations, void or valid, are subject to tax.
F 11. The donee's acceptance is required for the completion of the donation.
F 12. The delivery of the donor of the property to be donated perfects the contract of donation.
F 13. Acceptance is required even in transfers for inadequate considerations.
F 14. The donation of intangible personal property must be in writing
T 15. The donation of tangible personal property may be made orally if the value exceeds P5,000
T 16. The donation of real property must be in a public instrument.
F 17. The donation of intangible personal property must be made in writing if the value does not exceed
P5,000.
T 18. Donors are classified into residents or citizens and non-resident aliens.
F 19. Non-resident aliens are subject to donor's tax only on donations of tangible properties located in the
Philippines.
F 20. The donation to a non-resident alien is exempt from donor's tax.
True or False 2
1. Donations to any person is exempt if the amount of donation does not
exceed P250,000
2. Donations by non-resident alien donors may be exempt from Philippine
donor's tax for intangible personal properties.
3 Intangible personal properties of non-resident alien donors, regardless of
their location, are subject to the rule on reciprocity exemption.
4. Aliens, residents or non-residents, are subject to donor's tax on tangible
personal properties located in the Philippines.ro
5. Aliens, residents or non-residents, are subject to donor's tax on intangible
personal properties located in the Philippines. En
Resident or citizen donors are taxable on donation of any property
regardless of the location of the property. The googlan
7. Donations to relatives are exempt from donor's tax.
8. Donor's tax is a local tax intended to raise money for the government.
9. The renunciation by the surviving spouse of his share in the hereditary
estate is always taxable to donor's tax.
10. The general renunciation of inheritance is generally exempt from donor's
tax.
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Multiple Choice - Theory: Part 1
1. Which is an incorrect statement?
a. Donor's tax is imposed on donation inter-vivos
b. Estate tax is imposed on donation mortis causa
c. Income tax is imposed on onerous transactions
d. None of these
2. Donor's tax is not intended to
a. raise money for the government.
b. recoup government loss on future tax revenue.
c. control tax evasion of income tax.
d. provide a system of business regulation.
3. Who is the one directly liable to the payment of donor's tax?
a. The donor
b. The donee
c. The person in possession of the property upon discovery of the donation
d. Any of these
4. Which of these donations is subject to donor's tax?
a. Irrevocable donation
b. Transfer in contemplation of death
c. Transfer under special power of appointment
d. Transfer under general power of appointment
5. Which of the following donation is not subject to donor's tax?
a. Donation intended the donor to see his children enjoy the property while he still lives
b. Donation intended by the donor to reward services rendered by the donee
c. Donation intended by the donor to settle family disputes
d. Donation intended to take effect upon the death of the decedent
6. Which is subject to donor's tax?
a. Merger of the usufruct in the owner of the naked title
b. Delivery of the property by the trustee to the beneficiary
c. Support payment to children
d. Cancellation of indebtedness of a debtor out of gratuity
7. Which is not required in a contract of donation?
a. Legal capacity of the donee
b. Acceptance by the donee
c. Delivery
d. Intention to donate
8. Which is not required in taxation of transfers for less than adequate and full consideration?
a. Intention of the donor
b. Acceptance of the donee
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c. Delivery
d. A and B
9. What is the required form in the donation of real property?
a. Written agreement
b. Public instrument
c. Oral agreement
d. A or B
10. The donation of shares of stocks must be in
a. writing
b. writing If the value exceeds P5,000,
c. a public instrument
d. any form
11. Which is a correct statement?
a. Donation of tangible personal property not exceeding P5,000 can be made orally.
b. Donation of intangible personal property exceeding P5,000 may be made in writing
c. The donation of tangible personal property worth P5,000 or more must be in writing
d. The donation of real property must be in writing
12. Which donor is subject to tax on global donation?
a. Mexican donor, residing in Africa
b. American donor, residing in America
c. Japanese donor, residing in the Philippines
d. Chinese donor, residing in Japan
13. Which is taxable only on Philippine donations?
a. Filipino residing in Jolo, Sulu, Philippinnes
b. A Filipino citizen, residing in Canada
c. An Australian citizen, residing in the Philippines
d. An Italian citizen, residing in the United Arab Emirates
14. Which of the following donated properties of a non-resident alien donor may be exempt from donor's tax?
a. Investment in domestic stocks
b. Condominium unit
c. Cars
d. None of these
Multiple Choice - Theory: Part 2
1. Statement 1: Donations to residents or citizens are subject to donor's tax
Statement 2: Donations to non-resident aliens are exempt from donor's tax.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
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d. Neither statement
2. Statement 1: Donations of non-resident aliens to resident citizens are exempt.
Statement 2: Donations of non-resident aliens to non-resident aliens are
exempt
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
3. In donor's taxation, which is not considered in determining taxability of donations?
a. Tax classification of the donor
b. Location of the property
c. Relationship of the donee to the donor
d. A and B
4. The donation of a non-resident alien donor is exempt from donor's tax if the property is
a. located abroad.
b. a real property located abroad.
c. an intangible property located in the Philippines.
d. located in the Philippines at the date of donation.
