Part 1
Answer: D
GENERAL PRINCIPLES
 7. One of the following is a primary purpose of
taxation
 a. Protection of local institute against foreign
competition through imposition of high customs
duties on imported goods;
 b. Reduction of inequalities in wealth and income
by imposing progressively higher tax rates;
 c. To secure revenue for the support of the
government.
 d. Strengthening of anemic enterprises by giving
tax exemptions.
MUTIPLE CHOICE: Choose the correct
answer.
 1. The process by which the sovereign raises
income to defray the expenses of the government is
called[RPCPA]
 a. subsidy
 b. tariff
 c. taxation
 d. tribute
Answer: C
 2. One of the characteristics of internal revenue
tax is that they are [RPCPA]
 a. Criminal in nature
 b. Penal in nature
 c. Political in nature
 d. Generally prospective in application
Answer: D
 3. In case of conflict between tax laws and
generally accepted accounting principles
(GAAP)[RPCPA]
 a. Both tax laws and GAAP shall be enforced.
 b. GAAP shall prevail over tax laws.
 c. Tax laws shall prevail over GAAP.
 d. The issue shall be resolved by the court.
Answer: C
 4. Which of the following has no power of
taxation? [RPCPA}
 a. Provinces
 b. Cities
 c. Barangays
 d. Barrios
Answer: D
 5. “Schedular system of income taxation” means
[RPCPA]
 a. All types of income are added together to
arrive at gross income.
 b. Separate graduated rates are imposed on
different types of income.
 c. Capital gains are excluded in determining gross
income.
 d. Compensation income and
business/professional income are added together in
arriving at gross income.
Answer: B
 6. Which of the following statements is true?
 a. Opinions of legal luminaries are sources of tax
laws.
 b. The Constitution grants exemption from all
kinds of taxes to religious and charitable
organizations.
 c. Because the power to tax is unlimited,
comprehensive, plenary and supreme, the power to
tax can reach over into any jurisdiction to seize
upon person or property.
 d. The “benefit-protection theory “is the source of
the “doctrine of symbiotic relationship.”
Answer: C
 8. Which of the following is not a secondary
purpose of taxation?
 a. To serve as key instrument of social control.
 b. To effect a more equitable distribution of
wealth among people.
 c. To achieve social and economic stability.
 d. To raise revenue to defray the necessary
expenses of the government.
Answer: D
 9. Which is the best answer? A tax reform at any
given time underscores that fact that [RPCPA]
 a. Taxation is an inherent power of the state.
 b. Taxation is essentially a legislative power.
 c. Taxation is a power that is very broad.
 d. The state can and should adopt progressive
taxation.
Answer: C
 10. The legislative body can impose a tax at any
amount underscores the legal truism that taxation is
[RPCPA]
 a. An inherent power of the tax.
 b. A very broad power of the state.
 c. Essentially a legislative power.
 d. For public purposes.
Answer: B
 11. All of the following, except one, are basic
principles of the sound tax system
 a. Fiscal adequacy
 b. Theoretical justice
 c. Administrative feasibility
 d. Inherent in sovereignty
Answer: D
 12. Under this basic principle of sound tax
system, the government should not in incur a deficit
[RPCPA]
 a. Theoretical justice
 b. Administrative feasibility
 c. Fiscal adequacy
 d. None of the above
Answer: C
 13. The following, except one, one are basic
principles of a sound tax system.
 a. It should be capable of being effectively
enforced.
 b. It must be progressive.
 c. Sources of revenue must be sufficient to meet
government expenditures and other public needs.
 d. It should be exercised to promote public
welfare.
Answer: D
 14. Which of the following is not one of the
canons of a sound tax system?
 a. Quantifiability
 b. Equality
 c. Certainty
 d. Convenience
Answer: A
 15. The requirement of equality or theoretical
justice is complied with if the tax is
 a. Progressive
 b. Regressive
 c. Ad valorem
 d. Specific
Answer: A
 16. The power of taxation can only be exercised
by the lawmaking body
 a. Subject to constitutional and inherent
limitations
 b. Equality or theoretical justice
 c. Legislative in character
 d. Inherent in sovereignty
Answer: C
 17. The President of the Philippines and the
Prime Minister of Japan entered into an executive
agreement in respect of loan facility to the
Philippines from Japan whereby it was stipulated
that interest on loans granted by private Japanese
financial institutions in the Philippines shall not be
subject to Philippine income taxes. What basic
characteristic of taxation has been violated by this
agreement?
 a. Inherent limitation
 b. Theoretical justice
 c. Legislative in character
 d. Administrative feasibility
Answer: C
 18. Which statement gives the correct answer?
That a feasibility study needs or need to look into
taxes of different political subdivisions of
government which may be alternative sites of the
business because [RPCPA]
 a. Provinces, cities and municipalities must have
uniform taxes between and among themselves.
 b. The local taxes of a political subdivision need
not be uniform with the local taxes of another
political subdivision.
 c. Businesses that are subject to national taxes are
exempted from local business taxes.
 d. Local business taxes may be credited against
national business taxes.
