CHAPTER5- SELF-TEST EXERCISES

TRUE OR FALSE 1
1.Generally, interest income from non-bank sources is subject to regular income tax. TRUE (Final tax on interest
covers only interest income from banks and trust funds)

2. Foreign income is subjected to final tax if the taxpayer is taxable on global income Tax FALSE

3. Items of passive income from abroad are subject to final tax. FALSE (Final tax applies only on identified
passive income from sources WITHIN.)

4. Interest income on government securities are subject to final tax. TRUE (They are considered deposits
substitutes.)

5. All items of passive income are generally subject to final tax. FALSE(Passive income are generally subject to
final tax, but not ALL)

6. Final tax is collected at source; hence there is no need to file an income tax return. TRUE

7. Corporations are tax-exempt on inter-corporate dividends from any corporation. FALSE (Only inter-corporate
dividend from DOMESTIC corporation)

8. Individuals and corporations are tax-exempt on interest income on long term deposits. FALSE (Only individual
taxpayers are exempt)

9. Dividends fro resident corporations are subject t to regular tax.TRUE

10. Dividends from Real Estate Investment Trusts are exempt from final tax. FALSE (REIT dividends are
generally subject to 10% final tax.)

11. Stock dividends are always exempt from final tax.

FALSE (Stock dividend is generally exempt, except when it confers upon the recipient an interest different
from what he previously owned or when the declaration of stock dividends amounts to a declaration of cash
dividends.)

12. Corporations are subject to final tax on prizes. FALSE (The NIRC did not contemplate final taxation of
prizes on corporations, hence, corporate prizes is deemed subject to regular income tax.)

13. The share in the next income of a business partnership is subject to a creditable withholding tax, not to final tax.
FALSE (subject to final tax of 10%)

14. General professional partnerships are subject to final tax but not to regular tax. FALSE (they are exemopt from
any income tax)

15. All non-residents are exempt from final tax on foreign currency deposits. TRUE (Only resident aliends are
subject to 7.5% final tax)

16. Royalties, active or passive are subject to regular income tax. FALSE ( Active royalties are subject to regular
tax. Passive royalties are subject to final tax)

17. The tax sparing rules is applicable to resident and non-resident foreign corporations. FALSE (It applies only to
non-resident foreign corporations)

TRUE OR FALSE 2
1. A government employee may claim the tax informer’s reward. FALSE
2. The final tax on winnings applies to corporations. FALSE

3. Individual, except corporations, are subject to final tax on winnings abroad. FALSE (Passive income abroad,
including winnings are subject to regular tax.)
4. Winnings which are not more than 10,000 in amount are subject to the regular income tax. FALSE (This rule
applies to taxable price.)

5. PCSO or lotto winnings are exempt from all types of income tax. FALSE(PCSO / lotto winnings are now
generally subject to 20% final tax)

6. Special aliens do not file a regular income tax return on their compensation income. TRUE

7. The final tax on interest on tax-free corporate covenant bonds applies only to resident individual or corporate
taxpayers. FALSE

8. NRA-NETB and NRFC are subject to final tax only to passive income from sources in the Philippines. FALSE
Active or passive income are subject to final tax)

9. NRA-NETB nd nrfcs are not required to file the regular income tax return. TRUE

10.Residents shall withhold 10% final tax upon interest on foreign currency loans of FCDU banks under the
expanded foreign currency deposit system. TRUE

11.A qualified employee trust fund is not subject to final tax. TRUE

12.The income of FCDU banks from fellow depositary banks under the expanded foreign currency deposit system is
subject to 10% final tax. FALSE ( it is exempt)

13.Petroleum service subcontractors are subject to 8% final tax on their income from petroleum service contractors.
TRUE

14.The final withholding tax return shall be filed by the withholding agent on or before the 15th day of the month the
final taxes were withheld. FALSE (on the 10th day, not the 15th day)

15.Foreign governments and foreign government-owned and controlled corporations are exempt from final tax.
TRUE (they are exempt from income tax: final tax, capital gains tax or regular income tax)

Multiple Choices - Theory 1

1. Which is correct with regard to the final income taxation?
a. Taxpayers need not file an income tax return.
b. It covers all items of passive income from whatever sources.
C. It applies to all items of gross income of any non-resident earned from
sources within the Philippines.
d. It applies to passive income earned abroad.

2. Which statement is correct regarding final income tax?

a. Items of income subjected to final tax can still be subjected to regular tax.
b. Final tax applies only on certain passive income earned within the
Philippines
c. Items of income exempt under final tax are subject to regular tax.
d. Final income tax applies to all passive income from Philippines sources.