5. Which of the following donation to is not exempt from donor's tax?
a. Donation to the International Rice Research Institute
b. Donation to a government-owned and controlled corporation
c. Donation to the Integrated Bar of the Philippines
d. Donation to the Philippine Inventors' Commission
6. Which of the following donation is not exempt?
a. Philippine Institute of Certified Public Accountant
b. Intramuros Administration
c Development Academy of the Philippines robots
d. Ramon Magsaysay Award Foundation
7. Which is not excluded in net gift?
a. Donations to politicians or political parties
b. Donations between spouses
c. Donations with reserved powers
d. Foreign donations of resident aliens
8. The donation by a corporate donor is
a. Always subject to donor's tax regardless of amount.
b. Presumed made to a stranger hence always taxable.
c. Presumed always made to a relative; hence exempt.
d. Subject to the same tax rules on donation of individuals.
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9. Statement 1: Any person, natural or juridical, resident or non-resident who transfers or causes to transfer
property by gift shall file an estate tax return.
Statement 2. A donation is taxable, whether made in trust or otherwise, whether the gift is direct or indirect,
and whether the property is real or personal
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
10. Which of these is taxable in the Philippines?
a. Donations made abroad
b. Donations made in the Philippines
c. Donations of property situated in the Philippines
d. All of these
11. Donation of foreign properties is exempt from tax if the donor is a
a. resident citizen.
b. resident alien
c. non-resident citizen.
d. non-resident alien.
12. Which is subject to a reciprocity exemption on donor's tax?
a. Donation of intangible personal property situated in the Philippines by a non-resident citizen.
b. Donation of intangible personal property situated in the Philippines by a resident alien.
c. Donation of intangible personal property situated in the Philippines by a non-resident alien.
d. All of these
13. When the reciprocity rule applies, which of these is subject to donor's tax to a non-resident alien donor?
Property
Location
a. Cash
Philippines
b. Land
Japan
c. Car
Philippines
d. Franchise Japan
14. Which is incorrect?
a. Donations of non-resident aliens involving properties located abroad to residents of the Philippines are
exempt from donor's tax.
b. Renunciation of inheritance by an heir to another is not subject to donor's tax.
c. Gifts are reckoned on an annual basis. The donor's tax is determined for the whole gift throughout the year.
d. Donation by a non-resident citizen to a non-resident alien is exempt from donor's tax.
15. Which of the following donations may be exempt?
a. Donation of a resident alien of its properties located abroad to a non- resident alien
b. Donation of a non-resident alien of intangible properties located in the Philippines to a non-resident
alien.
c. Donation of a non-resident alien of real properties located in the Philippines to a resident alien.
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d. Donation of intangible properties located in the Philippines by resident aliens.
16. Statement 1: Corporate donors are not entitled to the P250,000 annual gift exemption
Statement 2: Encumbrance on the property donated, if assumed by the donor, is deductible for donor's tax
purposes.
a. True, True
b. True, False
c. False, True
d. False, False
17. Statement 1: A donation between husband and wife during the marriage is generally void.
Statement 2: A donation can be made to conceived or unborn children.
a. True, True
b. True, False
c. False, True
d. False, False
18. Which is incorrect?
a. Donor's tax shall not apply until and unless there is a completed gift.
b. Donation is perfected from the moment the donee accepts delivery.
c. Donation is completed at the moment the donor makes delivery.
d. Donor's tax is a tax on the transfer of property at death.
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CHAPTER 17 - DONOR'S TAX
True or False 1
F 1. The donor's tax rate to relatives is a progressive tax.
F 2. The donor's tax rate to strangers increases as the net gift increases.
F 3. Donation between juridical person is not qualified to P250,000 gift exemption
F 4. The gift of real property may be measured at independent appraisal value.
F 5. The gift of listed shares is the closing price of the shares at the date of donation
F 6. Corporate donors are subject to 6% flat donor's tax. Individual donors are subject to a tabular donor's tax.
F 7. Donation to corporate nees is not qualified to P250,000 gift exemption.
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F 8. The gift to non-residents is exempt from donor's tax.
T 9. The gifts made to residents are generally subject to donor's tax.
F 10. Donations to donees abroad are exempt from donor's tax.
T 11. The donation to a future heir is not subject to donor's tax.
T 12. Donation in trust which is irrevocably designated is subject to donor's tax.
T 13. The registration of a property in the name of another person is a taxable donation
F 14. The cancellation of the indebtedness of another for a consideration is a
donation
T 15. Donation in revocable trust is excluded in net gift.
T 16. Husband and wife are considered separate taxpayers.
True or False 2
T 1. The donation of communal or conjugal properties is presumed made one- half by the husband and onehalf by the wife.
T 2. Under the TRAIN law, the donation of a donee has no difference with a donation to several donees.
F 3. Transfers mortis, whether inter vivos or mortis causa, for an insufficient consideration are subject to
donor's tax.
T 4. Gifts of preferred shares are measured at the par value of the shares.
F 5. Net gift must be valued at the point of death of the donor.
T 6. Net gift must be valued at the completion of a conditional donation.
F 7. The value of gift on revocable transfers is determined when the contingent donee accepts the property.
T 8. If either of the spouses did not consent to the donation of a conjugal or
communal property, there is only one donor for purposes of the donor's tax.
F 9. Obligations assumed by the donor are deductible in computing net gift.
F 10. The assumption of the donee's obligation by the donor is a form of donation subject to donor's tax.
T 11. The obligations of the donor on the property donated, if assumed by the donee, is deducted in
computing net gift.
T 12. Donations to the government involving properties are exempt from donor's tax.
F 13. Donations to accredited non-profit institutions for administrative purposes are exempt from donor's tax.