Answer: B
 19. The power of taxation is inherent in
sovereignty being essential to the existence of every
government. Hence, even if not mentioned in the
Constitution, the state can still exercise the power. It
is essentially a legislative function. Even in the
absence of any constitutional provisions, taxation
power falls to Congress as part of the general power
of lawmaking. [RPCPA]
 a. False, False
 b. False, True
 c. True, True
 d. True, False
Answer: C
 20. Those restrictions on the exercise of the
power of taxation that one found in the constitution
or implied from its provisions?
 a. Theoretical justice
 b. Legislative in character
 c. Inherent limitations
 d. Constitutional limitations
Answer: D
 21. Which of the following statements is not
correct? [RPCPA]
 a. Taxes may be imposed to raise revenue or to
provide disincentives to certain activities within
state.
 b. The state can have the power of taxation even
if the constitution does not expressly give it the
power to tax.
 c. For the exercise of the power of taxation, the
state can tax anything at any time.
 d. The power of taxation in the Philippines
Constitution are grants of power and no limitations
on taxing power.
Answer: D
 22. One of the following is not inherent
limitations on the exercise of the power of taxation
–
 a. International comity
 b. Double taxation
 c. Non-delegation of the legislative power to tax
 d. Territoriality
Answer: B
 23. The City Council passed an ordinance
imposing an occupation tax on air conditioning
technician. Code is the only person with such
occupation in the city. He challenged the validity of
the ordinance as being discriminatory since he is the
only one adversely affected.
 a. The contention of code is tenable
 b. The ordinance is unconstitutional because
Conde is denied of his right to equal protection of
the law
 c. The contention of Conde is not justified
because the rule on c. uniformity is not violated is
not violated considering that the ordinance would
also be imposed on all air conditioning technician
who may come within the jurisdiction of the city
 d. The issue on validity or invalidity of the
ordinance should be set aside
Answer: C
 24. Treating the persons who are similarity
situated in the same manner-




a. Uniformity of taxation;
b. Equality of taxation
c. Due process of law
d. Non-delegation of legislative power
Answer: B
 25. All subject or object that are situated are
treated alike as to the burden that may be the
benefits that may result
 a. equitable
 c. uniformity
 b. Proportional
 d. progressive
Answer: C
 26. A tax law is not violative of the due process
when it is
 a. Arbitrary
 c. excessive
 b. Discriminatory
 d. proportionate
Answer: D
 27. Which of the following is violative of the
uniformity rule in taxation?
 a. Different tax rates on boarding stables for
racehorses and boarding houses that are not for
racing;
 b. Wholesale dealers in oil are subject to
occupation tax while wholesale dealers in other
articles such as sugar, bacon , coal, iron and other
things are not so subject;
 c. A road users’ tax imposed on all motor
vehicles registered and operating in the City of
Manila but does not subject vehicles not registered
therein but also operating temporarily in said city;
 d. A tax of P2 per square meter or fraction thereof
is imposed on every billboard or sign anywhere in
the country.
Answer: C
 28. The Lung Center of the Philippines’, a
charitable institution, is erected in the middle of a
twelve hectare lot:
 I. A big space at its ground floor is being leased
to private parties, for canteen and small store
spaces, and to medical or professional practitioners
who use the same as their private clinics for their
patient whom they charge for their professional
services.
 II. The rest of the portions of the building are
used for its patient, whether paying or non-paying.
 III. Almost one of the entire area of the lot on the
left side of the building is vacant and idle.
 IV. A big portion on the right side is being leased
for commercial purposes to a private enterprise
known as Elliptical Orchids & Garden Center.
Which portion is subject to real property tax?




a. I only
b. I and II
c. III and IV
d. I, II and Iv
Answer: D
 29. Statement 1: The constitutional exemption on
income taxes, property taxes and customs duties is
allowed on non-stock, non-profit educational
institutions only.
Statement 2: A building being leased by its owner to
a private educational institution for use as
classrooms is exempt from property tax.
Statement 3: Income of a non-stock, non-profit
educational institutions run by the Archdiocese is
exempt from tax provided that the incomes are
actually, directly and exclusively used educational
purposes.
Which of the above statements are correct?




a. Statement 1 only
b. Statement 1 & 2
c. Statement 2 only
d. All of them
Answer: D
 30. Which of the following statements is not
correct? [RPCPA]
 a. An inherent limitation of taxation may be
disregarded by the application of a constitutional
limitation.
 b. The property of an educational institution
operated by a religious order to exempt from
property tax, but its income is subject to income tax.
 c. The prohibition of delegation by the state of the
power of taxation will still allow the Bureau of
Internal Revenue to modify the rules on time for
filling of returns and payment of taxes.
 d. The power of taxation is shared by the
legislative and executive departments of
government.
