ON OF BUSINESS TAXES (LECTURE NOTES) PROBLEMS: VAT on Sale of Goods and Properties Instructions: Select the best answer from choices A, 8, C and D by encircling the letter of your choice corresponding to your answer. 1. Wonder Corp. is a value-added tax registered dealer of appliances. The following data are for its calendar month ended January 31, 2018: Sales, total invoice value 6,720,000 Purchases, net of input taxes 5,500,000 Sales return 201,600 Purchases return 300,000 Deferred input taxes (carried over from the fourth quarter) 9,500 The value-added tax payable for Wonder Corp.'s calendar month ended January 31, 2018 is: a, P50,500 b. P60,000 c. P64,900 d.P74,400 2, Orofar,a trader, made the following sales of goods during the month of January 2018, exclusive of VAT: Cashsales 200,000 Open account sales 100,000 Installment sales 100,000 Note: Receipt from Installment sale Is P40,000. Consignment made (net of VAT): December 15,2017 100,000 October 15,2017 100,000 September 15, 2017100,000 Output tax is: a, PB4,000 b.P72,000 c. P60,000 d.P48,000 3. Winery is a manufacturer of wine, During a particular calendar quarter, it had the following transactions (net of VAT): Jan. 4,2018 : Consigned wine to a retailer in Makati City amounting to P200,000. Feb. 14, 2018 Exported P1,000,000 worth of wine to Spain. Feb. 27,2018 President of Winery celebrated his birthday, consuming P50,000 worth of wine given to him by the company asa birthday gift. Mar, 20, 2018 Declared property dividend of one case of wine for every 10 shares, amounting to P150,000.CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) The output tax for the calendar quarter ended March 31, 2018 is: a. P48,000 b. P168,000 cc. P140,000 d.P40,000 Items 4 and 5 are based on the following information: Lovely had the following data on its operations for a month as a VAT-registered taxpayer: Sales, total invoice price P592,480 Purchases of goods, VAT not included: From VAT-registered persons 100,000 From non-VAT registered persons 80,000 Purchases of services, VAT not included: From VAT-registered persons 20,000 From non-VAT registered persons 8,000 From persons subject to percentage taxes 10,000 Salaries of employees 60,000 Other operating expenses 12,000 This is the first month of being liable to the value-added tax. Data on inventories at the begin- ning of the period bought from VAT registered persans follow: Inventory, at cost 44,800 at net realizable value 449,000 Value-added tax paid on beginning inventory 4,800 4, Input taxes are: a. P24,800 b. P20,400 c.P19,200 d. P19,650 5, The value-added tax payable is a. P43,830 b, Pld,280 c. P46,680 d.P59,248 Items 6 through 8 are based on the following information: Allamounts given are total invoice costs/prices: A,non-VAT taxpayer, sells to 6, VAT taxpayer P 67,200 B, VAT taxpayer, sells to C, VAT taxpayer 100,800 C, VAT taxpayer, sells to D, VAT taxpayer, an exporter 168,000 D, VAT taxpayer, exports 300,000 6. The value-added tax of B: a. Payable of P3,600 c. Payable of P 10,800 b. Payable of P10,080 d. Payable of P'12,096CONTINUATION OF BUSINESS TAXES LECTURE NOTES) 7. The value-added tax of C: a. Payable of P7,200 c. Payable of P6,720 b. Payable of P8,064 d. Refundable of P10,900 8. The value-added tax of D: a. Payable of P18,000 c. Refundable of P18,000 b. Payable of P36,000 d. Refundable of P36,000 Items 9 through 12 are based on the following data: Data from the books of accounts of a VAT taxpayer for January 2018: Domestic Exports Total Sales 2,000,000 8,000,000 P10,000,000 Purchases: From VAT taxpayers of: Goods for sale 600,000 2,400,000 3,000,000 Supplies and services 90,000 360,000 450,000 From non-VAT taxpayers of: Goods for sale 100,000 1,300,000 1,600,000 Supplies and services 20,000 80,000 100,000 There was no inventory at the beginning or end of the taxable period. 9. The value-added tax payable on the domestic sales is: a.P119,000 b. P131,000 c. P157,200 d.P142,800 10. The input taxes attributable to zero-rated sales is: a.P276,000 b. P331,200 c. P340,800 d.P330,240 11. If the input taxes attributable to zero-rated sales are claimed as tax credit, the net input value-added tax refundable is: a. P157,000 b. P200,200 cc. PIB7,440 d.P174,000 12. The gross profit from sales for the period i a.P4,850,000 —b.P6,550,000 ~—-c.P5,400,000—d. P4,950,000 o woCONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 13. The following first quarter data pertain to a value-added taxpayer whose purchases were all from value-added taxpayers: Output taxes, January Input taxes, January Output taxes, February Input taxes, February Sales, total invoice price, March Purchases, totalinvoice cost, March The value-added tax payable for March is: a, P190,400 b, P192,000 c, P204,000 Items 14 and 15 are based on the following data: P 132,000 240,000 348,000 144,000 3,360,000 1,456,000 d.P260,400 After recognizing the value-added tax payable