Multiple Choice - Theory: Part 1
1. A gift is valued at the date of
a. death of the donor.
b. notarization of the donation.
c. completion or acceptance of the donation.
d. payment of the donor's tax.
2. A donation of real property is valued at
a. zonal value of the property.
b. value per tax declaration and
c. independent appraisal value
d. the higher of zonal value or value per tax declaration.
3. Which type of donation is exempt?
a. Renunciation of the right to collect an indebtedness of a debtor
b. General renunciation of inheritance by an heir
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c. Transfer for an insufficient consideration
d. Irrevocable donation in trust
4. The donation of preferred stocks are valued at
a. Book value
b. Par value
c. Second-hand value
d. Independent appraisal value
5. For purposes of donor's taxation, the fair value of common stocks is determined as its book value using the
a. Asset appraisal method
b. Independent appraisal method
c Adjusted net asset methods
d. Market price averaging method
6. Which is correct regarding donation of common properties?
a. Both spouses shall file separate donor's tax returns
b. Either spouse shall file a donor's tax return.
c. The spouses shall file a consolidated donor's tax return.
d. Any of these at the discretion of the spouses
7. The donation of common property shall be considered
a. one-half made by the husband and one-half made by the wife.
b. totally made by the spouse signing the deed of donation
c. void unless with the consent of both spouses.
d. donation made by the head of the family.
8. Donations of properties to joint donees are treated as
a. separate donations to be reported under a separate donor's tax return.
b. donations to each donee which will be classified according to the relation of each donee to the donor.
c. a donation to a partnership; hence, these are subject to 30% donor's tax.
d. a single donation which will be reported in a single donor's tax return.
9. Which of the following donations is taxable?
a. Donation to an accredited charitable institution
b. Donation to an association
c. Donation to an educational institution accredited by CHED
d. All of these
10. Which of the following obligations, even if assumed by the donee, is not deductible in computing net gift?
a. Mortgage payable
b. Real property tax
c. Donor's tax
d. All of these
11. Which of these donations to a non-profit institution are exempt from donor's
tax?
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a. Donations restricted by the donor for salaries of staff of the non-profit institutions
b. Donations restricted by the donor for utilities expenses of the non-profit institutions
c. Donations restricted by the donor to be used only for program expenses of the non-profit institution to
carry out its organizational mission
d. All of these
12. Obligations, if assumed by the donor, are
a deductible by residents or citizens.
b. deductible by non-resident aliens.
c. deductible by any donor.
d. never deductible
13. Statement 1: Where property is transferred during a person's lifetime for lessthan adequate and full
consideration in money or money's worth, then the
amount by which the value of the property exceeded the value of the
Statement 2: Encumbrance on the property donated, if assumed by the donor, is deductible for donor's tax
purposes.
Which is true?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
Multiple Choice - Theory: Part 2
1.Statement 1: Donations abroad are exempt from donor's tax to an alien donor.
Statement 2: Donations in the Philippines are exempt to a non-resident donor.
Which is false?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
2. Which is correct regarding the exemption of donation to non-stock and non- profit institutions?
a. It must be made to accredited institutions only.
b. It must be made to bona fide non-profit institutions, whether accredited or not
c. The donor must be a resident or a citizen of the Philippines.
d. The property donated must be situated in the Philippines at the date of donation
3. Donations in the tax return is presented on a cumulative year-to-date basis. This is true to
a. Donations to individuals only
b. Donation to juridical persons only
c. Both donations to individuals and donations to corporations
d. Donations made in the Philippines only
4. Statement 1: Donor's tax rates vary depending on the applicable tax law at
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Statement 2: The law in force at the time of completion or perfection of the the time of gift shall govern the
contract of donation.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
5. Which of these donations to the government are subject to donor's tax?
a. Donations of tanks and ammunitions to the Philippine military
b. Donations of computers to the Department of Education
c. Donations to government-owned and controlled corporations
d. None of these
6. Counted from the date of donation, the donor's tax is paid within
a. 10 days
b. 15 days.
c. 30 days.
d. 60 days.
7. Which is not a required disclosure in the donor's tax return?
a. Current and past gifts during the year
b. Donations made last year
c. Name of the donee
d. Deductions claimed
8. Which is not included in net gift?
a. Transfers to the government
b. Transfers to non-profit and non-stock charitable institutions
c. Portion of the fair value of the property adequately paid for
d. All of these
9. Which of the following is included in net gift?
a. Transfers to the government
b. Transfers to non-profit and non-stock charitable institution
c. Portion of the donation representing dowry
d. Excess of the fair value of the property over the consideration paid by the donee
10. Which of these is not included in net gift?
a. Dowry gift to a step-child
b. Gift to a spouse
c. Gift to relatives
d. Gift to a stranger
11. Under the law, the donor's tax return shall be filed in
a. duplicate.
b. triplicate.
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c. quadruplicate.
d. quintuplicate.
12. Which is not entitled to claim tax credit for foreign donor's tax paid?
a. Resident alien
b. Resident citizen
c. Non-resident citizen
d. Non-resident alien
13. The donor's tax may be paid to the following except
a. An authorized agent bank
b. Revenue district officer
c. Revenue collection officer
d. Barangay treasurer
14. If there is no BIR office in the place of the donor's residence, the donor's tax return shall be filed with the
a. office of the Commissioner
b. revenue district officer,
c. revenue collection officer.
d. authorized municipal treasurer.