Answer: B
 31. Saint Anthony College (SAC) is non-stock,
non-profit educational institutions. It owns a 5
hectare lot one-half of which being used as its
school campus while the other half is vacant. To
cope with the increasing operating costs and to
upgrade its facilities. SAC plans to do the following
effective January 1, 2006: (1) rent out to a
marketing firm the vacant portion of the lot; (2)
increase tuition fees by 10% in accordance with
government regulations; and (3) import 20 sets of
computers for use in its computer courses. Which of
the following questions is answerable by “Yes.”?
 a. Is SAC subject to real estate tax on the one-half
portion to be rented out to a business establishment?
 b. Will be exempt from income tax on its rental to
the marketing firm?
 c. Will the increase in tuition fees be subject to
income tax if it results to a net income from school
operations?
 d. Will it be subject to customs duties on the
importation of the computers?
Answer: A
 32. The Bicol School of Business and Arts. A
proprietary educational institution which is offering
primary, secondary and tertiary education is
registered with and accredited by the Department of
Education (DepEd) and the Commission on Higher
Education (CHED).
Which of the following is exempt from tax? What
king of tax?
 a. The importation of laboratory equipmentsfrom custom duties.
 b. The school building being rented by the school
– from real property tax.
 c. A portion of the school building being leased to
a fastfood chain – from real property tax.
 d. The income from operation – from income tax.
Answer: B
 33. Assuming that the school in the preceding
number is a non-stock non-profit educational
institution. Which of the following is subject to tax?
What kind of tax?
 a. The school building owned by the school –
from real estate tax.
 b. The school building being rented by the school
– from real property tax.
 c. A portion of the school building being leased to
a fastfood chain – from real property tax.
 d. The income from operation – from income tax.
Answer: C
 34. The Municipality of Monte Cristo has a ten
(10) hectare cemetery consisting of four (4)
different cemeteries which are owned by different
entities. Which of the following is subject to real
estate tax?
 a. Cementerio Municipal del Monte Cristo – a
government cemetery owned by the municipality
which was established for the purpose of using it as
a burial ground of the paupers in Monte Cristo.
 b. Monte Cristo Catholic Cemetery – owned by
the Catholic Church payments are remitted to the
Catholic Church and for the improvement of the
cemetery.
 c. Happy Trip Memorial Park – owned by a
corporation where dividends are distributed to the
shareholders at end of the year.
 d. Quita-Quita Memorial Park – owned by an
association consisting one hundred (100) different
families; each family owns several square meters of
lot; not a single portion held for sale to either
member or non-member of the association.
Answer: C
 35. All appropriation, revenue or tariffs bills, bills
authorizing increase of the public debt, bills of local
application, and the private bills shall originate
exclusively in the [RPCPA]
 a. Office of the President
 b. House of the Representatives
 c. Senate
 d. Supreme Court
Answer: B
 36. Which statement is wrong? Tax laws
[RPCPA]
 a. Must originate from the House of
Representative and on which same bill the senate
may purpose amendments.
 b. May originate from the Senate and on which
same bill the House of Representative may purpose
amendments.
 c. May have a House version and Senate version
approved separately.
 d. May have recommended by the President to
Congress.
Answer: B
 37. Congressman Luis R. Villafuerte of the 2nd
district of Camarines Sur and Senator Juan Pone
Enrile sponsored to bill in the House of
Representatives and the Senate, respectively,
increasing the personal exemptions of individuals
taxpayers as well as granting tax exemption to
minimum wage earners. Which of the following is
correct?
 a. The senate bill should be discussed a head of
the house bill.
 b. The senate and the house bills maybe discussed
at the same time in both houses.
 c. The houses bill should be discussed ahead of
the senate bill.
 d. No priority; each bill can be discussed ahead of
the other.
Answer: C
 38. No law granting any tax exemption shall be
passed without the concurrence of [RPCPA] –
 a. Majority of all members of the Congress.
 b. 2/3 vote of all members of the Congress.
 c. ¾ vote of all members of the Congress.
 d. Unanimous vote of all members of the
Congress.
Answer: A
 39. Which of the following statements is incorrect
with respect to the power of the president?
 a. Congress may authorize the President to fix
within specified limits tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties
or imposts within the framework of the national
development program of the government.
 b. The President can veto any particular item in a
revenue or tariff bill, but the veto shall not affect the
items or item to which he does not object.
 c. The power of taxation can be delegated to the
President of the Philippines.
 d. The President of the Philippines is empowered
to grant tax exemption on certain class of taxpayers.
Answer: D
 40. Which of the following statements is
incorrect?
 a. No persons shall be imprisoned for nonpayment of debt or non-payment of taxes.
 b. The passage of laws granting tax exemptions
requires the concurrence by a majority of all the
members of Congress.
 c. The Supreme Court’s jurisdiction over tax
cases cannot be impaired.
 d. The revenues and assets of non-stock, nonprofit educational institutions and donations for
educational purposes are exempted from taxes and
duties.
Answer: A
 41. They restrict the exercise of the power of
taxation although they are not embodied in the
Constitution
 a. Theoretical justice
 b. Legislative in character
 c. Inherent limitations
 d. Constitutional limitations
Answer: C
 42. A tax must be imposed for public purpose.
Which of the following is not a public purpose?