for the month of December 2017, the books of accounts of Colors, a merchandising company, showed ¢ debit balance in the input taxes account of P12, 000, Sales and purchases at total invoice prices/costs for January 2018 were: Sales Sales returns and allowances Sales discount Purchases of: Goods for sale, from VAT-registered persons Goods for sale, from non-VAT registered persons Services, from VAT-registered persons Equipment (life of 10 years) from VAT-registered person Importation of goods for sale: Invoice cost, country of origin Freight Insurance Customs duty Excise tax Other expenses prior to removal from customs custody Other expenses after removal from customs custody Operating expenses 14. The value-added tax on the importation is: a. P2170 b. P2,604 P2634 15. The value-added tax payable for January 2018 is: a. P34,716 b. P41,150 €. P4O,716 P896,000 56,000 22,400 224,000 56,000 21,280 112,000 20,000 500 200 600 100 300 250 30,000 d.P6,234 .P46,716CONTINUATION OF BUSINESS TAXES LECTURE NOTES) VAT on Sale of Services and Lease of Properties Tax Base: Cash received (actually and constructively) 2x Advance payments for future projects Xx Materials charged with the services XXX Tax base (gross receipts, excluding VAT) XXX ‘Add VAT 30K Total invoice amount xx Note: Receivables, although earned, are not included, Problem: 1, In the value-added tax on sale of services, the output tax is computed: a. On billings of the month, b, On collections of the month on all billings made. ¢, On the contract price of contracts completed during the taxable period. d, Only and strictly on labor performed under the contract for services. Meaning of sale or exchange of services: COLD LBMC DOC WHILE “F"O + Sale or exchange of services means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, including those performed or rendered by: a. Construction and service contractors; b. Owners, lessors or distributors of cinematographic films; c, Lessors of property, whether personal or real; d. Commercial, customs, stock, immigration, and real estate brokers; e. Persons engaged in milling, processing, manufacturing or repacking goods for others; f. Domestic common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Phil, to anather place in the Phil; g. Transportation contractors on their transport of goods or cargoes including persons who transport goods or cargoes for hire and other domestic common carriers by land relative to their transport of goods or cargoes; h. Dealers in securities; i, Proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts, theatres and movie houses; j. Proprietors, operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers; k, Warehousing services;CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) L. Nonlife insurance companies (except their crop insurance), including surety, fidelity, indemnity and bonding companies and insurance commissions (whether life or nontife); m. Lending investors; n, Sales of electricity by generation, transmission, and/or distribution companies; 0, Services of franchise grantees of electric utilities, telephone and telegraph radio and television broadcasting, toll road operations and all other franchise grantees (like PAGCOR and its licensees and franchisees), except those subject to other percentage taxes; and p. Similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties, Problems: 1. Mighty is a civil engineer who pays the occupation tax under the Local Government Code, He is also a building contractor. The tax that he should payis: a. Excise tax b, Value-added tax c.Contractor’stax d. None of these 2. Bogart is an operator of parking lots. What business tax is due on his income from the business? a. Broker'stax c. Caterer's tax b. Common carrier's tax d. Value-added tax 3. Icarus is a lessor of real property and personal property (cars). The tax that he pays is: a. Excise Tax c. Transaction tax b. Value-added tax d. None of these 4, Which statement is correct? Leasing of property shall be subject to value-added tax on sale of servic a. If the property is in the Philippines and the lease agreement was executed in the Philippines. b. If the property is in the Philippines and the lease agreement was executed outside the Philippines. ¢, Ifthe property is in the Philippines and the lease agreement was executed within or ‘outside the Philippines. d. All of the above. 5, Three (3) of the following are exempt from the value-added tax. Which is the exception? a. Medical, dental, hospital and veterinary services. b. Services rendered by persons subject to percentage tax. ¢. Receipts from leasing of real properties. d. Export sales by persons who are not value-added tax registered. o aCONTINUATION OF BUSINESS TAXES LECTURE NOTES) + Output VAT - Computation of Output VAT Without VAT With VAT Gross receipts YOK XxX Multiplied by 12% 12/2 Output VAT OC XXX ~ Sources of output VAT a. Actualsales b. Zero-rated sales © Zero-rated sales of services: @. Processing, manufacturing or repacking of goods for other persons doing business outside the Philippines which goods are subsequently exported; b. Services other than those mentioned in letter (a); Effectively zero-rated sales of services; d. Services rendered to persons engaged in international shipping or air transport operations; e. Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70% of total annual production; £, Transport of passengers and cargoes by domestic air or sea carriers from the Phil. to a foreign country; and g. Sale of power or fuel generated through renewable sources of energy such as biomass, solar, wind, hydropower, geothermal, ocean energy and other emerging energy sources using technologies such as fuel cells and hydrogen fuels. “Provided that letters (a) and (@) above shall be subject to the 12% VAT (not 0% VAT) upon successful establishment and implementation of an enhanced VAT refund system that grants refunds of creditable input tax within 90 days from filing of a VAT refund application with the Bureau". + Input taxes (see sale of goods or properties) - Claim for input tax on depreciable goods (see sale of goods or properties) - Greditable input tax of VAT-registered person also engaged in VAT-exempt sates (see sale of goods or properties) = Excess output or input taxes (see sale of goods or properties) ~ Input taxes on zero-rated sales of goods, properties or services (see sale of goods or properties)CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) + Withholding of VAT on Government money payments and payments to non-residents (see sale of goods or properties) + Filing of return and payment of VAT (see sale of goods or properties) Problems: 1, During a quarter, Unilab, a VAT-registered taxpayer, made sales of goods amounting to P1,000,000 plus output tax of P120,000 for a total of P1,120,000. It also made sales of services amounting to P200,000 plus output tax of P24,000 for a total of P224,000. During the same quarter, it made domestic purchases of P1,000,000 for goods for sale plus input tax of P120,000. It also hired the services of an independent contractor to repair the building used for both lines of activities for which it paid the amount of P150,000 plus P18,000 input VAT. Its input tax carried over from the previous quarter is P215,000. Unilab received a credit memorandum for purchases returned during the quarter covering purchases made in the previous quarter amounting to P336,000, P36,000 of which is the adjustment to input tax. The value-added tax for the quarter is: a. Payable of PO c. Payable of P43,200 b, Refundable of P180,000 d. Refundable of P173,000 Items 2 through 4 are based on the following data: Sale of services by a VAT-registered contractor: Collections on total invoice price for contracts completed (including P448,000 for materials) P1120,000 Receivables on billings (VAT included) 336,000 Advances on contracts (VAT not included) 200,000 Retentions on contracts made by clients out of contract price already earned 90,000 Purchases of. Materials (VAT included) 224,000 Services of sub-contractor (VAT not included) 448,000 Services of persons subject to percentage taxes 56,000 Salaries of employees 60,000 2. Output taxes are: a. P158,400 b. P144,000 ¢. P132,000 d.P154,800 3, The input taxes are: a. P67,200 ».P72,000 ¢.P77,760 d. P80,640 o aCONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 4, The value-added tax payable is: a. P64,800 b, P86,400 c. PB6.400 d.P66,240 5, Taxpayer Is a VAT-registered person. Data for a month (no VAT component) were Gash received: For building completed with a contract price of P5,000,000 3,800,000 ‘Advances received for building to be constructed 300,000 Cash received on materials returned to VAT-suppliers 100,000 Cash received from owners, for materials used in construction (not included in the figures above) 1,000,000 Cash received from owners for building permit fees 200,000 Cash received from VAT sub-contractors for overpayments 300,000 Cash paid: To VAT-registered sub-contractors 900,000 To VAT-registered suppliers of materials 1,100,000 To non-VAT suppliers of materials 500,000 To the City Government, for building permit fees 200,000 Advances to VAT-registered sub-contractors 150,000 Operations expenses 80,000 The value-added tax payable is: a. P335,000 b, P342,000 c. P332,400 d.P402,000 Items 6 through 8 are based on the following data: The taxpayer is a VAT-registered building contractor. The following data are for January 2016: Cash received on contract price for Building #1 constructed in the Philippines to house offices of foreign investors. Remittance received in dollars ($1: P56) $200,000 Cash received (VAT not included) for Building #2 constructed in the Philippines For labor P1,000,000 For materials 2,000,000 From owners, for building permit fees 30,000 Building #1 Building #2 Payments