15. Where the donor has no residence in the Philippines, the donor's tax return shall be filed with
a. the office of the President.
b. the office of the Commissioner
c. an authorized government depositary bank near the residence of the donee.
d. the Revenue District Office having jurisdiction over the place where the donee is located
16. Which of these donations to the Philippine government is subject to donor's tax if the donor is a resident?
a. Donation of properties located abroad
b. Donation of properties located in the Philippines
c. Both A and B
d. Neither A nor B
17. Which of these donations to the Philippine government is subject to donor's tax if the donor is a nonresident alien?
a. Donation of properties located abroad
b. Donation of properties located in the Philippines
c. Both A and B
d. Neither A nor B
18. Which of the following properties, when donated, are not subject to donor's tax to the wife?
a. Capital properties
b. Paraphernal properties
c. Common properties
d. B and C
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CHAPTER 18 - DOCUMENTARY STAMP TAX
True or False
F 1. Documentary stamp tax is a form of business tax.
F 2. Documentary stamp tax does not apply when the transaction is void or voidable.
T 3. If one party is exempt in a transaction subject to DST, the other non-exempt party is taxable.
F 4. The documentary stamp tax return shall be filed within 5 days from the close of the month the transaction
is executed.
F 5. A single transaction may result in payment of several documentary stamp taxes.
T 6. Documents pertaining to the same taxable transactions are taxable as one
transaction.
F 7. The taxpayer shall file documentary stamp tax return on loose stamp.
F 8. Non-payment of documentary stamp taxes shall invalidate the contract.
F 9. Once DST is unpaid, the document can never be presented as evidence in court.
T 10.The person benefited by the transaction usually pays the DST.
Multiple Choice: Theory
1. Which of the following bills of exchange is not subject to documentary stamptax?
a. Drawn and payable in the Philippines
b. Drawn abroad but payable in the Philippines
c. Drawn in the Philippines but payable abroad
d. Drawn and payable abroad
2. Which of the following instrument is not subject to DST on assignment?
a. Mortgage
b. Lease
c. Charter
d. Traded debt securities
3. Statement 1: Loans not exceeding P250,000 made by individuals during a month for personal purposes is
exempt from documentary stamp tax.
Statement 1: Loans not exceeding P250,000 made by a corporation during a month is subject to documentary
stamp tax.
a. True; True
b. True; False
c. False; True
d. False; False
4. Which is not subject to DST on bills of lading?
a. Shipment of goods bound for abroad
b. Shipment of goods between places in the Philippines
c. Import shipment of goods from abroad
d. None of these
5. Which does not belong to the group for purposes of documentary stamp tax?
a. Mortgages
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
b. Pledges
c. Deed of trusts
d. Loans
6. Statement 1: Stocks issued by foreign corporations in foreign countries are subject to Philippine
documentary stamp tax.
Statement 2: Stocks issued by a domestic corporation in foreign countries are subject to Philippine
documentary stamp tax.
a. True; True
b. True; False
c. False; True
d. False; False
7. Which is not subject to documentary stamp tax?
a. Issue of a domestic stocks
b. Assignment of a domestic stocks
c. Issue of a foreign stocks
d. Assignment of a foreign stocks
8. Which is subject to documentary stamp tax?
a. Savings deposit
b. Time deposit
c. 5-day interbank call loan
d. Traded bonds securities
9. Which is not subject to documentary stamp tax?
a. Bank notes
b. Promissory notes
c. Bonds
d. Mortgage notes
10. Which is subject to documentary stamp tax?
a. Accounts payable for services rendered
b. Credit card receivables
c. Accounts receivables on sales of goods
d. Promissory note for intercompany advances
11. Which of the following leases is not subject to DST?
a. Lease of equipment
b. Lease of vessels
c. Lease of real estate
d. None of these
12. Documentary stamp taxes are
a. Ad valorem taxes
b. Specific taxes
c. Both ad valorem and specific taxes
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d. Either ad valorem or specific taxes
13. Which of the following advances is not subject to documentary stamp tax?
a. Employee advances
b. Advances by a parent company to its subsidiary
c. Advances by the home office to its branch
d. Advances between sister companies
14. Which of the following bills of exchange is not taxable?
a. Those made by a Philippine drawer in favor of a Philippine drawee
b. Those made by a Philippine drawer in favor of a foreign drawee
c. Those made by a foreign drawer in favor of a Philippine drawee
d. Those made by a foreign drawer in favor of a foreign drawee
15. Which do not belong to the group?
a. Checks
b. Drafts
c. Bills of exchange
d. Warehouse receipts
16. Statement 1: Leases not exceeding 1 year in duration is exempt from documentary stamp tax.
Statement 2: Loans not exceeded 1 year in duration is exempt from documentary stamp tax.
a. True; True
b. True; False
c. False; True
d. False; False
17. A check is subject to a documentary stamp tax of
a. P 1
b. P 3
c. P 5
d. P 8
18. Which of the following is an ad valorem documentary stamp tax?
a Stamp tax on proxies
b. Stamp tax on certificates
c. Stamp tax on checks
d. Stamp tax on lease agreements
19. Which documentary stamp tax is a specific tax?
a. Stamp tax on warehouse receipts
b. Stamp tax on loan agreements
c. Stamp tax on issue of stocks
d. Stamp tax on deed of conveyance of properties
20. Which is subject to documentary stamp tax?
a. Contribution of real estate property as capital in a partnership
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b. Transfer of real property from the decedent to an heir
c. Donation of a car to children
d. Pledge of property to answer for any default of obligation
21. A and B, both non-resident citizens, entered into a lease contract involving a land owned by B in the
Philippines. A shall rent the same for his business
Which is correct?
a. The lease agreement is not subject to documentary stamp tax since both
parties are non-resident,
b. The lease is subject to documentary stamp tay, since the property is a real estate
c. The lease agreement is not subject to documentary stamp tax since the lessor is not a resident in the
Philippines.
d. The lease is subject to documentary stamp tax since the object of the contract of lease is a real property
located in the Philippines.