[RPCPA]
 a. National defense
 b. Public education
 c. Improvement of sugar industry
 d. None of the above
Answer: D
 43. Which of the following activities is not a
public purpose?
 a. Construction of bridges
 b. Payment of Christmas bonuses of government
officials and employees.
 c. Opening of road on a tract of land owned by a
private individual.
 d. Scholarship to poor but deserving students.
Answer: C
 44. A fundamental rule in taxation is that “the
property of one country may not be taxed by
another country.” This known as [RPCPA}
 a. International law
 b. International comity
 c. Reciprocity
 d. International inhibition
Answer: B
 45. QUESTION 1: Can estate tax the Armed
Forces of the Philippines? QUESTION 2: Are
government-owned and controlled corporations
subject to tax?
 a. Yes, No
 b. Yes, Yes
 c. No, Yes
 d. No, No
Answer: B
 46. Diplomatic officials such as heads of states
and ambassadors are exempt from taxes and duties
because of
 a. International comity
 b. Reciprocity provisions
 c. Principles of territoriality
 d. Exemption in tax code
Answer: A
 47. Deals with the provisions of the law which
determines the person or property to be taxed, the
sum or sums to be raised, the rate thereof, and the
time and manner of levying, receiving and
collecting of taxes
 a. Collection
 b. Payment
 c. Enforced contribution
 d. Levy
Answer: D
 48. Constituted of the provisions of law which
prescribes the manner of enforcing the obligation on
the part of those taxed to pay the demand thus
created
 a. Collection
 b. Proportionate in character
 c. Enforced contribution
 d. Levy
Answer: A
 49. The amount required is dictated by the need
of the government in [RPCPA] –
 a. License fee
 b. Tax
 c. Toll
 d. Tariff
Answer: B
 50. One of the characteristics of a tax is
 a. A tax is a pecuniary burden and the law may
not allow payment in kind.
 b. It is dependent upon the will or contractual
assent, express or implied of the person taxed.
 c. It is levied by the state by virtue of its
sovereignty.
 d. It is collected for public and private purposes.
Answer: C
 51. One of the characteristics of a tax is that
[RPCPA]
 a. It is generally based on contract.
 b. It is generally payable in money.
 c. It is generally assignable.
 d. Optional
Answer: B
 52. Which is not an essential characteristic of
tax? [RPCPA]
 a. Unlimited as to amount
 b. Payable in money
 c. Proportionate in character
 d. Regular in payment
Answer: D
 53. No person shall be imprisoned for nonpayment of {RPCPA}
 a. Property tax
 b. Excise tax
 c. Poll tax
 d. Income tax
Answer: C
 54. An example of a property tax is
 a. Additional community tax an income of real
properties
 b. Real estate tax on real properties
 c. Estate tax on inherited personal as well as real
properties
 d. Donor’s tax on donation of property
Answer: B
 55. Which of the following is not an example of
excise tax?




a. Transfer tax
b. Sales tax
c. Real property tax
d. Income tax
Answer: C
 56. Sharon, a CPA has just obtained her CPA
license. Before she can lawfully pursue her
occupation, she should pay [RPCPA]
 a. Privilege tax (PTR)
 b. Percentage tax
 c. CPA’s Income tax
 d. Value-added tax
 b. Indirect tax
 c. Excise tax
 d. Poll tax
Answer: B





63. A tax on business is [RPCPA]
a. Direct tax
b. Indirect tax
c. Property tax
d. None of the above
Answer: B
 57. A tax that is imposed upon a person who is
directly bound to pay it a. Direct tax
 b. Indirect tax
 c. Excise tax
 d. Poll tax
 64. Fermin is a mining operator. His mining lands
are not covered by any lease contract. The tax
Fermin has to pay based on the actual value of the
gross output or mineral products extracted is
[RPCPA]
 a. Mining tax
 b. Royalties
 c. Rental
 d. Ad valorem tax
Answer: A
Answer: D





 65. Tax that is imposed solely to raise revenue for
government expenditures
 a. Revenue tax
 b. Regulatory tax
 c. Specific tax
 d. Ad valorem tax
Answer: A
58. One is not a direct tax [RPCPA]
a. Immigration tax
b. Transfer tax
c. Income tax
d. Contractor’s tax
Answer: D
 59. The basic community tax of P5.00 of an
individual is a (an)
 a. Property tax
 b. Direct tax
 c. National tax
 d. Ad-valorem tax
Answer: B
 60. Which of the following statements is not
wrong?
 a. Non-payment of additional community tax is
ground for imprisonment.
 b. In case of conflict between a tax law and a
revenue regulation, the latter shall prevail.
 c. A revenue regulation can expand the provisions
of law by imposing a penalty even if the law that it
implements does not impose a penalty.
 d. Revenue bills shall originate exclusively from
the Senate.