3. Interest income from which of the following sources is subject to final income tax?
a. Lending
c. Bond investment
b. Mortgage loans d. Money market placements

4. The final tax does not apply to interest on (select the best answer)
a. Long-term deposit c. Deposit substitute
b. Trust funds
d. Promissory notes

5. The exemption on final tax on interest from long-term deposit is not applicable to
a. Citizens individuals
c. Resident corporation or individuals
b. Corporations
d. All of these

Income Taxation
Chapter 5-F
6. Which interest income is not subject to any income tax
a. Interest income from discount notes
b. Interest income from bonds issued by a bank
c. Imputed interest
d. Interest income from deposit substitute

7. The final tax rates on pre- termination of long-term deposits is not relevant to
a. any corporations. c. resident aliens.
b. resident citizens. d. non-resident citizens.

8. Which of the following is subject to 15 final tax an interest from foreign

currency deposits made with Philippine banks?
a. Non-resident corporation
b. Nonresident alien engaged in trade or business
c. Non-resident alien not engaged in trade or business!
d. Resident alien

9.The following are subject to final tax on all income from sources within the
Philippines. Which is the exception?
a. Non-resident foreign corporation
b. Non-resident alien not engaged in trade or business
c. Non-resident alien engaged in trade or business!
d. None of these.

10. The interest income from long-term peso deposits made with foreign banks is
a subject to 20% final tax. c. subject to regular tax.
b. exempt from any tax. d. None of these

11. What is the final tax on interest income on 6-year deposit pre-terminated less than 2 years before maturity?
a. 20%
b. 12%
c.5%
d. 0%

12. Which of the following recipients is exempt from final tax on dividends?
a. Resident citizen
c. Resident corporation
b. Non-resident alien
d. Resident alien
13. A dividend declaration in 2019 is subject to a final tax of
a. 6%
b. 8%
c. 10%
d. 20%

14. Dividends declared by a resident corporation is

a. exempt from any tax. c.subject to regular income tax.
b. subject to 10% final tax, d. subject to 20% final tax.

15. Between the date of declaration and the date of record, BCD, Inc. sold a
investment representing stock of ABC, Inc., a domestic corporation. Which
statement is correct?
a. ABC, Inc. shall withhold 10% dividend tax if the buyer of the sale is an
individual.
b. ABC, Inc. shall withhold 10% dividend tax if the buyer of the sale is a
Corporation.
C.ABC, Inc. shall withhold 10% dividend tax if the seller of the sale is an
individual
d. ABC, Inc. shall withhold 10% dividend tax if the seller of the sale is a
corporation.

Multiple Choices - Theory 2

1. Which is covered by final tax?
a. Interest income from foreign banks
b. Share in the net income of a joint venture
C P10,000 taxable prizes from the Philippines
d. Share in the net income of a general professional partnership

2. Which is not subject to 20% final tax?

a. Interest income from trust funds
b. Royalties from musical compositions
c. P11,000 worth of prizes
d. Winnings

3. Which is not subject to 10% final tax?

a. Royalties from literary works
b. Dividends from a domestic corporation
c. Share in the net income of a business partnership
d. Royalties from a business trademark

4. Which of the following is taxable?

a. Prize on sports competitions sanctioned by the national sports organization
b. Prize from dance competition abroad
c. Nobel prize
d. Any prize received without effort

5. Which winning is taxable to a final tax

a. Winnings exceeding P10,000
b. Winnings not exceeding P10,000
c. Winnings from PCSO or lotto
d. All of these

6. Prizes from sources abroad is subject to final tax

a. If the amount of prices exceeds P10,000
b. If the amount of prizes does not exceed P10,000.
c. If it is given to the taxpayer without effort.
d. Under no circumstance.

7. The following winnings are exempt from tax, except one. Which is the exception?
a. Jueteng winnings c. PCSO winnings not exceeding P10K
b. Lotto winnings exceeding P10K d. All of these

8. Which of the following is exempt form final tax?

a. Interest income earned by a bank from deposits in another bank
b. Royalties from books
c. Interest income earned by a bank from lending activities
d. All of these

9. Dividend Income from domestic corporations is subject to final tax effective

a. 2000 c. 1998
b. 1999 d. 1997

10. Prizes arising from sources within the Philippine may be

a. subject to final tax.
b. subject to regular tax.
c. exempt from tax
d. exempt or subject to final tax or regular tax

11. Any royalties earned abroad by a non-resident corporation is

a. not to subject to Philippine income tax.
b. always subject to final tax.
c. subject to either final tax or regular tax
d. always subject to regular tax.

12. The winnings of a resident alien from abroad is

a. subject to regular tax
b. subject to final tax.
c. subject to either final or regular tax.
d. not subject to Philippine income tax.