Multiple Choice: Computational
1. Teddy sold a piece of lot with zonal value of P4,000,000 to a buyer for P4,500,000. Compute the
documentary stamp tax.
a. P 270,000
b. P 67,500
c. P 63,750
d. P 60,000
2. In the immediately preceding problem, compute the documentary stamp tax assuming the properties were
sold to the government
a. P270,000
b. P 67,500
c. P 63,750
d. P 60,000
3. Juan donated a piece of land. He was assessed a basic donor's tax of P30,000. Compute the documentary
stamp tax.
a. P 30,000
b. P 12,000
c. P 11,250
d. P 7,500
4. Casablanca Corporation issued shares 1,000,000 P10-par value shares to various shareholders for a total
consideration of P12,000,000. One of the shareholders is Japeth who subscribed for 120,000 shares. Japeth
sold the shares for P140,000. Compute the documentary stamp tax on the issue of stocks.
a. P 120,000
b. P100,000
c. P 90,000
d. P 75,000
5. Compute the documentary stamp tax on Japeth's sale of shares.
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a. P 10,500
b. P9,000
c. P 1,050
d. P 900
6. Pedro contracted Juan to mortgage his land for P3,272,000. His land has a zonal value of P5,000,000 and an
assessor's fair value of P4,500,000.
a. P13,120
b. P 12,000
c. P14,500
d. P15,000
7. Jomar invested P200,000 in the stocks of SMB, a listed corporation. The shares had P100,000 par value.
Jomar disposed the shares in the open market for P240,000
a. P 0
b. P750
c. P 1,000
d. P 1,500
8. Kulas loaned Tomas P1,000,000 evidenced by a 12% interest bearing note due in one-year time. Compute
the documentary stamp tax.
a. P 0
b. P5,000
c. P 7,500
d. P 8,400
9. Assuming that the loan in the preceding problem is due for 146 days, compute the documentary stamp tax
a. P 0
b. P2,000
c. P 3,000
d. P 3,360
10. German Company issued shares of stocks to Mr. Wong, an OFW in Germany. The stocks had P2,000,000
par value in Philippine Pesos. Compute the documentary stamp tax.
a. P 0
b. P7,500
c. P 15,000
d. P 20,000
11. Compute the documentary stamp tax if Mr. Wong is a resident Chinese in the Philippines
aP0
b. P 7,500
c. P15,000
d. P 20,000
12. Compute the documentary stamp tax assuming that bonds instead of stocks were issued to Mr. Wong who
is a resident of the Philippines.
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a. P 0
b. P7,500
c. P 15,000
d. P20,000
13. Assume Mr. Wong sold the stocks to Wealth Corporation in the Philippines for P2,000,000, what is the
documentary stamp tax on the sale?
a. P 0
b. P7,500
c. P 15,000
d. P 20,000
14. Ken loaned Mario P5,000,000 under a written loan agreement. The principal of the loan will mature in 5
years and pays 10% annual interest. Ken required Mario to submit a promissory note to secure the loan. After
a year, Mario incurred delay in interest payment prompting Ken to require Mario to mortgage his residence
with a total fair value of P4,000,000 as security to the loan Compute the documentary stamp tax on the loan
agreement.
a. P 0
b. P 37,500
c. P 50,000
d. P 56,250
15. Compute the documentary stamp tax on the mortgage.
aP0
b. P 30,000
c. P 16,020
d. P 20,020
16. Assuming Mario was not able to pay for the mortgage principal and executed a deed of conveyance of his
residence as full payment for the loan, what is the documentary stamp tax.
a. P 0
b. P 30,000
c. P 60,000
d. P 75,000
17. Jem Enterprises of Davao City ordered a custom-built equipment from Tyler Company in Baguio City for
P500,000. Tyler shipped the goods through Mando Logistics to Kim's Warehousing in Davao. Jem Enterprise
issued a bills of exchange in favor of Jem Enterprise ordering Metro Baguio to pay P550,000 on sight. After
Metro Baguio's payment, Tyler Company ordered
the release of the bills of lading and the warehouse receipt to Jem Enterprise.
Compute the documentary stamp tax on the account receivable.
a. P 0
b. P 3,750
c. P 4,125
d. P 5,500
18. Compute the documentary stamp tax on the bills of lading
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a. P 0
b. P 20
c. P 30
d. P 50
19. Compute the documentary stamp tax on the warehouse receipts.
a. P 0
b. P20
c. P 30
d. P 50
20. Compute the documentary stamp tax on the bills of exchange.
a. P 0
b. P1,000
c. P 1,500
d. P 1,650
21. Compute the documentary stamp tax if Jem Enterprise issued a check for the full payment of Tyler's bill.
a. P 0
b. P3
c. P 20
d. P 30
22. Oppa Enterprise leased a commercial space owned by Pyto Industries at a rental of P400,000 a year. The
lease covers a non-cancellable period of 5
years. Compute the documentary stamp tax.
a. P 0
b. P3,996
c. P 4,002
d. P 5,008
CHAPTER 19 - TAX REMEDIES
True or False 1
F 1. Philippine taxes are assessed by the government subject to the concurrence of the taxpayers.
