1.

One of the following statements is incorrect

A. Imported goods which are subject to excise tax are no longer subject to VAT.
B. VAT on importation is paid to the Bureau of Customs before the imported goods are released from custody.
C. Expenses incurred after the goods are released from Customs custody are disregard in computing the VAT
on importation.
D. When a person who enjoys a tax-exemption on his importation subsequently sells in the Philippines such
imported articles to a non-exempt person, the purchaser-non-exempt person shall pay the VAT on such
importation.

2. Which of the following input taxes can be refunded, converted into tax credit certificates or carried over to the
next quarter at the option of the VAT registered taxpayer?
A. Input tax on raw materials
B. Input tax on importation of supplies
C. Input tax on zero-rated sales of goods and services
D. Input tax on purchase of services

3. Value Added Tax is a/an

A. Indirect tax
B. Direct tax
C. Local tax
D. Personal tax

4. Statement 1: A taxpayer whose gross sales or receipts exceeded the amount of P3,000,000 shall pay VAT even
if he is not VAT registered; consequently, he is also entitled to input taxes.

Statement 2: Importer of goods for personal use is not subject to VAT if he is not-VAT registered
A. Both statements are true
B. Both statements are false
C. Only statement 1 is true
D. Only statement 2 is true

5. Which statement is correct?

A. Zero rated sales are exempt from the VAT.
B. A person whose sales or receipts do not exceed P250,000 is exempt from VAT and OPT
C. A person who issues a VAT invoice on a VAT exempt transaction is nevertheless subject to VAT on the said
transaction
D. Entities which are exempt from income tax are also exempt from VAT.

6. Which of the following importation is subject to VAT?

A. Importation of frozen meat
B. Importation of bamboo poles
C. Importation of apples for personal consumption
D. Importation of grapes for sale

7. Which of the following is subject to VAT?

A. Sale of smoked fish
B. Sale of lechon
C. Sale of shells and coral products by a dealer
D. Sale of newspaper

8. One of the following is not a major business internal revenue tax in the Tax Code
A. VAT
B. Excise Tax
C. Income Tax
D. Percentage Tax

9. The allowable transitional input tax is

A. The lower between 2% of the value of beginning inventory or actual VAT paid on such inventory.
B. The higher between 2% of the value of beginning inventory or actual VAT paid on such inventory.
C. The actual VAT paid on the beginning inventory
D. 2% of the value of beginning inventory
10. The VAT due on the sale of taxable goods, property and services by any person whether or not he has taken the
necessary steps to be registered
A. Input tax
B. Output tax
C. Excise tax
D. Sales tax

11. One of the following is not a transaction deemed sale:

A. Transfer, use or consumption not in the ordinary course of business, of goods or properties originally
intended for sale or for use in the course of business
B. Distribution or transfer to shareholders or investors of goods or properties as share in the profits of a VAT-
registered person or to creditors in payment of debt.
C. Retirement from or cessation of business, with respect to inventories of taxable goods on hand as of the
date of such retirement or cessation
D. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned.

12. One of the following is not an activity subject to VAT

A. Sale in retail of goods by a dealer
B. Sale of bamboo poles by a dealer
C. Sublease of real property in the course of business
D. Importation of ordinary fees for poultry chicken

13. Which of the following is not correct?

I. Any person who is not subject to mandatory registration because his actual or expected gross
sales/receipts from non-exempt business for the past 12 months do not exceed P3,000,000, may opt
to register under the VAT system, but shall not be allowed to cancel his VAT registration for the next
three years.
II. Any person who is VAT-registered but enters into transactions which are exempt from VAT may opt that
the VAT apply to his transactions which would have been exempt but shall not be allowed to cancel his
VAT registration for the next three years.
III. Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding
year do not exceed P10,000,000 may opt for VAT registration, but shall not be allowed to cancel his
VAT registration for the next three years.

A. III only
B. II only
C. I only
D. I, II, and III

14. Which of the following sales of real properties held primarily for sale to customers shall be subject to VAT?
A. Sale of parking lot where the selling price is P1,800,000
B. Sale of 2 adjacent residential lots in favor of one buyer from the same seller at P725,000 per lot.
C. Sale of 2 adjacent residential dwellings in favor of one buyer from the same seller at P1,225,000 per
residential dwelling
D. Sale to one buyer from the same seller of 2 condominium units which are combined and utilized as one
residential unit where the aggregate value of the adjacent units exceed P1,500,000

15. ABC Restaurant recorded the following sales during the month (based on menu prices)
To regular customers P560,000
To senior citizen 224,000
To person with disability 112,000

The output VAT is

A. P60,000 B. P72,000 C. P69,600 D. P79,200

Regular C ustomers 560,000

Multiply by: 12/112
Output VAT 60,000

Senior Citizen and PWD - exempt from vat.

16. The taxpayer is a VAT registered real estate dealer:

Selling price (net of VAT) P6,000,000
Zonal Value 6,300,000
 FMV, in the assessment rolls 5,800,000
Payment made by the buyer
March 15, 2017 P750,000
October 15, 2017 750,000
March 15, 2018 2,250,000
October 15, 2018 2,250,000

I. The output tax on March 15, 2017 collection is

A. P90,000 B. P756,000 C. P283,500 D. P94,500

II. The output tax on March 15, 2018 collection is

A. P94,500 B. P270,000 C. P756,000 D. P283,500

I. II.
Zonal Value (highest) 6,300,000 750 Zonal Value (highest) 6,300,000 750
Multiply by: 12% 750 Multiply by: 0 750
756,000 2,250 750 756,000 2,250 2,250
3/15/2017 2,250 03-15-18 2,250
Basis 756,000 6,000 Basis 756,000 6,000
Multiply by: 750/6,000 Multiply by: 2,250/6,000
Output tax 94,500 Output tax 283,500

17. Using the preceding number, but the FMV in the assessment rolls is P6,500,000
I. The output tax on October 15, 2017 collection is
A. P780,000 B. P90,000 C. P97,500 D. P270,000