Answer: A
 61. Statement 1: The value-added tax is a
property tax.
Statement 2: The estate tax is a direct tax.
[RPCPA]




a. The two statements are correct.
b. The two statements are wrong.
c. Statement 1 is correct, Statement 2 is wrong.
d. Statement 1 is wrong, Statement 2 is correct.
Answer: D
 62. Forms part of the purchase price of the
commodity or service and passed on to customers
 a. Direct tax
Answer: A
 66. Tax levied for particular or specific purpose
irrespective of whether revenue is actually raise or
not
 a. Revenue tax
 b. Regulatory tax
 c. Specific tax
 d. Ad valorem tax
Answer: B
 67. Tax imposed by the national government and
is effective within the entire jurisdiction thereof
 a. National tax
 b. Local tax
 c. Proportional tax
 d. General tax
Answer: A
 68. Taxes imposed by a political subdivisions of
the state and is effective only within the territorial
boundaries thereof
 a. National tax
 b. Local tax
 c. Progressive tax
 d. Regressive tax
Answer: B





69. Which of the following taxes is proportional?
a. Value-added tax
b. Income tax
c. Estate tax
d. Donor’s tax
Answer: A
 70. The following are kinds of taxes as to
graduation. Which one is not? [RPCPA]
 a. Digressive
 b. Uniform
 c. Regressive
 d. Progressive
Answer: B
Answer: C
 77. Mr. No Nuli is exempt from all taxes.
Q1: Is he exempt from customs duties on the
importation of goods?
Q2: Is he exempt from parking fees on the
parking areas owned by the government?
 71. The power of the state of those to whom the
power has been delegated to take private property
for public use upon paying to the owner a just
compensation
 a. Power of eminent domain
 b. Police power
 c. Power of taxation
 d. People power
Q3: Is he exempt from Mayor’s permit fees?
Answer: A
Answer: C
 72. There can be classification of the subject
matter being required to shoulder the burden. Which
is the exception? [RPCPA]
 a. Tax
 b. License fee
 c. Toll
 d. Eminent domain
 78. After having been informed that some
massage parlors are being used in fronts for
prostitution, the Sangguniang Panglungsod of
Manila passed a tax ordinance subjecting massage
parlors within its jurisdiction to such onerous taxes
that leave them no other alternative but to stop
operating. The passage of the ordinance is a valid
exercise of –
 a. Taxation
 b. Eminent domain
 c. Police power
 d. Police power and power of taxation
Answer: D
 73. The power of the state to enact such laws in
relation to persons and property as may promote
public health, public morals, public safety and the
general welfare of the people
 a. Power of eminent domain
 b. Police power
 c. Power of taxation
 d. People power
Answer: B
 74. The following are the similarities of the
inherent power of taxation, eminent domain and
police power except one [RPCPA]
 a. Are necessary attributes of sovereignty
 b. Interferes with private rights and property
 c. Affect all persons or the public.
 d. Are legislative in their implementation.
Answer: C
 75. Which statement refers to police power as
distinguished from taxation? [RPCPA]
 a. It can only be imposed on specific property or
properties.
 b. The amount imposed depends on whether the
activity is useful or not.
 c. It involves the taking of property by the
government.
 d. The amount imposed has no limit.
Answer: B
 76. Police power as distinguished from taxation
 a. Just compensation is received by the owner of
the property.
 b. Maybe exercised by private individuals.
 c. Superior to the non-impairment clause of the
constitution.
 d. Property is taken by the government for public
purpose.
Which of the above questions is/are
answerable by “No”?




a. Q2 only
b. Q1 and Q2
c. Q2 and Q3
d. Q1, Q2 and Q3
Answer: D
 79. Which of the following statements is correct?
 a. Non-payment of tax and debt is aground for
imprisonment.
 b. The power to tax may include the power to
destroy.
 c. Provisions in the Philippine Constitution on
taxation are grants of power.
 d. Lands and buildings being used actually,
directly and exclusively for religious and charitable
purpose by churches and charitable institutions are
exempt from income and property taxes.
Answer: B
 80. The following statements are correct. Which
is the exception? a. The rule of taxation shall be
uniform and equitable.
 b. Taxation may be used to implement the police
power of the state.
 c. Police power is superior to the non-impairment
clause of the constitution.
 d. The salary of the justices of the Supreme Court
are exempt from income tax.
Answer: D
 81. Statement 1: An Executive order passed by
the President of the Philippines directing the
Commission on Higher Education (CHED) to
regulate the operation of review center is a valid
exercise of police power.
Statement 2: Construction of a church building is
exempt from the payment of building permit fees
because the cco9nstitution provides that churches
are exempt from property taxes.
Which of the above statements is true?