made (VAT included, when applicable): For services of VAT-registered sub-contractors P_ 224,000 P 448,000 For materials from VAT-registered suppliers 1,120,000 2,240,000 For salaries of employees 22,400 44,800CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 6. The output taxes are: a. P300,000 b. P320,000 c.P360,000 d. P384,000 7. The value-added tax payable on domestic sales Is: a. P91,200 b. P72,000 c.P67,200 d.P37.440 8. Thenet input taxes refundable Is: a. P146,400 b, P144,000 .P74,400 d.P72,000 9. Sturdy is a building contractor. Contract prices received in a month (value-added tax not included) were: From the National Government (public works) 6,000,000 From property owners 4,000,000 Purchases of materials for public works contract 750,000 Purchases of labor from sub-contractors for public works contract 50,000 Purchase of materials for contracts with property owners 600,000 Purchase of labor from sub-contractors for contracts with property owners 400,000 The value-added taxes payable for the month on sale to the Government and sales to property owners are, respectively: a, Government, P300,000; Property owners, P300,000 b. Government, P300,000; Property owners, P360,000 c, Government, P720,000; Property owners, P480,000 d, Government, P624,000; Property owners, P360,000 Items 10 and 11 are based on the following data: An actor received a total amount of P1,120,000 from talent fees for the month ending January 31, 2018. At the same time, he also has four (4) units of taxicabs from which he realized P500,000. His purchases of goods and services (inclusive of VAT) from VAT-registered suppliers are as follows: Purchases of wardrobes used in films 224,000 Purchase of spare parts for taxicabs 112,000 Public relations services for image build-up as an actor 89,600 Insurance premiums for taxicabs 56,000 Rental of office space used for both administering his occupation/calling and taxicabs business 336,000 Total purchases of goods and services 817,600, 10. The value-added tax payable for the month is a. P32,400 b. P44,400 c. P50,400 d. 62,400CONTINUATION OF BUSINESS TAXES LECTURE NOTES) 11. The other percentage tax due for the month is: a. None b, P15,000 cc. PS0,000 d. P60,000 12. AVAT-registered stockbroker (not dealer in securities) who owns shares of stock as Investments had the following selected data on gross receipts, costs and expenses (value-added taxes not included), for January 2018; Commissions received from buyers P 200,000 Commissions received from sellers 300,000 Selling price of shares of stock traded in the LSE: ABC Company 400,000 XYZ Company 600,000 Cost of the shares sold: ABC Company 300,000 XYZ Company 500,000 Cost of supplies used in the brokerage business paid to VAT-taxpayers amounted to P33,600, value-added tax included, Salaries of employees amounted to P67,200. The value-added tax payable and the other percentage tax due for the month are: VAT payable Percentage tax due VAT payable Percentage tax due a. P46,640 P10,000 cc. P56,400 P6000 b, P49,200 P20,000 d. P56,400 5,000 11CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) SUMMARY AND COMPARISON NOTES FOR OTHER PERCENTAGE TAXES 102-2017, RR No. 10- No, 09-2018 3% 2% += 10% = 4%) 2% 6% 3M S/LGPS FF A w I s c 0 BF 3% © 15% = 10% «4% 4% 5% 5% 18% 2% 796 /5% 30% 1% 0% SECTION DESCRIPTIONS TAXBASE | RATE 116 | Tax on persons: S/LGPS | 1) Exempt from VAT except: ~ COOPERATIVES ~ SELF-EMPLOYED INDIVIOUALS AND Quarterly PROFESSIONALS availing of the 8% optionaltax | Gross (Beg. 1/1/2018 - TRAIN LAW); Salesor | 3% 2) Supposedly VAT liable BUT do not exceed the Gross threshold of 3M (1,919,500 before) & not VAT Receipts registered; and 3) Not liable to pay OPT below. 119 | Taxon Franchise F 1) Gas & Water Utilities - Receipts if: 2% a) Franchise related (regardless of amount) yoy b) Not Franchise related: Recnts | 3% - Threshold must be 3M (1,919,500 before) or P ~ (IF 3M (1,919,500 before) = VATABLE) 2) Radio and/or Television Broadcasting Companies Monthly = ‘not more than 10M & the biliylenot VA cegered fox || Be ~ (IF >10M = VATABLE regardless of registration)| Receipts 3) PAGCOR Operations Gross ~ Income from other Related Services (income. gaming : shallbe subjectto | receipts/ normal income tax, value-added tax and other- —_| earnings or applicable taxes, as may be deemed appropriate, _| the agreed (RMC 102-2017) or pre-CONTINUATION OF BUSINESS TAXES CTURE NOTES) -ALicensee deriving income from both gaming | determined| 5% operations and from other related services shall be | minimum subject to 5% franchise tax on its gaming revenues | monthly and normal income tax. value-added taxand other | revenues/ applicable taxes on its nongaming revenues. (RMC income 102-2017) from Gam- ing opera- tions under existing rules = higher 125 Amusement Taxes from Operators of: A 1) Boxing Exhibitions - Exempt if: (ALL must be PRESENT) a) World or Oriental Championship in ANY Ce) , Gross | 10% division is at stake; Receipts b) Promoted bya Filipino citizen or corporation, at least 60% Filipino owned; and ©) One of the contenders is a Filipino citizen. 