II. The output tax on October 15, 2018 collection is

A. P780,000 B. P135,000 C. P270,000 D. P292,500

FMV (highest amount) 6,500,000 750 FMV (highest amount) 6,500,000 750
Multiply by: 0 750 Multiply by: 12% 750
780,000 2,250 750 780,000 2,250
3/15/2017 2,250 03-15-18 2,250
Basis 780,000 6,000 Basis 780,000 6,000
Multiply by: 750/6,000 Multiply by: 2,250/6,000
Output tax 97,500 Output tax 292,500

18. A is engaged in two (2) lines of business, one with VAT and the other is NON-VAT. His records show the following
(VAT not included)
Sales
From VAT business P4,000,000
From Non-VAT business 6,000,000
Purchases
For VAT business 2,000,000
For Non-VAT business 3,000,000
Purchases from VAT suppliers used for both VAT and Non-VAT business 20,000
Operating expenses 1,800,000

I. The VAT payable is

A. P600,000 B. P240,000 C. P237,600 D. P239,040

II. The net income is

A. P3,180,000 B. P2,840,000 C. P2,818,560 D. P2,820,000
I. D - 239,040
Sales, VAT Registered 4,000,000 II. C- 2,818,560 Non- VAT Expenses:
Multiply by: 0 Sales 720,000
Output Tax 480,000 Sales 10,000,000 Purchases (360,000)
Purchases (5,020,000) Purchase from vat registered 1,440
Input Tax (240,000) OPEX (1,800,000) Non- VAT Expense 361,440
Supplier (960) Gross 3,180,000
VAT Payable 239,040 Non- VAT Expense (361,440)
Purchases: Net Income 2,818,560 6,000,000 3,000,000 12,000
2,000,000 20,000 4000/10000 12% 12% 12%
12% 40% 0.04 720,000 360,000 1,440
240,000 8,000
12%
960

19. Monthly VAT declaration is filed on or before the

A. 10th day from the end of each month
B. 20th day from the end of each month
C. 25th day from the end of each month
D. 30th day from the end of each month

20. Quarterly VAT return shall be filed on or before the

A. The 10th day from the end of each quarter
B. The 20th day from the end of each quarter
C. The 15th day from the end of each quarter
D. The 25th day from the end of each quarter

21. An individual taxpayer operates a Grocery Store and is not VAT-registered. His annual gross sales amounted to
P2,900,000 for the year although his operations resulted to a net loss for the year 2018. He is subject to
A. 3% OPT
B. VAT
C. MCIT – 2%
D. None, because operation resulted in a loss

If he was qualified and chose to be taxed under the 8% income tax rate, he shall be subject to
A. 3% OPT
B. VAT
C. MCIT – 2%
D. None of the above

22. Which of the following lessors of residential units is/are subject to VAT?
A B C D
No. of apartment units 100 20 16 18
Monthly rent/unit P14,800 P15,000 P15,400 P15,100
A. B and D
B. C and D
C. B, C and D
D. D only

A - Exempt because the monthly rent is not more than 15,000 D

B - Exempt because the monthly rent is not more than 15,000, its just exact 15,000. Monthly Rent 15,100
C - does not exceed 3M to be subject to VAT. No. of units 18
Monthly Rent 15,400 Rent for every unit 271,800
No. of units 16 No. of Months in a yr 12
Rent for every unit 246,400 Amount 3,261,600 *exceed 3M - Subject to VAT.
No. of Months in a yr 12
Amount 2,956,800
23. An imported an article from the US. The invoice value of the imported article was $7,000 ($1-P50). The following
were incurred in relation with the importation.
Insurance P15,000
Freight 10,000
Postage 5,000
Wharfage 7,000
Arrastre charges 8,000
Brokerage fee 25,000
Facilitation fee 3,000

The imported article is subject to P50,000 custom duty and P30,000 excise tax. A spent P5,600 (inclusive of
VAT) for trucking from the customs warehouse to its warehouse in Quezon City. The VAT importation is
A. P60,000 B. P35,000 C. P50,500 D. P60,000

Invoice value 350,000

Insurance 15,000
Freight 10,000
Postage 5,000
Wharfare 7,000
Arrastre charges 8,000
Brokeage Fee 25,000
C ustom duty 50,000
Excise tax 30,000
Total landed cost 500,000
Multiply by: 12%
VAT on Importation 60,000

24. Assuming that the imported article above was sold for P600,000, VAT exclusive. The VAT payable is
A. P11,400 B. P12,000 C. P9,500 D. P9,200

Output tax: Input tax: 5,600 Outpu tax 72,000

Sale of importation 600,000 VAT Importation 60,000 12/112 Less: Input Tax 60,600
Multiply by: 12% 72,000 Trucking from the warehouse 600 60,600 600 VAT Payble 11,400

25. The A Bakers sells cakes and pastry to well known hotels in the Metro Manila area. The hotels are allowed credit
based on the track record of the hotels. The sale by the store in April 2018 was P224,000 including the VAT.
75% of the sales are normally on account. How much is the output tax for the month of April 2018?
A. P22,000 B. P20,000 C. P16,500 D. P24,000

Sales 224,000
Multiply by: 12/112
Output Tax 24,000

26. A, trader, made the following sales of goods during the month of June 2018, exclusive of VAT:
Cash sales P200,000
Open account sales 100,000
Installment sales 100,000
Note: receipt from installment sales 40,000
Consignment made (net of VAT)
June 15, 2018 100,000
May 15, 2018 100,000
April 15, 2018 100,000

Output tax is
A. P50,000 B. P34,000 C. P60,000 D. P72,000
 C ash Sale 200,000
Open account sales 100,000
Installment sales 100,000
C onsignment:
June 15,2018 100,000
Total 500,000
Multiply by: 12%
Output Tax 60,000

27. A, VAT-registered, made the following purchases during the month of January 2018
Goods for sale, inclusive of VAT P224,000
Supplies, exclusive of VAT 20,000
Office air conditioner, total invoice amount 56,000
Home appliances for residence, gross of VAT 17,600
Repair of store, total invoice amount evidenced by ordinary receipt of the contractor 4,400