a. Statement 1 only
b. Statement 2 only
c. Neither statement
d. Both statement
Answer: C
 82. Statement 1: The Congress can enact tax laws
even in the absence of a constitutional provision
granting said body the power to tax. Statement 2: A
tax may be validly imposed in the exercise of police
power and not the power to tax.
 a. False. False
 b. False, True
 c. True, True
 d. True, False
Answer: C
 83. Which of the following may not raise money
for the government [RPCPA]
 a. Power of taxation
 b. Police power
 c. Power of eminent domain
 d. Privatization of government’s capital assets
Answer: C
 84. In this power of the state , the person who is
parting with his money or property is presumed to
receive a benefit [RPCPA]
 a. Taxation
 b. Police power
 c. Eminent domain
 d. Forfeiture power
Answer: A
 85. Which of the following inherent powers of
the government is inferior to the non-impairment
clause of the constitution?
 a. Taxation
 b. Police power
 c. Eminent domain
 d. None
Answer: A
 86. Tax as distinguished from license fee
[RPCPA]
 a. Non-payment does not necessarily render the
business illegal.
 b. A regulatory measure
 c. Imposed in the exercise of police power.
 d. Limited to cover cost of regulation.
Answer: A
 87. The distinction of a tax from permit or license
fee is that a tax is [RPCPA]
 a. Imposed for regulation.
 b. One which involves exercise or police power.
 c. One in which there is generally no limit on the
amount that may be imposed.
 d. Answer not given.
Answer: C
 88. Which of the following term describes this
statement “that the state has complete discretion on
the amount to be imposed after distinguished
between a useful and non-useful activity?”
[RPCPA]
 a. Tax
 b. License fee
 c. Toll
 d. Customs duty
Answer: B
 89. Which of the following is not a distinction or
similarity of license fee from tax? [RPCPA]
 a. Imposed for regulation
 b. Involves exercise of police power.
 c. Non payment makes the business illegal.
 d. Legal compensation or reward of an officer for
services.
Answer: D
 90. All of the following, except one, are
characteristics of a toll
 a. Demand of proprietorship.
 b. Compensation for the use of another’s
property.
 c. Maybe imposed by private individuals.
 d. Levied for the support of the government.
Answer: D





91. This is a demand of ownership [RPCPA]
a. License fee
b. Tax
c. Toll
d. Franchise
Answer: C
 92. One of the following is not characteristics of a
special assessment
 a. It has special application only to a particular
time and place.
 b. It is levied only on land.
 c. May be levied on business.
 d. Based wholly on benefits.
Answer: C





93. Which statement is wrong? [RPCPA]
a. A tax is a demand of sovereignty.
b. A toll is a demand of ownership.
c. A special assessment is a tax.
d. Customs duty is a tax.
Answer: C
 94. Which of the following is a not characteristic
of debt?
 a. Generally arises from contract.
 b. Payable only in money.
 c. Assignable
 d. Imprisonment is not a sanction for nonpayment.
Answer: B
 95. All funds or income derived by the
government from any other source
 a. Tax
 b. Custom duty
 c. Revenue
 d. Ordinary income
Answer: D
Answer: C
 102. Your client owns a row of apartments. He
complains to you that he is being required to pay
four (4) kinds of taxes in this line of business alone
.From the list given by your client, which of the
following taxes has been wrongly imposed on him?
 a. Real estate tax on the land and building.
 b. Value-added tax on the gross receipts from
rent.
 c. Community tax based on the assessed value of
the apartment house.
 d. Income tax on income from rent.
Answer: C
 96. It comprises all kinds of funds including taxes
[RPCPA]
 a. License tax
 b. Income
 c. Customs duty
 d. Revenue
Answer: D
 97. Which of the following constitute
objectionable double taxation? [RPCPA]
 a. A license fee and a tax imposed on the same
business or occupation for selling the same articles.
 b. A tax imposed both on the occupation of
fishing and on fishpond operations.
 c. Persons engaged in leasing or selling real
property are subject to real estate dealers tax and
their sales are also subject to 10% VAT.
 d. A tax of 1% is imposed for bank reserve
deficiency while a penalty of 1/10 of 1% is also
imposed as a consequence of such reserve
deficiency.
Answer: D
 98. Which of the following is not an element of
direct duplicate taxation which is violative of the
equal protection and uniformity clauses in the
constitution?
 a. Same property is taxed twice;
 b. Same taxing authority;
 c. Same amount;
 d. Same purposes;
Answer: C
 99. Which of the following statements is correct?
 a. Tax laws can never have a retroactive effect.
 b. The government cannot tax its agencies and
instrumentalities.
 c. A taxpayer’s suit can be filed by any taxpayer
in any instance against the government.
 d. In the Philippines, there may be double
taxation.
Answer: D
 100. The following constitute double taxation
except one [RPCPA}
 a. Both taxes imposed in the same amount.
 b. Both taxes are levied for the same purpose.
 c. Both taxes are imposed by the same taxing
authority.
 d. Both taxes are imposed upon the same person.
Answer: A
 101. 1st Statement: Our constitution does not
prohibited double taxation. 2nd Statement: If double
taxation occurs, the taxpayer may seek relief under
the uniformity clause or the equal protection
guarantee(RPCPA)
 a. 1st statement is correct, 2nd statement is
wrong.
 b. 1st statement is wrong,2nd statement is correct
 c. Both Statements are wrong.
 d. Both Statements are correct.