2) Professional Basketball Games Quarterly Gross | 15% Receipts 3) Cockpits 4) Cabarets, Night or Day clubs Quarterly ~ Including videoke bars, karaoke bars, karaoke Gross 18% televisions, karaoke boxes, and music lounges Receipts. (AMC 18-2010) 5) Jai-alai and Race tracks Quarterly Gross | 30% Receipts For the purpose of amusement tax, the term “grass receipts” embraces ALL the receipts of the proprietor, lessee or operator of the amusement place. Said grass receipts also include income from television, radio, and motion picture rights, ifany. 126 —_| Tax on Winnings of: w 1) Bettor(s) ina horse race ~ Ordinary (generic) Winnings (Off-track betting without designation) NetPrize | 10% Formula of Net Prize: ~ Gross Winnings - Cost of Winning TicketsCONTINUATION OF BUSINESS TAXES (LECTURE NOTES) - Special (specific) Winnings (Off-track betting with designation: Double, Forecast, Quinella & Tri- fecta) Net Prize | 49% Formula of Net Prize: = Gross Winnings - Cost of Winning Tickets 2) Owners of winning race horses Bee | aoe 123& 124 | Taxon Life Insurance Premiums EXCEPT purely Insurance 1 cooperative companies or associations Premiums | 2% ~_(ifnon-life policies = VATABLE) Collected Agents of Foreign Insurance Companies (fire, marine, or miscellaneous insurance agents) fore 1) Owners who directly sell or do business in the . Premiums | 5% eougity OR Collected 2)Through Agents 188 eae re on Stocks Transactions: eee ) Jaxon sale. hater arexchangeofsharesofstnck. | caning or listed and traded through the Local Stock Exchange Price: 006 1) Tax on shares of stock sold or exchange through the LSE in an Initial Public Offering (IPO) of shares of stock of a closely held corporation in accordance with the proportion of shares of stock sold, bartered, or exchanged or disposed of to the total Gross outstanding shares of stock after the listing in the Selling LSE: Price - Upto 25% 4% ~ Over 25% to 33.1/3% 2% = Over 331/3% % 17 Tax on Domestic Common Carriers by land for the c transport of passengers and keepers of garages, EXCEPT owners of bancas and animal-drawn two- wheeled vehicles ~ The following shall be considered per unit minimum quarterly gross receipts (for Sec. 117 only): 14CONTINUATION OF BUSINESS TAXES LECTURE NOTES) Manila f Other Cities Provincial | Actual | 3% Jeepneyforhire | __P2,400 1,200 Monthy Public Utility Bus aeceincor - Exceeding 30 6,000 6,000 | “tainimum but not exceed- Oe ing50 Month- - Exceeding 50 7,200 7,200 a — ; feceipts = Taxis 3,600 2,400 ene Car for hire (with 3,000 3,000 chauffeur) Car for hire (w/o 1,800 1,800 chauffeur) Tax on International Carriers (air & shipping) for the transport of cargoes (R.A. No. 10378) - ‘Gross receipts” shallinclude, but shall not be limited to, the total amount of money or its equivalent representing the contract, freight/cargo fees, mail fees, deposits applied as payments, Monthly advance payments and other service charges Gross | 3% and fees actually or 13 constructively received Receipts during the taxable quarter from cargo and/or mail, originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the passage documents. (RR No, 15-2013) 120 | Taxon Overseas dispatch, message, or conversation ° originating from the Philippines (international outbound calls, from PH to abroad) = Owner or user of the facility is liable oe - Exempted from Sec. 120 are DING : me Receipts | 10% + Diplomatic services " , from such + International organizations Services + News services + Government 1218122 | Taxon Banks and Non-bank Financial Intermediaries BF performing quasi-banking functions: a) Oninterests, commissions and discounts from lending activities as well as incame from financial leasing, based on remaining maturities of the instruments, as follows:CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) «Maturity period of > 5 years + Maturity period of § years or less ~ Note: In case of pre-termination, the maturity period shall be reckoned to end as of the date of pre-termination for purposes of classifying the transaction and applying the correct rate of tax. b) On royalties, rental of property (real or per- sonal), profit from exchange and all other items treated as gross income under Sec. 32 of the tax code. ©) On net trading gains within the taxable year in foreign currency, debt securities, derivatives and the other similar financial instruments. d) On dividends and equity shares in the net in- come of the subsidiaries Monthly Gross Re- ceipts % 59 7% ™% 0% Tax on Other Non-bank Financial intermediaries, including finance companies, money changers, and_ pawnshops: a) On interests, commissions and discounts from lending activities as well as income fram financial leasing, based on remaining maturities of