Creditable input taxes are

A. P26,400 B. P29,400 C P24,000 D. P32,400

Goods for sale 24,000 224,000 20,000 56,000

Supplies 2,400 12/112 12% 12/112
Office air conditioner 6,000 24,000 2,400 6,000
Creditable input tax 32,400

28. A taxpayer registered under the VAT system on January 1, 2018. His records during the month show:
Value of inventory as of December 31, 2017 purchased from VAT registered person P50,000
VAT paid on inventory as of December 31, 2017 6,000
Value of inventory as of December 31, 2017 60,000
Sales, net of VAT 140,000
Sales, gross of VAT 45,000
Purchases, net of VAT 70,000

VAT payable is
A. P11,100 B. P7,221 C. P3,100 D. P3,400

Output Tax
Sales ( 140,000 x 12%) 16,800
Sales (45,000 x 12/112) 4,821 21,621
Less:
Input Tax
Transitional Input Tax (60,000+50,000 x 2%) 2,200
Actual VAT Paid (higher) 6,000 6,000
Purchases (70,000 x 12%) 8,400 14,400
VAT Payable 7,221

29. A VAT taxpayer purchased the following machineries for the second quarter of 2018 (VAT not included):
Life Cost
Asset 1 April 10 4 years P800,000
Asset 2 April 20 5 years 1,000,000
Asset 3 May 14 3 years 600,000
Asset 4 May 20 2 years 400,000
Asset 5 June 10 3 years 600,000
Asset 6 June 15 6 years 1,200,000

I. The input tax for April 2018 is

A. P216,000 B. P4,000 C. P98,000 D. P122,00

II. The input tax for May 2018 is

A. P124,000 B. P120,000 C. P8,000 D. P4,000
 III. The input tax for June 2018 is
A. P4,400 B. P8,400 C. P216,000 D. P146,000

IV. The input tax for the quarter ending June 2018 is
A. P126,400 B. P134,400 C. P136,400 D. P17,400

V. On January 2022, how much unutilized VAT may the taxpayer apply against any output VAT until it is
fully utilized?
A. P65,000 B. P70,500 C. P76,800 D. P89,300

I. IV. Asset 5 - June (200,000 x 12%) 24,000

Asset 1 44,296 800000 x 12% 96,000 /48 months (4 years) 2,000 April 4,000 divide 12 Months (excess month) 12
Asset 2 44,306 1000000 x 12% 120,000 /60 months (5 years) 2,000 May 124,000 2,000
April 2018, Input Tax 4,000 June (8400 - 2000) 6,400
Input Tax 134,400
II.
Asset 3 44,330 600,000 x 12% 72,000 V. June 2018
Asset 4 44,336 400,000 x 12% 48,000 120,000 Asset 4 (1000000 - 200000) 1,000,000 Input tax, ending quarter 134,400
Add: Deferred input tax, April 4,000 Asset 5 600,000 Less: outright Claim 57,600
May 2018, Input Tax 124,000 Total Asset 1,600,000 Unutilized VAT 76,800
Multiply by: 0
III. Input Tax 192,000
Asset 4 44,357 600,000 x 12% 72,000 /36 months 2,000 Less: Input tax ending quarter 134,400
Asset 5 44,362 1,200,000 x 12% 144,000 /60 months 2,400 4,400 Outright Claim 57,600
Add: Deferred input tax, April 4,000
June 2018, Input Tax 8,400

30. The following are the data of City Appliance Marketing Corporation, for the last quarter of 2017.
Sales up to December 15, total invoice value P336,000
Purchases up to December 15, net of input tax 215,000

Additional information:

On December 16, 2017, City Appliance Marketing Corporation retired from its business and the inventory valued
at P190,000 was taken and transferred to New City Appliance Corporation. There is a deferred input tax from
the third quarter of P3,500.

How much is the total VAT due and payable by City Appliance Marketing Corporation in its operations in the last
quarter and its retirement from business?
A. P22,500 B. P3,500 C. P6,350 D. P29,500

Output tax
Sales upto December 15, 2017 (336,000 x 12/112) 36,000
Inventory on Dec. 16, 2017 (190,000 x 12%) 22,800 58,800
Less:
Input Tax
Purchases (215,000 x12%) (215,000 x 12%) 25,800
Deferred Input Tax 3,500 29,300
VAT Payable 29,500

31. Assuming that New City Appliance Corporation has the following data for the first quarter of 2018:
Sales, total invoice value P448,000
 Purchases, total invoice value 224,000

How much is the VAT payable of New City Appliance Corporation for the firs quarter of 2018?
A. P28,000 B. P1,200 C. P30,000 D. P24,000

Output Tax Input Tax Output Tax 48,000

Sales (448,000 x 12/112) 48,000 Purchases (224,000 x 12/112) 24,000 Less: Input Tax 46,800
Inventory, Dec. 16,2017 VAT Payable 1,200
Transitional Input Tax (190,000 x 2%) 3,800
Actual Input tax Paid (higher) 22,800 22,800 46,800

32. A Refining Company manufactures refined sugar. It had the following data during the first quarter of 2018:
Sales of refined sugar, net of VAT P2,000,000
Purchases from farmers of sugar cane used in 500,000
manufacture of refined sugar
Purchases of Packaging materials, gross of VAT 784,000
Purchases of labels, gross of VAT 112,000

The VAT payable is

A. P124,000 B. P112,500 C. P70,000 D. P62,000

Output Tax
Sales of Refined Sugar (2,000,000 x 12%) 240,000
Less:
Input Tax
Presumptive Input Tax (500,000 x 4%) 20,000
On purchase of packaging materials (784,000 x 12/112) 84,000
On Purchases of labels (112,000 x 12/112) 12,000 116,000
VAT Payable 124,000

33. A, is a VAT registered dealer of appliances. The following data are for the last quarter of 2018:
Sales, net of output tax P6,800,000
Purchases, net of input tax 5,500,000
Sales return 200,000
Purchase return 300,000
Deferred input tax 9,500