F 2. An assessment will not push through without the approval of the taxpayer.
T 3. Government assessment is prima facie presumed correct and done in good faith.
F 4. Recovering erroneously paid tax is a government remedy.
T 5. The government remedies are assessment and collections.
F 6. The taxpayers' remedies include payment of tax or delaying government collections until the tax
prescribes.
T 7. An assessment is a notice of tax deficiency or delinquency coupled with a demand for its payment.
F 8. To determine the correct tax, the Commissioner of Internal Revenue can inquire into the balances of bank
accounts of the taxpayers.
T 9. The assessment must be made within 3 years from the filing of the return.
F 10. Unpaid taxes must be collected by the government within five years from the filing of the tax return or
the deadline for such filing whichever is late.
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T 11. In collecting taxes, the government may resort to either summary remedies or judicial action.
T 12. The 3-year prescriptive period on assessment may be extended by fraud done by the taxpayer in filing his
return.
F 13. A taxpayer who did not file a return will not by any chance, be subjected to an assessment
T 14. When a return is filed before the deadline, the prescriptive period of assessment is counted from the
deadline.
F 15. The return may be modified, changed or amended within 10 years from the
date of its filing as long as no letter of authority has yet been issued to the taxpayer.
True or False 2
F 1.The BIR must restrict its examination to those taxpayer groups listed in the BIR Annual Audit Program. Any
assessment issued in violation of this rule is void.
T 2. The pre-audit of tax returns may lead to an additional tax liability of the
taxpayer.
F 3. A revenue officer can issue his own letter of authority to any taxpayer he suspects of fraudulent tax
reporting.
F 4. The business operations of taxpayers who are non-compliant with basic tax rules and regulations may be
permanently suspended and closed.
T 5. The business operations of taxpayers may resume after their compliance with requirements and payment
of the penalties due.
T 6. The "letter of authority" is required to be an electronic copy printout.
T 7. The taxpayer can object to an investigation if he is given a manual LA.
T 8. A tax verification notice is also an authority for an examination.
F 9. A letter notice is an authority for the examination of a particular taxpayer.
T 10. A taxpayer who is issued a letter notice may also be issued a letter of authority
F 11. A letter notice which is issued to a taxpayer who is simultaneously issued a letter of authority is void.
F 12. The examination of the taxpayer shall be generally conducted in the BIR office so that the taxpayer
cannot interfere with the independence of the revenue officer
F 13. Taxpayers may be subject to audit examination more than once in a year.
T 14. A jeopardy assessment may be issued based on the best evidence obtainable" rule.
F 15. A revenue officer who finds reasonable basis for the issuance of an assessment must recommend the
issuance of a warrant of distraint or levy.
True or False 3
F 1. A pre-assessment notice is always required to be given to a taxpayer who will be assessed
T 2. Assessments must always be coupled by a demand for the payment of tax.
T 3. The failure of the taxpayer to respond within 15 days shall result to the issuance of a final assessment that
can no longer be questioned in court.
F 4. A final assessment notice from the BIR can no longer be questioned.
F 5. A waiver of statutes of limitation is required for a request for reconsideration
T 6. The failure to file a protest shall make the assessment final and executory and unappealable to the CTA.
T 7. The assessment will become automatically final and executory on both contested and uncontested issues
if the taxpayer fails to submit to required supporting documents.
T 8. If the BIR finds merits in the taxpayer's responses to the preliminary assessment letter, the impending
assessment may be cancelled.
T 9. Assessment that reached the stage of finality shall be enforced for collection
F 10. An assessment is always necessary for the collection of unpaid taxes.
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F 11. Once the assessment becomes final and executory, the government cannot be enjoined from collecting
the same. No court is authorized to suspend the collection of taxes for whatever reasons.
T 12. Payment under protest may be recovered by the taxpayer.
T 13. The Commissioner of Internal Revenue may not act on the protest within 180 days.
T 14. A judicial appeal to the CTA is called a petition for review on certiorari.
T 15. The failure of the taxpayer to state the facts and the legal basis in support to his protest on a tax issue
shall make the assessment on such contested issue final, executor, and demandable.
True or False 4
T 1. The collection of tax is enforceable once an assessment achieves administrative finality.
F 2. The remedies of distraint or levy may be availed of by the government ever in default of an assessment.
T 3. The government may resort to suspension of business operations to enforce the collection of taxes.
T 4. The final notice before a seizure letter must be issued before the warrant of distraint or levy
T 5. An installment payment and a compromise settlement are subject to the approval of the BIR
T 6. The government may pursue judicial action simultaneously with the distraint and/or levy of a taxpayer's
property.
T 7. The statutes of limitation for the assessment and collection of taxes shall be suspended when the
taxpayer is out of the Philippines.
T 8. The remedies of the taxpayer for a judicial appeal or administrative appeal after the 180-day period are
mutually exclusive.
F 9. The claim for refund for erroneously paid taxes must be filed within 2 years from the filing of the return.
T 10. A claim for refund is not necessary when a return is filed showing an overpayment of tax.