the instruments, as follows «Maturity period of > 5 years + Maturity period of 5 years or less - Note: In case of pre-termination, the maturity period shall be reckoned ta end as of the date of pre-termination for purposes of classifying the transaction and applying the correct rate of tax. b) Interest, commissions, discounts and all other items treated as gross income (royalties, rental of property (real or personal), and profit from exchange) under the Tax Cade, as amended ©) On dividends and equity shares in the net Income of the subsidiaries. - Note: RR-10-2004 Monthly Gross Receipts. % 5% 5% 0% 16CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) Return and payment of other percentage taxes a. General rule: Every person liable to pay percentage taxes shall file a quarterly return of the amount of his gross sales, recelpts or earnings and pay the tax thereon within twenty five (25) days after the end of each taxable quarter. The taxpayer may file a separate return for each branch or place of business, or a consolidated return for all branches or places of business with the authorized agent bank, Revenue District Officer, Collection Agent or duly authorized Treasurer of the City or Municipality where said business or principal place of business is located, as the case maybe. b. Exceptions; + The stock transaction tax of 6/10 of 1% shall be collected by the stock broker and remitted to the Bureau of Internal Revenue within five (5) banking days from the date of collection, + The stock transaction tax of 496, 2% and 1%, in case of primary offering, shall be paid by the corporation within thirty (30) days from the date of listing of the shares of stock in the local stock exchange. In case of secondary offering, the tax shall be collected by the stockbroker and remitted to the Bureau of Internal Revenue within five (5) banking days from the date of collection. + Any person retiring from a business subject to percentage tax shall notify the nearest internal revenue officer, file his return and pay the tax due thereon within twenty five (25) days after closing his business. Problems: 1. Which of the following statements is incorrect? a. Ataxpayer whose annual gross sales and/or receipts exceed P 3,000,000 shall pay VAT even if he is not VAT-registered. b. Ataxpayer whose annual gross sales and/or receipts do not exceed P 3,000,000 but who is VAT-registered shall pay VAT. c, Percentage tax may be imposed together with VAT. d. Percentage tax may be imposed together with excise tax. 2. First statement: Persons whose transactions are exempt from value-added tax under Section 109 (BB) because their gross sales and/or receipts do not exceed P 3,000,000 may volunterily apply for registration under the VAT system Second statement: A VAT-registered person whose annual gross sales and/or receipts for two (2) consecutive years did not exceed P 3,000,000 may apply for cancellation of VAT-registration and revert back to being VAT-exempt under Section 109 (88). a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d, Only the second statement is correct.CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 3. Which of the following is not true? The percentage tax: a. Is basically a tax on sale of services. b. May be Imposed together with the value-added tax. c. Maybe imposed on a sale of goods. d. May be imposed together with the excise tax. 4, Aseller of goods is not VAT-registered. His annual gross sales amount to P 3,000,000, To what business tax is he liable? a.3% tax on VAT-exempt persons ——_c. 3% common carrier's tax b. 12% value-added tax d, Not subject to any percentage tax 5, Marino is an owner of a small variety store, His gross sales in any one year do not exceed 3,000,000. He is not VAT-registered, The following data are taken from the books of the veriety store for the quarter ending March 31, 2018; Merchandise inventory, December 31,2017 P10,000 Gross sales 45,000 Purchases from VAT-registered supplier 38,500 The percentage tax due is: a.P7,000 b,P1,350 ¢. P4,500 . Nene 6. Which of the following franchise grantees is subject to the franchise tax? a. Franchise on radio and/or television broadcasting companies the annual gross receipts in the preceding year exceed P10,000,000. b. Franchise on gas and water utilities. , Franchise on toll road operations. d. PAGCOR and its licensees and franchisees. 1, Franchise grantees of gas and water utilities are subject to a franchise tax of a. 2% b.3% ¢. 