 103. One of the following is a false statement
about double taxation. Which is it?
 a. There is no constitutional prohibition on double
taxation.
 b. Direct duplicate taxation is a valid defense
against a tax measure if it is violative of the equal
protection
 c. Absence of any of the elements of direct
double taxation makes it indirect duplicate taxation.
 d. A 20% final withholding tax on interest
income on bank deposits and a 5% gross receipts
tax on banks is a direct duplicate taxation.
Answer: D
 104 . Statement 1: An ordinance imposing a tax
on the manufacture of softdrinks and another tax on
the sale of the softdrinks constitute double taxation.
Statement 2: A criminal case for tax evasion maybe
filed against a taxpayer even without prior
assessment issued by the Commissioner of Internal
revenue.
Which of the following statement is false?
 a. Statement 1 only
 b. Statement 2 only
 c. Neither statements
 d. Both statements
Answer: D
 105. Transfer of the tax burden by one on whom
the tax is assessed to another.
 a. shifting
 b. Capitalization
 c. Transformation
 d. Tax exemption
Answer: A
 106. Which of the following is not a scheme of
shifting the incidence of tax burden? (RPCPA)
 a. The manufacturer transfers the tax to the
consumer by adding the tax to the selling price of
the goods sold.
 b. The purchasers ask for a discount or refuse to
buy at regular price unless it is reduced by an
amount equal to the tax he will pay.
 c. Changing the terms of the sale like FOB
shipping point in the Philippines to FOB destination
abroad, so that the title passes abroad instead of in
the Philippines.
 d. The manufacturer transfer the sales tax to the
distributor, then in turn to the wholesaler, to the
retailer and finally to the consumer.
Answer: C
 107. The reduction in the selling price of incomeproducing properly by an amount equal to the
capitalized value of future taxes that may be paid by
the purchaser.
 a. Shifting
 b. Capitalization
 c. Transformation
 d. Tax exemption
Answer: B
 108. The method by which the manufacturer or
producer upon whom the tax is imposed pays the
tax and strives to recover such expense through
lower production cost without sacrificing the quality
of his product.
 a. Shifting
 b. Capitalization
 c. Transformation
 d. Tax exemption
Answer: C
 109. The grant of immunity to particular persons
or corporation or to persons or corporation of a
particular class from a tax which persons and
corporations generally within the same taxing
district are obliged to pay.
 a. Tax exemption
 b. Tax evasion
 c. Tax avoidance
 d. Tax amnesty
Answer: A
 110. Statement 1: The grant of a tax amnesty
must be construed against the taxpayer and liberally
in favor of the taxing authority.
Statement 2: A tax exemption may be withdrawn
anytime at the pleasure of the taxing authority.
Which of the above statements is true?
 a. Statement 1 only
 b. Statement 2 only
 c. Neither statement
 d. Both statement
 Answer: C
 111. Statement 1: A BIR Ruling issued by a
Commissioner of Internal Revenue which grants tax
exemption would create a perpetual exemption in
favor of the taxpayer.
Statement 2: A tax exemption may be
withdrawn anytime at the pleasure of the taxing
authority
Which of the above statements is true?
 a. Statement 1 only
 b. Statement 1 and 2
 c. Statement 2 only
 d. Neither of them
 Answer: C
 112. It is also known as tax dodging
 a. Tax exemption
 b. Tax evasion
 c. Tax avoidance
 d. Transformation
Answer: B
 113. It is otherwise known as tax minimization.
 a. Tax exemption
 b. Tax evasion
 c. Tax avoidance
 d. Transformation
Answer: C
 114. Which of the following statements constitute
tax avoidance?
 a. Deliberate failure of a taxpayer to pay the taxes
due to the government.
 b. Connotes fraud through the use of pretenses
and forbidden devices to lessen or defeat taxes.
 c. Punishable by law.
 d. Maybe contrary to the intent of the legislature
but nevertheless do not violate the law.
Answer: D
 115. Which of the following facts pertain/s to tax
avoidance?
 a. After studying his tax problems, Alliante
decided to withdraw his bank deposits and to buy
tax exempt securities.
 b. Who wishes to avoid the payment of taxes
assessable on the transactions made it appear on the
deed of sale that the selling price was only P
200,000 although it was actually P 300,000.
 c. Refraining from engaging in activities subject
to tax.
 d. Clavillians Insurance Corporation sold its
office building to Eva for P 100 million who, in
turn, sold the same property to Royal Match, Inc.
for P200 million .These two transactions were
evidenced by Deeds of Absolute Sale notarized on
the same day by the same notary public.
 a. A only
 b. A and C
 c. A and D
 d. A,C and D
 Answer: B
 116. In case of ambiguity, tax laws shall be
interpreted.
 a. Strictly against the taxpayer
 b. Liberally against the government
 c. Liberally in favor of the taxpayer
 d. Liberally in favor of the government
Answer: C
 117. In cases of deductions and exemptions on
income tax returns, doubts shall be resolved (
RPCPA).
 a. Strictly against the taxpayer.
 b. Strictly against the government.
 c. Liberally in favor of the taxpayer.
 d. Liberally against the government
Answer: A
 118. The following, except one, are exemptions
to the rule that tax exemptions must be strictly
construed against the taxpayer.
 a. Where the statute granting the exemption
provides for liberal interpretation thereof.
 b. If the taxpayer does not fall within the purview
of the exception by clear legislative intent.
 c. In case of special taxes relating to special cases
and affecting only special classes of persons.
 d. If exemptions refer to public property.