T 11. In a compromise settlement, taxpayers must pay at least 10% of the basic assessed tax in cases of
financial incapacity.
F 12. In a compromise settlement, taxpayers must pay at least half of the basic assessed tax in all other cases
other than financial incapacity.
T 13. A compromise may be beneficial to both the government and the taxpayer.
T 14. Minor criminal violations may be compromised.
T 15. Taxes may be abated by the government when the tax case against the taxpayer has already prescribed.
Multiple Choice - Theory 1
1. The 3-year prescriptive period will be extended by any of the following instances except one. Choose the
exception.
a. Failure of the taxpayer to file a return
b. Waiver by the taxpayer of the statutes of limitation
c. Filing by the taxpayer of a fraudulent return
d. Fortuitous events
2. In the case of late filing of return, the prescriptive period for assessment shall be counted as
a. 3 years from the filing of the return.
b. 3 years from the payment of the tax.
c. 5 years from the deadline of the return.
d. 5 years from the filing of the return.
3. Which is correct regarding the pre-audit of a tax return?
a. Pre-audit is part of a regular audit.
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b. Pre-audit requires the issuance of an LA.
c. Pre-audit is done to check mathematical computations or ascertain correctness and validity of deductions
claimed by the taxpayer
d. Pre-audit is a substitute for a regular audit.
4. The letter of authority will not be issued by
a. Regional director.
b. Assistant commissioner - LTS.
c. Commissioner of internal revenue.
d. Revenue district officer.
5. A subpoena for the production of documents is a
a. Subpoena tecum
b. Subpoena ad testificandum
c. Subpoena duces tecum
d. Subpoena duces testificandum
6. Which is not a taxpayer protest?
a. Request for reconsideration
b. Request for settlement by compromise
c. Request for re-investigation
d. A and B
7. Statement 1: A revised assessment can no longer be disputed.
Statement 2: A cancelled assessment can no longer be enforced.
Which is false?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
8. Which of the following will not be involved during the assessment stage?
a. Preliminary assessment notice
b. Formal letter of demand and final assessment notice
c. Final decision on disputed assessment
d. Preliminary collection letter
9. Which is not a remedy of the government to enforce collection of unpaid taxes?
a. Seizure of taxpayer properties
b. Imposition of administrative penalties
c. Suspension of business operations
d. Abatement of the tax liability of the taxpayer
10. The failure of the taxpayer to make the installment payment of the tax shall result in
a. forfeiture of the tax balance.
b. the entire tax balance becoming due and demandable immediately.
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c. the issuance of a new assessment.
d. the criminal prosecution of the taxpayer.
11. Which is not required in an assessment notice?
a. A declaration of tax deficiency from the taxpayer
b. A demand for the payment of tax deficiency of the taxpayer
c. A statement to the effect that the taxpayer must dispute the findings of the examiner
d. The details of the supporting facts and the legal basis of the assessment
12. Exceptionally, an FLD/FAN may be issued outright except when
a. The taxpayer interposed valid defenses
b. The deficiency tax results from mathematical errors
c. The deficiency tax pertains to unremitted withholding taxes
d. The deficiency tax pertains to excise tax on excisable articles
13. To freeze bank accounts and interests, the government shall issue a
a. Notice of levy
b. Warrant of distraint
c. Warrant of garnishment
d. Preliminary collection letter man
14. The issuance of an FLD/FAN after protest has been made by the taxpayer is
a. a denial of the protest.
b. an illegal procedure which deprives the taxpayer of due process.
c. called jeopardy assessment.
d. intended to expedite the collection of taxes.
15. An assessment made without the benefit of a complete or partial audit
a. Jeopardy assessment
b. illegal assessment
c. Disputed assessment
d. Final assessment
Multiple Choice - Theory 2
1. In general, the conduct of the audit investigation of the taxpayer shall not run over
a. 60 days.
b. 120 days.
c. 180 days.
d. One year.
2. As a rule, taxpayers shall be subject to audit
a. annually.
b. at least once a year.
c. only once a year.
d. for as long as the examiner deems it fit considering the taxpayer's audit
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3. A taxpayer may be subject to multiple audits during the year in the following cases, except one. Choose the
exception.
a. Request for reconsideration by the taxpayer which was granted by the CIR
b. When there is a need to verify capital gains tax liabilities
c. Discovery by the CIR of a fraud or mistakes committed by the taxpayer
d. None of these and
4. Upon receipt of a preliminary assessment notice, the taxpayer must respond within
a. 10 days
b. 15 days
c. 30 days.
d. 60 days.
5. The final decision of the CIR may be administratively disputed by the taxpayer within days from receipt
thereof.
a. 15 days from receipt thereof.
b. 15 days from issuance thereof.
c. 30 days from receipt thereof.
d. 30 days from issuance thereof.
6. A taxpayer who concedes to a BIR assessment must
a. pay the tax.
b. file a motion for re-investigation.
c. pay the tax and file a claim for refund.
d. file a petition for review with the CTA.
7. Documents are required to support a
a. Request for reconsideration
b. Request for re-investigation
c. Both A and B
d. Neither A nor
8. The document must be submitted within
a. 60 days from the receipt of the FLD/FAN.
b. 60 days from the submission of the protest.
c. 30 days from the receipt of the pre-assessment notice.
d. 30 days from the issuance of the FLD/FAN.