4% d.5% 8. Beneco is a holder of franchise to distribute and sell electricity. In a particular quarter, its gross receipts amounted to P2,000,000 from distribution and sale of electricity. it has also receipts from the lease of its auditorium and theater amounting to P600,000. The value- added tax or percentage tax due for the quarter is: a. P40,000 percentage tax ¢. P52,000 percentage tax b. P72,000 value-added tax d. P312,000 value-added tax 18CONTINUATION OF BUSINESS TAXES LECTURE NOTES) Items 9 and 10 are based on the following data: As franchisee, it had the following data on revenues and receivables, taxes not included: Receivables Quarter ended 3/31/2018 operations: Revenues Beginning End Covered by the franchise 2,000,000 P300,000 400,000 Not covered by the franchise 900,000 120,000 9. The business taxes, before any tax credit, if generating and selling electricity: a. P228,000 b. P321,600 c. P100,400 d. P290,400 10. The business taxes, before any tax credit, if generating and selling gas and water utilities: a. P61, 400 , P131,600 c. P100, 400 d. P48,400 11. The operator of one of the following places is not subject to amusement tax: a. Cockpits b, Racetracks c, Bowlingalleys d. KTV karaoke jaints 12. First statement: All boxing exhibitions held in the Philippines shall be subject to amusement tax. Second statement: Admission charges to amusement places are required for the imposition of amusement tax. a. Both statements are correct ¢. Only the first statements correct b. Both statements are incorrect d. Only the second statement is correct 13. Chavit, a Filipino citizen, promoted @ world boxing championship in Manila featuring Pacman, a Filipino champion. Gate receipts amounted to P3, 000, 000 and additional receipts from television coverage was Php2, 000, 000. The amusement tax due is: a. Exempt . P500,000 c. P300,000 d.P600,000 14, Assuming the above is not a world championship but a Philippine national boxing championship, how much is the amusement tax a. Exempt b. P500,000 c. P300,000 d.P600,000 15, Matuti operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for a particular quarter follow: Gross receipts Cockpit operation Ps00,000 Restaurant operation: Sale of food 100,000 Sale of liquor 150,000 The amusement tax due from Matuti is: a. P90,000 b, P135,000 ¢, P225,000 d.P12,500 19CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 16. Using the data in No. 15, except that the restaurant is not owned by Matuti but is owned by another person, not VAT-registered and whose annual gross recelpts never exceeded P 3,000,000 the amusement tax due from Matuti is: a. P90,000 b. P135,000 c.P225,000 d.P112,500 12. Continuing No. 16, the percentage tax due from the restaurant owner Is: a. P45,000 'b. P25,000 c.P30,000 d. P7500 18. Shares of stock held as investment when sold through the local stock exchange shall be subject to: a. 6/10 of 1% based on gross selling price or gross value in money. b. 1/2 of 1% based on gross selling price or gross value in money, cc, 15% final tax on the net capital gains realized during the taxable year. d. 4%; 296; 1% based on gross selling price or gross value in money. 19. Allof the following, except one, are liable to 6/10 of 1% stock transaction tax. Which one isnot? a. Individual taxpayers, whether citizens or aliens b, Estate and trust c, Corporate taxpayers, whether domestic or foreign d, Dealers in securities 20. Shares of stock held as investment by an individual when sold not through the local stock exchange shall be subject to: a. 6/10 of 1% based on gross selling price or gross value in money. b. 12% VAT based on gross income. c, 159% final tax on the net capital gains realized during the taxable year. d. 496; 296; 1% based on gross selling price or gross value in money. 21. Gloria invested P500,000 in the shares of stock of Tabako Corp. The corporation's shares are listed and are traded in the local stock exchange. Gloria sold the shares for P350,000 through the local stock exchange. The percentage tax on the sale i a. P6,000 b, P3500 P2100 d. P1750 22. Using the same data in No. 21 and assuming that Gloria sold the shares to Corona, a direct buyer, the percentage tax on the sale is: a. None b. P2,100 ¢.P10,000 d.P22,500 23. Manalo, a dealer in securities, sold P1,500,000 (tax excluded) worth of shares it held as inventory to Romulo. The shares sold were acquired for P1,000,000 (tax excluded) and were listed and traded in the local stock exchange. The tax due on the sale is: a. None ¢. P45,000 final capital gains tax b, P9,000 percentage tax d. P60,000 value-added taxCONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 24. One of the following is subject to common carrier's tax. a. Owners of bancas. b. Owners of animal-drawn two-wheeled vehicles. ¢. Common carriers by alr or water for transport of passengers, goods or cargoes. d. Common carriers by land for transport of passengers. 25. Which of the following is subject to the 3% common carrier's tax? a. Transportation contractors on their transport of goods or cargoes, b, Common carriers by air and sea relative to their transport of passengers. ¢, Owners of animal-drawn two-wheeled vehicles. d, Domestic carriers by land for the transport of passengers. 