Answer: B
 119. A franchise can be amended by (RPCPA).
 a. An amendment of special law, which granted
the franchise.
 b. An amendment of a law of general application.
 c. An amendment of a revenue regulation.
 d. An amendment of tax laws.
Answer: B
 120. Some franchise holders who are paying the
franchise tax are being required by an amendatory
law to pay the value-added tax, while others remain
subject to franchise tax. Which of the following
constitutional provisions makes the law
unconstitutional? (RPCPA)
 a. No law shall be passed impairing the obligation
of contract.
 b. The rule of taxation shall be uniform.
 c. No person shall be deprived of property
without due process of law.
 d. None of the above
Answer: D
 121. S1: The point on which a tax is originally
imposed is impact of taxation. S2: As a rule, taxes
are subject to set-off or compensation.
1st
Statement
a. True
True
b. False
True
c. False
False
d. True Answer: D False
2nd Statement
 122. Which of the following is not considered as
a step in making a revenue regulations effective?
 a. Recommendation by the Commissioner of
Internal Revenue to the Secretary of Finance.
 b. Approval by the Secretary of Finance
 c. Legislations by Congress.
 d. Publication in a newspaper of general
circulation.
Answer: C
 123. Statement 1: In case of conflict between a
revenue regulation and the provisions of the
National Revenue Code, the latter shall prevail.
Statement 2: the revocation of a revenue regulation
cannot be made retroactive even if the reason for its
revocation is that it is erroneous or contrary to law.
 a. Statement 1 is correct: Statement 2 is wrong.
 b. Both Statement are correct
 c. Statement 1 is wrong: Statement 2 is correct
 d. Both statements are wrong.
Answer: A
 124. All of the following, except one, are sources
of tax laws a. Legistations, tax treaties and tax ordinance.
 b. Judicial decisions
 c. Opinions of authors
 d. Administrative rules and regulations.
Answer: C
 125. The least source of our tax laws is a. Statues
 b. Court decisions
 c. Constitutions
 d. BIR rulings
Answer: D
 126. When the refund of a tax supposedly due to
the taxpayer has already been barred by
prescription, and the said taxpayer is assessed with a
tax at present, the two taxes may be set-off with
each other. This doctrine is called.
 a. Set-off doctrine
 b. Doctrine of reciprocity
 c. Tax sparing doctrine
 d. Equitable recoupment
Answer: D
 127. Statement 1: The doctrine of equitable
recoupment is applicable in the Philippines.
Statement 2: Where taxes and the claim of the
taxpayer are fully liquidated, due and
demandable,set-off or legal compensation may take
place by operation of law.
 a. Statement 1 is correct: Statement 2 is wrong.
 b. Both Statement are correct
 c. Statement 1 is wrong : Statement 2 is correct
 d. Both statement are wrong
Answer: C
 128. The place or authority that has the right to
impose and collect taxes  a. Territoriality
 b. International comity
 c. Situs of taxation
 d. Transformation
Answer: C
 129. Domicile or residence of the owners is not
the situs of taxation in
 a. income tax
 b. community tax
 c. estate tax
 d. business tax
Answer: D
 130. Which of the following is not correct with
respect to a respect to a taxpayer’s suit?
 a. It must pertain to illegal disbursement of public
funds.
 b. It pertains to the passage of a seemingly
unconstitutional measure.
 c. The funds sought to be disbursed must have
been raised through taxation.
 d. It must not refer to an enactment of a tax law.
Answer: B
32. Statement I: Unpaid mortgage indebtedness is
deductible from the gross estate provided the said
property subject to the indebtedness is included in the
gross estate, net of the mortgage indebtedness
Statement II: A donation inter-vivos by the decedent to
the Philippine government a few months before his
death is a deduction from the gross estate D
a. True, true
c. False, true
b. True, false
d. False, false
33. Statement I: A died giving B power to appoint a
person who will inherit A's house and lot. B however
can only choose among C, D, E and F. B decided to
transfer the property to C, in B's will when he was old
already. The transfer from B to C is subject to estate tax
Statement II: During A's lifetime, he decided to give B as
gift his car subject to the condition that if B does not
become a CPA within three years, A shall revoke the
transfer. In the second year, however, A
died. The car can no longer from part of A's gross estate
D
a. True, true
b. True, false
c. False, true
d. False, false