The VAT payable for the last quarter of 2018 by A is

A. P120,500 B. P70,500 C. P80,000 D. P158,500

Sales, net of output tax 6,800,000 Purchases 5,500,000 Output Tax 792,000
Less: Sales Return 200,000 Less: Purchase Return 300,000 Less: Input Tax 624,000
Net Sales 6,600,000 Net Purchases 5,200,000 Deferred Input Tax 9,500 633,500
Rate of Tax 12% Rate of Tax 12% VAT Payable 158,500
Output Tax 792,000 Input Tax 624,000
34. A VAT registered person is engaged in the sale of VAT taxable goods and at the same time is also engaged in a
non-VAT business, in the same business establishment. During the year, total sales of the VAT business
amounted to P336,000, inclusive of VAT. The sales of the non-VAT business amounted to P200,000 with a
separate percentage tax of P6,000 for a total of P206,000. During the same quarter, repairs on the building
amounted to P50,000 plus VAT of P6,000. Supplies purchased for common use amounted to P10,000 plus
P1,200 VAT. The creditable input tax is
A. P6,000 B. P7,200 C. P1,000 D. P4,320

35. Using the above data, the VAT payable is

A. P24,000 B. P25,000 C. P31,680 D. P26,400
 Output Tax
Sales, Inclusive of VAT (336,000 x 12/112) 36,000 Purchase Supplies for common use (10,000 x 12% x 60%) 720
Sales, Non-VAT 200,000 Repair ( 50,000 x 12% x 60%) 3,600
Percentage Tax 6,000 206,000 Creditable Input Tax 4,320

Output tax 36,000

Ratio of vatable sales to total sales: Less: Creditable Input Tax 4,320
300,000/500,000 60% VAT Payable 31,680

36. M, building contractor, showed to you the following data:

Contract price, net P5,000,000
Cash received for labor (VAT included) 3,000,000
Cash received for materials (VAT included) 360,000
Receivables 2,000,000
Advances on other contracts still unearned (with VAT) 1,120,000
Cash received and held in trust, to be paid to one of his suppliers, Acme Warehouse, gross of 560,000
VAT
Payments to VAT-registered suppliers:
For materials, net of VAT 500,000
For suppliers, net of VAT 100,000
For services of sub-contractors (VAT included) 1,680,000

The VAT payable of M is

A. P228,000 B. P348,000 C. P350,000 D. P360,000

Output Tax
C ash received for labor (3000000 x 12/112) 321,429
C ash received for materials (360000 x 12/112) 38,571
Advances on other contracts (1120000 x 12/112) 120,000 480,000
Less:
Input Tax
Materials (500,000 x 12%) 60,000
Supplies (100,000 x 12%) 12,000
Subcontractors (1680000 x 12/112) 180,000 252,000
VAT Payable 228,000
37. A, a VAT taxpayer billed his customer:
Selling price P500,000
Value Added Tax 70,000
Total P570,000

The output tax is

A. P70,000 B. P60,000 C. P61,071 D. P68,400

Selling price 500,000

VAT 70,000
Total 570,000
Multiply by 12/112
Output Tax 61,071

38. A PEZA registered enterprise is paying the 5% preferential tax in lieu of all other taxes. Can the same enterprise
claim a TCC or refund from any VAT that it pays on its purchases?
A. Yes, because it should not be paying the VAT as it is exempt from all taxes whether direct or indirect.
B. No, since it is VAT exempt, it is not allowed to claim input tax credits
C. Yes, because the issuance of a VAT invoice to the PEZA registered enterprise was erroneous
D. None of the above
39. JL, went out on a date with Ceil, and her uncle, Tito Chris (senior citizen), in Mike’s Bistro for Ceil’s birthday.
They order food which they all shares and the total bill amounted to P6,000, gross of VAT.

How much will Mike’s Bistro bill JL?

A. P1,785.71 B. P357.14 C. P5,428.57 D. P5,543.45

Total Bill 6,000.00

Divide by 3
C ontribution per person 2,000.00
Total Bill 6,000.00
VAT, JL and C eil [(2,000/1.12) x 12%] (214.29)
Senior C itizen Discount, Tito C hris
[(2,000/1.12) x 20%] (357.14)
JL Bill 5,428.57

40. M Corporation made total sales of P200,000 to the government. Purchases of supplies directly attributable to
such sales amounted to P120,000, net of VAT. Unattributed input tax allocated to such sales amounted to
P4,800. The government withheld a 1% EWT on such purchases.

How much will M Corporation received form the government?

A. P210,000 B. P200,000 C. P212,000 D. P222,000

Government Sales 200,000

12% VAT 24,000
1% EWT (2,000)
5% VAT Withheld (10,000)
Amout Received 212,000

41. In number 40, aside from the supplies of P120,000, what can M Corporation deduct in computing its taxable
income?
A. P19,200 B. P14,000 C. P5,200 D. P3,400

Old
Directly Attributable (120,000x12%) 14,400
Not directly attributable 4,800 19,200
Standard input tax (200,000 x 7%) 14,000
5,200

42. In January 2018, J. Reyes started a car repair business. He did not expect his gross receipts to exceed P3 Million
a year, and thus di not register for purposes of the VAT. He also signified in his first quarter ITR his intention to
be taxed under the 8% income tax rate option. However, by mid-June 2018, his receipts had already reached
the amount of P3,000,050.

When should J. Ryes register for VAT, and when will be start to become liable for VAT? Will he still pay OPT
under Section 116 of the Tax Code?
A. He should register in July 2018 which is the month following the month where his gross receipts exceeded
P3,000,000. He will become liable for VAT starting July 2018. He will be liable for OPT for the months
January to June 2018.
B. He should register within 10 days after the end of June or from July 1 to July 10, 2018. He shall be liable
for VAT on August 1, 2018. He will no longer be liable to OPT.
C. He should register within 10 days after the end of December (the last month of the 12 month period) or
from January 1 to 10, 2019. He shall be liable for VAT beginning on the 1st day of the month following his
registration, or February 1, 2019. He will be liable for OPT from January to December 2018.
D. None of the above.
 43. A Company, VAT-registered, is engaged in stockbrokerage and dealership in securities. It provided the following
data for the 2nd quarter of 2018:

Commission received from stockbrokerage:

Commission received (net) P150,000
Commission uncollected but earned 250,000

Stock transactions are (VAT excluded)

Price Cost
A Stock P500,000 P350,000
B Stock 600,000 500,000
C Stock 800,000 650,000
All 3 stocks were traded in the stock exchange.