13. Royalty income of a domestic corporation from abroad is

a. subject to regular tax
b. subject to final tax.
c. subject to either final or regular tax.
d. not subject to Philippine income tax.

14. Winnings of PCSO are generally

a. exempt from any tax. c. subject to 20% final tax
b. subject to regular tax. d. subject to both final and regular tax.

15. The final tax rates on passive income are generally star to the
taxpayers, except one. Select the exception
a. Domestic corporation c. Non-resident citizen
b. Resident alien d. Non-resident corporation

16. The tax informer's reward may be granted to

a. Officials of the BIR
b. Public officials or employees
c. Close relatives of public government employees
d. Relatives of government employees beyond the 6th degree of consanguinity
17. Which is not subject to final tax?
a. Compensation to non-resident aliens not engaged in trade or business
b. Fringe benefits of supervisory and managerial employees
c. Income of non-resident foreign corporations
d. Fringe benefits of rank and file employees

18. which of the following is exempt from final tax?

a. Winnings to competitions sponsored by a local trading company
b. Prizes in a body building competition
c. Dividends from a foreign corporation
d. Winnings from a casino

Multiple Choice - Problems 1

1. Winnie, a resident citizen deposited P2,000,000 in the 180-day time deposit of Banco de Oro. The deposit pays
8% interest. Compute the final tax on maturity of the deposit
a. P6,000 c. P20,000
b. P8,000 d. P16,000

2. Assume that Winnie is a non-resident alien not engaged in trade or business compute the final tax on maturity of
the deposit.
a. P6,000 c. P20,000
b. P8,000 d. P16,000

3. Renz received P42,000 interest from short-term deposits. Compute the final tax withheld on the interest.
a. P10,500 c. P5,000
b. P9,000 d. P4,500
4. On January 1, 2014, Mr. Albuera invested P2,000,000 in the six-vear time
of Sulu Unibank which pays 10% annual interest. Compute the final tax to be
withheld by Sulu Unibank on December 31, 2014.
a. PO c. P200,000
b. P100,000 d. P250,000

5. Assume Mr. Albuera pre-terminated the time deposit on July 1, 2018:compute the final tax to be withheld on pre-
termination.
a P5,000 c. P45,000
b. P12,000 d. P108,000

6. Boy, a resident citizen, received the following interest income:

• P80,000 from short-term Peso time deposit
• P16,000 from a five-year bonds issued by a commercial bank
• P24,000 from 5/6 lending to market vendors
How much final tax must have been withheld from Boy's interest income?
a. PO c. P20,000
b. P16,000 d. P24,000

(P80K/80% X 20%)
7. Jake Corporation, a domestic corporation, deposited P1,000,000 in the five-year time deposit of Banco Pilipino
which pays 10% annual interest. Compute Jake Corporation's net interest income in the first year of the deposit.
a. P100,000 c. P80,000
b. P90,000 d. P70,000
[P1M X 10%) X 80%]

8. Assume Jake Corporation is a non-resident corporation; compute the final tax on interest income.
a. PO c. P20,000
b. P10,000 d. P30,000
(P100K X 30%)

9. On January 2, 2011, Quezon, Inc. placed P1,000,000 in the 5-year time deposit of Bank of Laguna. The placement
earns 10% annual interest. Quezon, Inc. pre-terminated the deposit on June 30, 2014. Compute the final tax to be
withheld on pre-termination.
a. PO c. P17,500
b. P10,000 d. P42,000
[(P1M X 10% X 6/12) X 20%]
10. Francis, a resident citizen, invested P1,000,000 in a debt instruments (deposit substitute) issued by UniBank. The
debt instruments pay 10% annual interest payable every quarter. How much final tax should UniBank withhold in
the firs quarter of the issue?
a. PO c. P6,250
b. P5,000 d. P20,000

[(P1M/4 X 10%) X 20%]

11. Cyndrell, a resident citizen, deposited P5,000,000 in a non-resident foreign depositary bank which pays 12%
annual interest. How much final tax shall be withheld in the first year?
a. PO c. P120,000
b. P45,000 d. P150,000

Rodrigo, a non-resident citizen, deposited his $2,000,000 savings in a two-year time deposit in blue bank, a
depository bank under the expanded foreign currency deposit system. The deposit pays 8% annual interest. How
much final tax shall be withheld in the first year?
Answer: $0

NOTE: A withholding tax is a tax that deducts a certain amount from an employee's salary and
transfers it to the government. The money is deducted from the employee's taxable income tax. In
the problem, there is no any withheld tax mentioned such as Social Security System, PhilHealth,
etc. Hence, answer is zero.