9. A taxpayer's motion for reconsideration may be acted upon by the BIR within
a. 180 days from the submission of documents.
b. 180 days from the filling of the protest.
c. 60 days from the filing of the filing of the protest.
d. 60 days from the receipt of the final assessment notice.
10. A taxpayer's motion for re-investigation may be acted upon by the BIR within
a. 180 days from the submission of documents.
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b. 180 days from the filing of the protest.
c. 60 days from the filing of the filing of the protest.
d. 60 days from the receipt of the final assessment notice.
11. The seizure of personal property is
a. Distraint
b. Garnishment
c. Levy
d. Forfeiture
12. The seizure of real property is
a. Distraint
b. Garnishment
c. Levy
d. Forfeiture
13. The seizure of interests such as bank accounts and credits of the taxpayer is called
a. Distraint.
b. Garnishment.
c. Levy
d. Forfeiture.
14. The remedies of distraint levy can be used only when the amount of tax
a. do not exceed P100.
b. do not exceed P1,000.
c. exceeds P100.
d. exceeds P1,000.
15. Used to validate the legal claims of the government to a taxpayer's property
a. Notice of tax lien
b. Notice of seizure
c. Warrant of distraint or levy
d. Final notice
Multiple Choice: Theory 3
1. Seized properties shall not be sold at public auction
a. after the property has been advertised for at least 30 days.
b. if the taxpayer settled the assessment.
c. if the taxpayer did not pay the assessment.
d. if the amount of tax does not exceed P100.
2. Who shall conduct the distraint of property when the amount of tax do not exceed P1,000,000?
a. Revenue director
b. Revenue district officer
c. Commissioner of Internal Revenue
d. Deputy Commissioner
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
3. Properties of the taxpayer shall be seized in sufficient quantity to cover the following costs except one.
Choose the exception.
a. Tax due including penalties and interest
b. Expenses of the distraint
c. Selling expense of the property
d. Service fee of the BIR
4. Constructive distraint is least likely to be made on a property of a taxpayer who is
a intending to remove or conceal his property.
b. retiring from a business subject to tax.
c. intending to leave the Philippines.
d. changing business address with due notice given to the BIR.
5. Statement 1: Levy and distraint may be done simultaneously.
Statement 2: Levy may be done after the distraint of personal property.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
6. Statement 1: The government may forfeit a property in its favor after the failure of three auction sales to
raise the amount of the unpaid tax.
Statement 2: The taxpayer may redeem the property forfeited by the government within two years.
Which statement is false?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
7. Statement 1: RATE cases are filed even in the absence of an assessment that
has attained the state of finality.
Statement 2: Returns are considered fraudulent if items of income are underdeclared or items of deductions
are overdeclared by more than 30%.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
8. Collections must be enforced by the government within
a. 3 years from the date of assessment.
b. 5 years from the date of assessment.
c. 10 years from the date of assessment in case of fraud.
d. 10 years from the date of filing of return in case of fraud.
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9. Which is not required to be included in the reply to the Preliminary Assessment Notice?
a. Explanation for matters questioned by the BIR examiner
b. A request for BIR response within 15 days
c Prayer for full or partial cancellation of the PAN
d. Factual and legal bases supporting the taxpayer's position
10. The prescriptive period of assessment and collection will not be suspended when the
a. CIR is prohibited from making an assessment.
b. BIR rejects the taxpayer's request for a reinvestigation.
c. taxpayer is out of the Philippines.
d. taxpayer's properties cannot be located.
11. Which is incorrect with respect to the recovery of erroneously paid taxes?
a. A claim for refund or credit must first be filed within 2 years from the payment of the tax
b. The unfavorable decision of the CTA must be appealed to the Supreme Court within 15 days
c. The judicial action to recover erroneously paid taxes must be interposed within 30 days from the receipt of
BIR's denial of the claim for refund or credit but must be within the 2-year period.
d. If the BIR did not act on the claim for refund or credit, the taxpayer
must proceed to the CTA within 30 days form the expiration of the 2-year period.
12. Statement 1: Refund checks or warrants which remain unclaimed or unencashed within 5 years will be
forfeited unless revalidated.
Statement 2: Tax credit certificates which remain unused within 5 years will be forfeited unless revalidated.
Which is true?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
13. Which is true regarding a compromise?
a. Taxpayers requesting for a compromise must settle at least 40% of the tax
b. It is entered into when a reasonable doubt as to the validity of the claim against the taxpayer exists.
c. Compromise is a coercive way to enforce collection of tax.
d. All of these
14. Who is not authorized to approve a taxpayer's offer for compromise?
a. The Revenue District Officer who has jurisdiction over the taxpayer
b. The Commissioner of Internal Revenue
c. The National Evaluation Board
d. The Regional Evaluation Board
15. Which can be compromised?
a. Withholding tax cases
b. Criminal tax fraud cases
c. Protested assessment cases
d. Cases of reduced assessment which were agreed by the taxpayer
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16. Which cannot be compromised?
a. Collection cases filed in courts
b. Civil tax cases contested by the taxpayer before the courts
c. Delinquent accounts with approved scheduled installment payments
d. Minor criminal violations
17. The CIR may not abate taxes in which of the following conditions?
a. The tax or any portion of which appears to be excessively assessed.
b. The taxpayer offered for a compromise settlement
c. The taxpayer is dead with no property left.
d. The tax case already prescribed.
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN
BUSINESS AND TRANSFER TAXATION 2019 - BANGGAWAN