Supplies bought P88,000, VAT included

A. The percentage tax due is

B. The VAT of A is

P0 / P56,571

Input Tax
Commission received 150,000 Supplies (88,000 x 12/112) 9,429

Stock A (500,000 - 350,000) 150,000

Stock B (600,000 - 500,000) 100,000
Stock C (800,000 - 650,000) 150,000
Total 550,000
Multiply by: 12%
Output Tax 66,000

Output Tax 66,000

Less: Input Tax 9,429
VAT Payable 56,571

44. The Bureau of Internal Revenue may use “Oplan Kandado” against the following taxpayer, except?
A. VAT registered person who fails to issue receipt
B. VAT registered person who fails to file VAT returns
C. VAT registered person who understates its taxable sales by 30%
D. VAT registered person who understates its purchase by 30%

45. A 3rd party, in behalf of a borrower, transfer his VATable land to a bank in settlement of a non-performing loan
of P100,000. The land had a book value of P70,000 and a FMV of P120,000 at the time of the dation in payment.
The 3rd party received from the borrower the amount of P80,000 for the dation. What are the tax consequences
of the dation in payment, if any?
A. The dacion or transfer shall be subject to VAT equivalent to 12% of the highest of P90,000, the zonal value,
or assessor’s value.
B. The 3rd party shall be liable for income tax on his gain of P10,000 (P80,000 – P70,000)
C. The 3rd party is liable for donor’s tax on the transfer for insufficient consideration where the insufficiency in
the consideration amounts to P40,000 (P120,000 – P80,000)
D. All of the above
 OPT, EXCISE TAXES AND DST

1. A is the owner of a small variety store. His gross sales in any one year do not exceed P3,000,000. He is not
VAT-registered. The following data are taken from the books of the variety store for the quarter ending March
31, 2018:
Merchandise inventory, December 31, 2017 P100,000
Gross sales 450,000
Purchase from VAT-registered suppliers 350,000

The percentage tax due is

A. P10,000 B. P13,500 C. P16,500 D. None

2. In the third quarte of 2018, a taxpayer engaged in the sale of services, whose annual gross receipts do not
exceed P3,000,000, had the following data.
Accounts receivable, beginning of the quarter P50,000
Sales during the quarter 100,000
Accounts receivable, end of the quarter 75,000
Purchases of supplies, total invoice amount 11,200

The percentage tax due for the quarter is

A. P2,250 B. P3,000 C. P7,500 D. P6,500

3. A, operates, a ferryboat. During a particular quarter, its receipts consists of the following:
Gross receipts (without VAT)
Transport of passengers P2,000,000
Transport of goods 1,500,000
Transport of cargoes 500,000

The common carrier’s tax payable is

A. P30,000 B. P90,000 C. P100,000 D. None

4. Using the data above, the output VAT is

A. P480,000 B. P90,000 C. P100,000 D. P240,000

5. A person whose business is to keep automobile for hire or keep them stored for use or order
A. Keeper of garages
B. Common carrier
C. Taxicabs operators
D. Tourist bus operator

6. Which of the following statements is incorrect?

A. A taxpayer whose annual gross receipts/sales exceed P3,000,000 shall pay VAT only if he is VAT-registered.
B. A taxpayer whose annual gross receipts/sales do not exceed P3,000,000 but who is VAT-registered shall
pay VAT.
C. Excise tax may be imposed together with VAT.
D. Percentage tax may be imposed together with excise tax

7. One of the following is subject to common carrier’s tax

A. Owners of banca
B. Owners of animal-drawn two wheeled vehicles
C. Common carriers by land for transport of goods or cargoes
D. Common carriers by land for transport of passengers

8. The franchise tax of grantees of radio and television broadcasting whose annual gross receipts of the preceding
year do not exceed P10,000,000 shall be
A. 2% of the gross receipts
B. 3% of the gross receipts
C. 4% of the gross receipts
D. 5% of the gross receipts

9. One of the following is not subject to the 3% percentage tax

A. International air carrier doing business in the Philippines
B. International shipping carrier doing business in the Philippines
C. Domestic carriers and keepers of garage
D. Franchise grantee of electric utilities
10. Franchise grantees of city gas and water utilities are subject to franchise tax of
A. 2% B. 3% C. 4% D. 5%

11. Amounts received for overseas dispatch, message or conversation originating from the Philippines
A. 3% franchise tax
B. 10% overseas communication tax
C. 2% franchise tax
D. 10% VAT

12. A tax on the right or privilege to enter places of amusement

A. VAT
B. Franchise tax
C. Amusement tax
D. Income tax

13. One of the following is not subject to amusement tax on gross receipts
A. Disco houses
B. Cockpits
C. Professional basketball
D. Bowling alleys

14. All of the following except one are liable to the 6/10 of 1% stock transactions tax, which one is not?
A. Individual taxpayers, whether citizens or alien
B. Corporate taxpayers, whether domestic or foreign
C. Estates and Trust
D. Dealers in securities

15. ABC Insurance Corporation, a domestic corporation, received the following premiums (net of any tax):

Insurance
Cash received P400,000 P300,000 P300,000
Promissory notes 100,000
Totals P500,000 P300,000 P300,000

a. The amount subject to percentage tax is

A. P400,000 B. P500,000 C. P900,000 D. P1,000,000

b. The percentage tax due is

A. P10,000 B. P8,000 C. P5,000 D. P20,000

c. The output tax is

A. P36,000 B. P24,000 C. P72,000 D. P120,000

16. ABC Corporation, a VAT-registered domestic corporation, is a holder of franchise to operate transportation units
on land. The records for the month show (net of any tax):
Cargo Passenger
Gross receipts from transporting P2,000,000 P3,000,000
VAT supplier Non-VAT Supplier
Payments to P800,000 P300,000