26. International carriers doing business in the Philippines is subject to the: a. 3% percentage tax on their gross receipts b, 3% percentage tax on their actual gross receipts or minimum gross receipts whichever is higher. c, 12% value-added tax on their gross receipts. d, Zero percent value-added tax on their gross receipts. 27. Which of the following statements is wrong? Where a domestic common carrier's (transporting goods and cargoes) gross receipts in twelve-month period do not exceed F100, 000. a. He is not required to register his business name with the Bureau of Internal Revenue, b, He is not subject to value-added tax. ¢, Heis not subject to the percentage tax. d. He is not subject to any internal revenue business tax. Items 28 and 29 are based on the following information: Saulog is a common carrier with passenger buses and cargo trucks. For the month of June 2018, it had the following data on revenues and receipts, taxes not included: For transporting passengers, gross revenues and receipts of P330,000. For transporting cargoes, gross revenues of P220,000, of which P200,000 was received For renting out to the MMDA its towing trucks, gross receipts of P50,000, representing 10,000 from gross revenue of the quarter ending March 31 and P40,000 for the month of June. 28. The percentage tax is: a.P17,400 6. P9,900 ¢.P16,500 d.P15,900 29. The output value-added tax is: a. None b, P28,800 ¢. P32,400 d.P30,000CONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 30. Pagoda is a common carrier by sea. During a particular quarter, its receipts consist of the following: Gross receipts, without tax: Transport of passengers P1,000,000 Transport of goods 1,500,000 Transport of cargoes 500,000 ‘The output VAT and OPT due for the quarter are: Output VAT __ OPT due. Output VAT__OPT due a. P240,000 P30,000 c. PO 90,000 b, P360,000 Po d. P360,000 P30,000 Items 31 through 33 are based on the following information: Revenues of the current period 400,000 Collections during the period of: Revenues of prior periods 50,000 Revenues of the current period 300,000 Revenues of the succeeding period (advances) 10,000 31. The business tax if a domestic common carrier by land for the transport of passengers: a. P'12,000 b. P9,000 c. P10,800 d.P22,800 32. The business tax if a night club: @.P54,000 b. P64,800 c.P72,000 d.P136,800 33. The business tax if a race track: a. P120,000 b, P228,000 cc. P90,000 d.P108,000 34, A telephone company, VAT-registered, provides services for domestic and overseas calls. What business taxes are due from the services offered? |. Value-added tax for domestic calls. II. Overseas communications tax for overseas calls. aYestolandil b.Notolandil —_¢. Yes tolonly d. Yes to ll only 35, Banks and non-bank financial intermediaries performing quasi-banking functions are subject to: a. Value-added tax b. Gross receipts tax ¢. Franchise tax d. Amusement taxCONTINUATION OF BUSINESS TAXES (LECTURE NOTES) 36. The lease of property, real or personal, is subject to: |. 2% gross receipts tax if the lessor isa bank. II. 1296 VAT If the lessor is not a bank. a. Yes tol and Il c. Yestolonly b. Notoland Il d. Yes to ll only 37. Which of the following is subject to the 0% gross receipts tax? a. Gross receipts on interest, commissions and discounts from lending activities and income from financial leasing. b. Dividends and equity shares in net income of subsidiaries. . Royalties, rentals of property, real or personal, profits from exchange and all other items treated as gross income in the Tax Code. d. Net trading gains within the taxable year on foreign currency, debt securities, derivatives and other similar financial instruments. 38. First statement: The quarterly percentage tax returns of taxpayers shall be filed, and taxes paid, not later than the 25th day following the end of the quarter. Second statement: With respect to taxpayers enrolled with EFPS, the deadline for e-+filing the quarterly percentage tax return and e-paying the tax thereon shall be 5 days later than that set in the first statement. a. Both statements are correct. c. Only the first statements correct. b. Both statements are incorrect. d. Only the second statement is correct. 39. How is the percentage tax on the secondary offering of shares of stock of closely held corporation collected and paid? a. The stockbroker collects and remits the tax within 5 working days from the date of collection. b. The stockbroker collects and remits the tax within 5 banking days from the date of collection. ¢. The purchaser collects and remits the tax within 5 days after the end of the quarter, fiscal or calendar. d. The local stock exchange collects and remits the tex within S banking days from the date of collection. 40, Which of the following percentage taxes are paid on a quarterly basis? |. Overseas communications tax IL Amusement tax. Ill, Taxes on winnings IV. Stock transactions tax. a. Allof the above b.I,landillonty —c.lllandIVonly —_d.lonty -END- reh/cde N wCRC-ACE The Professional CPA Review School