The percentage tax due is

A. P150,000 B. P60,000 C. P90,000 D. P144,000

17. Using the preceding number, but the franchise is for air and sea transport, within the Philippines, the VAT due
is
A. P144,000 B. P600,000 C. P468,000 D. P504,000

18. Using the preceding number, but the route is from the Philippines to foreign country, which of the following is
correct?
A. The corporation is exempt from VAT
B. The corporation is subject to percentage tax
C. The output vat is 0, hence the corporation cannot claim input tax
D. May claim a refund or credit the input taxes against other internal revenue taxes
19. A is a holder of franchise to sell electricity. In a particular quarter, its gross receipts amounted to P3,000,000
from the sale of electricity. It has also receipts from the lease of its auditorium and theater amounting to
P600,000. The percentage tax due for the quarter is
A. P40,000 B. P60,000 C. P100,000 D. None

20. A operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter follow:
Gross Receipts:
Cockpit operation P500,000
Restaurant operations:
Sale of food 100,000
Sale of liquor 150,000

The amusement tax due from A is

A. P90,000 B. P135,000 C. P225,000 D. P75,000

21. Using the above data, except that the restaurant is not owned by A but is owned by another person, B, not VAT-
registered and whose annual gross sales never exceeded P3,000,000. The amusement tax due from A is
A. P90,000 B. P135,000 C. P225,000 D. P75,000

22. Continuing the preceding number, the percentage tax due from B is
A. P90,000 B. P135,000 C. P225,000 D. P7,500

23. A, a resident citizen, promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate
receipts amounted to P3,000,000 and additional receipts from television coverage was P2,000,000. The
amusement tax due is
A. None B. P500,000 C. P300,000 D. P900,000

24. Assuming that the above data is not a world championship but a Philippine national boxing championship, how
much is the amusement tax?
A. None B. P500,000 C. P300,000 D. P900,000

25. A is a radio-TV broadcasting franchise grantee. During the preceding year, its gross receipts did not exceed
P10,000,000. During the first quarter of the current year, it had the following data:
Gross receipts, sale of airtime P2,000,000
Gross receipts, use of radio station’s communication 500,000
facilities
Business expenses 700,000

The franchise tax due for the first quarter is

A. P60,000 B. P40,000 C. P75,000 D. P39,000

26. A horseracing enthusiast has the following winnings during a particular racing day.
Total winnings (winner take all) P10,000
Cost of winning tickets 500

The tax on winnings is

A. P1,000 B. P400 C. P950 D. Zero

27. Using the data above, but the total winnings came from double bet, the percentage tax on winnings is
A. P1,000 B. P400 C. P950 D. P380

28. A domestic corporation paid P40,000 stock transaction tax on Initial Public Offering (IPO) of 500,000 shares.
After the IPO, there were 800,000 shares outstanding. The selling price of IPO per share was
A. P10 B. P8 C. P4 D. P2

29-31. ABC Corporation, a closely held corporation has an authorized capital stock of 1,000,000 shares with a par
value of P100/share as of January 1 2018. Of the 1,000,000 authorized shares, 250,000 thereof were subscribed
and fully paid by the following stockholders:
A 150,000
B 50,000
C 25,000
D 12,500
E 12,500
Total shares outstanding 250,000
On March 1, 2018, ABC Corporation finally decided to conduct an IPO and initially offered 250,000 of its unissued
shares to the investing public at P150/share. At the IPO, two of the existing stockholders. A and B, likewise decided
to sell their entire 150,000 and 50,000 shares, respectively. To the public also at P150/share.
a. The percentage tax due from the primary offering is
A. P375,000 B. P750,000 C. P1,500,000 D. P0

b. The percentage tax due for the sale of A’s shares is

A. P225,000 B. P450,000 C. P900,000 D. P0

c. The percentage tax due for the sale of B’s shares is

A. P75,000 B. P150,000 C. P300,000 D. P0

29. D

30. Later, on August 1, 2018, another stockholder C, sold his 25,000 shares to the public subsequent to the IPO at
P200/share. The percentage tax due is
A. P30,000 B. P50,000 C. P100,000 D. P200,000

31. Using the preceding number, on September 1, 2018, ABC Corporation again decided to increase capitalization
by offering another 300,000 of unissued shares to the public at P200/share consequently brining the total issued
shares to 800,000 shares, the percentage tax due is
A. P600,000 B. P1,200,000 C. P2,400,000 D. P0

32. Sale, importation, printing, or publication of books and any newspaper, magazine, review, or bullets which
appears at regular intervals with fixed prices for subscriptions and sale, and which is not devoted principally to
the publication of paid advertisements is:
A. Subject to VAT and OPT
B. Subject to VAT, exempt from OPT
C. Exempt from VAT and OPT
D. Exempt from VAT, subject to OPT

33. Under Section 145 of the Tax Code, as amended, cigars shall be subject to an excise tax in accordance with the
following schedule:
1/1/2017 2018 onwards
1. Ad valorem tax rate based on the net retail price 20% 20%
*per cigar
2. Specific tax (per cigar) P5.85 per cigar Specific tax shall be
increased by 4% every
year

Action Cigar Company manufactured cigars and removed them from the place of production on October 2018.
The retail selling price per box, net of VAT and excise tax, was P3,000, and 1 box of cigars contained 25 cigars.

*Net retail price (excluding excise tax and VAT) per cigar (Sec. 145, NIRC)

Compute the total excise tax due on a box of cigars.

A. P746.25 B. P875.65 C. P752.00 D. P734.00

Cigars ( P5.85 x 1.04) = P6.084 x 25 P152.1

Retail selling price P3,000 x 20% 600
P752.10

34. Allan Drinks Corporation, a manufacturer of carbonated drinks, will remove from its place of production 200
cases of its beverage containing high fructose corn syrup (HFCS) and a non-caloric sweetener. Each case
contains 6 bottles of 1.5 liters each. The excise tax is P12/liter. Compute the excise tax to be paid before
removal.
A. P21,600 B. P25,400 C. P43,100 D. P42,300

(200 cases x 6 bottles x1.5 liters) x P12/L P21,600

35. A promissory note is issued with a face value of P250,000 with a term of 2 years. The DST due is
A. P1,875 B. P2,000 C. P3,100 D. P2,300

P250,000 x P1.5/P200 = 1,875

36. A promissory note is issued with a face value of P250,000 with a term of 120 days. The DST due is
A. P616.44 B. P500.88 C. P389.29 D. P356.44

P250,000 x P1.5/P200 = 1,875 X 120 DAYS/365 DAYS = P616.44

37. DST is necessary is

A. Sale of real property
B. Inheritance of real property
C. Estate tax payment
D. Donation of real property exempt from the donor’s tax

38. The BIR assessed the taxpayer for deficiency DST on a loan extended to it by its affiliate, which is not covered
by any document but disclosed in Note 18 of its Audited Financial Statements (AFS).

The taxpayer argues that the Notes to AFS are neither documents nor debt instrument within the purview of
Section 179 of the Tax Code. Thus, the advances extended to it by related parties as appearing in Note 18 of
its 2019 AFS are not subject to DST.
A. The taxpayer is correct. The DST is literally a tax on document that embodies the transaction.
B. The BIR is correct. The DST is an excise tax because it is imposed on the transaction rather than on the
document.

LOCAL TAXES, PREFERENTIAL TAXATION, DTA

39. Where does the local tax authority emanate from?

A. Legislature
B. Executive
C. Sanggunian
D. Supreme Court

40. Which of the following is not a fundamental principle of local taxation?

A. It shall be uniform in each local sub-unit
B. It shall evolve a progressive system of taxation
C. The revenues collected under the Local Government Code shall inure solely to the benefit of and subject to
disposition by the LGU levying the tax or other imposition (autonomy)
D. Collection of local taxes can be delegated to any private person.

41. When may a Local Government Unit adjust local taxes?

A. Every 5 years
B. Every 2 years
C. Every year
D. Anytime the sanggunian deems it fit.

42. Where the National government elects to tax a particular area, it impliedly withholds from the local government
the delegated power to tax the same field. This doctrine is known as?
A. Preemption
B. Separatedness of Department of Government
C. Exclusive prerogative doctrine
D. Tax Jurisdiction

43. Zion Shoes’s head office is located in Ortigas, Pasig City. However, its manufacturing plant is in Taytay, Rizal.
As the company accountant you were asked by Zion where to pay the 2% Local Business Tax. Zion’s gross
receipts is P10,000,000.
A. Pay P200,000 at Taytay, Rizal
B. Pay P200,000 at Ortigas, Pasig City
C. Pay P60,000 at Ortigas, Pasig City and P140,000 at Taytay, Rizal
D. Pay P140,000 at Ortigas, Pasig City and P60,000 at Taytay, Rizal

44. The presentation of a community tax certificate is necessary in the following situation, except
 A. To acknowledge execution of document before a notary public
B. To take oath of office in the government
C. To receive any license or permit or certificate from public authority
D. To received private funds

45. Which is not a characteristic of the real property tax?

A. Direct tax
B. Ad Valorem
C. Progressive
D. Indivisible

46. Which real property is subject to the real property tax?

A. Real property of religious and charitable institution
B. Machineries actually, directly, and exclusively used by local water districts
C. Real property owned by cooperatives
D. Machineries for pollution control

47. What is considered idle land?

I. Agricultural lands more than one hectare in area, half of which remains uncultivated except agricultural
land with perennial crops with at least 50 trees and those used for grazing;
II. Land in the city or municipality more than one thousand square meters in area, one half of which
remains unutilized or unimproved by the owner.

A. True; True
B. True; False
C. False; True
D. False; False

48. For the given 2018 the following information from business:
Gross receipts from business P900,000
Rental income 650,000
Operational expenses 400,000
Real properties 17,000,000

Compute Individual Community Tax.

A. P1,555 B. P1,155 C. P5,200 D. P5,005

49. For the given 2018 the following information from business:
Gross receipts from business P900,000
Rental income 650,000
Operational expenses 400,000
Real properties 17,000,000

Compute Corporate Community Tax.

A. P7,920 B. P7,560 C. P1,120 D. P10,500

50. Who has the authority to collect Community Tax?

A. Bureau of Internal Revenue
B. Cities/Municipalities
C. Bureau of Customs
D. National Treasury

51. What is the characteristic of Community Tax?

A. Tax
B. Fee
C. Identification Card
D. License

52. Elorde, a famous boxer intends to convert his boxing gymnasium into a cockpit arena. Elorde summons you to
give him advise to go over his tax exposure. As a certified public accountant, you will recommend to Mr. Elorde
which of the following reference/documents?
A. National Internal Revenue Code
B. Revenue Regulations of the NIRC
C. Local Government Code
D. Tariff and Customs Code
53. Your client, Mr. Aegis, is an importer who inquired what laws will have most relevance in his daily transactions.
Having several laws to take into consideration, which laws do you recommend for Mr. Aegis to read?
A. National Internal Revenue Code
B. Implementing Rules and Regulation of NIRC
C. Tariff and Customs Code, as amended by the CMTA
D. Local Government Code

54. AZEP Corporation secured an income tax holiday for 4 years as a pioneer enterprise. On this third year of the
tax holiday. AZEP Corporation declared and paid cash dividends to its stockholders, all of whom are individuals.
Are the dividends taxable?
A. The dividends are taxable, the tax exemption of AZEP does not extend to its stockholders.
B. The dividends are tax exempt because of AZEP Corporation’s income tax holiday.
C. The dividends are taxable if they exceeded 50% of AZEP Corporation’s retained earnings.
D. The dividends are exempt if paid before the end of AZEP Corporation’s fiscal year.

55. The following are tax incentives given to micro business enterprises, except?
A. Income tax exemption on all types of income of the enterprise
B. Exemption from the coverage of the Minimum Wage Law (but employees will still receive the same social
security and health care benefits as other employees)
C. Priority to a special credit window set up specifically for the financing requirements of BMBEs
D. Technology transfer, production and management training, and marketing assistance programs for BMBE
beneficiaries

56. Mr. Lim bought a piece of land in Manila in 2017 whereby he discovered that it has unpaid real property tax for
year 2016. Which of the following is correct?
A. Mr. Lim is liable to real property tax because he is the new owner.
B. Mr. Lim is liable to real property tax because he assumed responsibility carried from previous owner.
C. Mr. Lim is not liable because realty taxes attach to the property, and are chargeable against the person who
had actual or beneficial use and possession of its regardless of whether or not he is the owner.
D. Mr. Lim is not liable because but realty tax attaches upon the property. It is the property itself which is
liable.

57. Idle lands are exempt from real property tax under the following circumstances, except:
A. Civil disturbance
B. Natural calamity
C. Any cause which physically or legally prevents the owner from utilizing his land
D. Declared by the president

58. 1st Statement: No regular court may intervene in assessment of real property taxes; It is the primary jurisdiction
of the Board of Assessors.

2nd Statement: No injunction by court will lie against real property tax collection by the Local Government.
A. True; False
B. True; True
C. False; True
D. False; False

59. 1st Statement: Local tax relief or exemption is granted in cases of natural calamities, civil disturbances, general
failure of crops, or adverse economic conditions which substantially decrease prices.

2nd Statement: Local tax incentives are granted only to new investments in the locality.
A. True; False
B. True; True
C. False; True
D. False; False

60. 1st Statement: Local tax cases may be brought to the attention of the Secretary of Finance.

2nd Statement: Customs tax cases may be brought to the attention of the Secretary Justice.
A. True; False
B. True; True
C. False; True
D. False; False
61. Which of the following has no power to impose taxes?
A. Provinces B. Cities C. Barangays D. Barrios

62. Talong Company is a domestic corporation whose principal classification is for well drilling work. It has no
branches nor sales outlets, but maintains project offices in different localities in the Philippines. It is also
registered as a Special Contractor at the Philippine Overseas Construction Board. As part of its business
expansion plan, the company intends to offer its well drilling and construction services to clients located overseas.

Are cities and municipalities authorized to impose and collect local business taxes on gross receipts realized by
a specialty contractor from its overseas construction projects?
A. No. Gross receipts must be realized from services rendered within the jurisdiction of the LGU imposing the
tax. (BLGF Opinion, May 2017)
B. Yes. The local business tax depends on the previous year’s sales receipts regardless of source.
C. It depends.
D. None of the above.

63. Kamay Holding Company, a holding company, owns 51% of Hawak Corporation. In its Statement of
Comprehensive Income, the holding company reported its proportionate share in the income of Hawak
Corporation as “ revenue from equity in the net earnings of an associate.” Is the “revenue from equity in the
net earnings of an associate” considered as gross receipts to the LBT?
A. Yes. Equity in net earnings is still considered revenue.
B. No. The “revenue from equity in the net earnings of an associate” does not fall under the category of gross
receipts. It is a mere paper entry mandated by accounting rules. (BLGF Opinion, July 2017)
C. Call me maybe.
D. None of the above.

64. Uniwide Sales Warehouse Club, Inc. (“Uniwide”) conducts and operates its business in buildings constructed on
parcels of land covered by 3 Transfer Certificates of Title (“TCTs”) issued by the Register of Deeds of Pasig City.
The TCTs indicate Pasig City as the location of the parcels of land. However, Cainta is claiming that the same
are within its territorial jurisdiction. To which LGU must Uniwide pay local business taxes?
A. Pasig City. To identify the LGU entitled to collect taxes, the location stated in the certificate of title should
be followed until amended thru proper juridical proceedings (Supreme Court Second Division, G.R. No2.
176703 & 176721, June 29, 2017).
B. Cainta
C. Baguio
D. Colombia

65. The Municipal Assessor of San Francisco, Agusan del Sur assessed the National Grid Corporation of the Philippines
(“NGCP”) for deficiency real property tax (“RPT”) for the years 2011 and 2012. In its petition with the LBAA,
NGCP assailed the RPT assessment on the ground that it is exempt from payment of the same under Section 9
of R.A. No. 9511 and Section 234 (c) of the Local Government Code. The Municipal Assessor filed a Motion to
Dismiss citing lack of jurisdiction on the part of the LBAA to rule on the petition due to NGCP’s failure to first pay
the tax under protest.

Did the LBAA acquire jurisdiction over NGCP’s petition against the RPT assessment?
A. Yes. Since the taxpayer is questioning the very authority of the assessor to impose the assessment, the
petition is under the jurisdiction of the LBAA even without first paying the tax under protest.
B. No. Under Section 252 of the LGC, payment under protest is mandatory if the taxpayer questions the
reasonableness or correctness of the RPT assessment. (NGCP vs CBAA, CTA En Bank Case No. 1392,
September 5, 2017).
C. It depends on the amount of RPT assessed.
D. None of the above.

66. A power generation company with principal office in Cebu City acquired and operated a power plant in Navotas
City. Due to the difficulty in hiring competent administrative personnel willing to work in flood-prone. Navotas
City, the company established an administrative office in Malabon City. This administrative office does not
generate sales orders nor does it receive collection from sales.

Which of the 3 offices shall be liable for the local business tax (LBT)?
A. All 3 offices.
B. Offices in Cebu City and in Malabon City.
C. Offices in Cebu City and in Navotas City. Pursuant to Section 150(b) of the LGC, 70% of all sales recorded
in the Principal office shall be subject to the LBT in Navotas City. The remaining 30% shall be subject to
the LBT in Cebu City.
D. None of the above