Vernon is a non-resident citizen working abroad. He invested 1,000,000 personal savings in a FCDU bank under a
joint account with his resident wife. The bank pays 8% annual interest.
Compute the final tax to be withheld in one year.
a. $0 c. $12,000
b. $6,000 d. $ 16,000

[($1M X 8% X 15%)/2]
14. Yvonne, a non-resident alien not engaged in trade or business, made a $5,000,000 deposit to an FCDU Bank.
The deposit pays 8% annual interest. Compute Yvonne’s final tax in the first year.
a. $0 c. $ 160,000
b. $60,000 d. $ 200,000

NOTE: Non-resident taxpayers such as non-resident foreign corporations, non-resident citizens,

and non-resident aliens are exempted from being subjected to the Final Tax on the interest income
from foreign currency deposit with the foreign currency depositary banks. This is in consideration
that having inadequate foreign currency reserves will limit the country's foreign trades. In
relation to the problem, since Ambet or Andoy is a non-resident alien not engaged in trade or
business, he/she shall be considered as a non-resident taxpayer and shall be exempted from
paying the Final Tax in relation to the deposit. Therefore, the final tax in the first year is 0 (a). 

15. Gerry, a resident alien, deposited $1,000,000 in a depositary bank under the expanded foreign currency deposit
system. The five-year savings deposit 10% annual interest. Assuming a P45:$1 exchange rate, how much final tax
on interest would be withheld in the first year?
a. P0 c. P 40,000
b. P 15,000 d. P 675,000

[($1M X 10% X 15%) X P45]

Multiple Choice - Problems 2

1. Kendrick Inc., a domestic corporation, was credited $46,250 interest income on its depositary account in an
FCDU Bank. How much final tax was withheld?
a. $0 c. $6,937.50
b. $7,500 d. $ 23,125.00

If we assume the $46,250 as net of tax, there would be no answer [i.e. $46,250/85%) x 15%].
The next correct assumption is that $46,250 gross is credited then the account must be
debited for $46,250 x 15%.
Final withholding tax ($46,250 x 15%) = $6,937.50

Under the TRAIN LAW, the final tax rate of individual residents on interest income from foreign deposits was
changed from 7.5% to 15%, but the rates of domestic and resident foreign corporations were not updated. With the
passage of the CREATE LAW,both interest income derived from FCDU deposits by domestic or resident foreign
corporations are already subject to a uniform final tax rate of 15%

2. Assuming Kendrick Inc. is a resident foreign corporation, how much final tax was withheld?
a. $ 23,125.00 c. $ 7,500
b. $6,937.50 d. $0

3. Tuzan Corporation declared P1,000,000 dividends in 2014. 40% of its outstanding shares is held by its only
corporate investor, Abdul, Inc. Compute the amount of dividends tax to be withheld on declaration.
a. P0 c. P 60,000
b. P 40,000 d. P100,000

(P1M X 60% X 10%)

4. Mr. Neis, a resident alien, owns 40% of the shares of Coco Corporation, a resident corporation. Coco declared
P200,000 dividends in 2014. How much final tax should be withheld from Mr. Neis' dividend income?
a. P40,000 c. P8,000
b. P20,000 d.P0

(A resident corporation is a foreign corporation)

5. Carrots, Inc. owns 20% of the stocks of Cabbage Corporation. Carrots and Cabbage domestic corporations.
Cabbage declared P120,000 dividends in 2014.
How much dividend income after any applicable tax will Carrots receive?
a. P24,000 b. P20,000
c. P19,000 d. P18,000

P120K X 20%

6. Mr. Siegfried, a resident citizen, received P100,000 dividend income from Vodka, Inc., a domestic corporation.
How much final tax must have been withheld by Vodka, Inc.?
a P0 c. P20,000
b. P11,111 d. P25,000
(P100K/90%) X 10%
OR

7. Ms Gina owns 40% of the capital and profits of Cebu Ventures, a business partnership engaged in the trade of
tourist souvenirs. Cebu Ventures reported P200.000 net income in 2014. Compute the total final tax to be withheld
by the partnership on Gina's profit sharing.
a. P0 c. P10,000
b. P8,000 d. P20,000
(P200K X 40% X 10%)
8. Raymond owns 20% of the capital and profits of a general professional partnership. The partnership reported
P500,000 profits in 2014. How much final tax will be withheld from Raymond?
a. P100,000 c. P10,000
b. P 50,000 d. 0

9. Teddy is a venturer sharing 50% in the profits of Wise Ventures, an unincorporated joint venture, engaged in the
trading of home appliances. Wise Ventures reported P200,000 profits for 2014. How much final tax will be withheld
by Wise Ventures?
a. P0 c. P20,000
b. P10,000 d. P40,000

(P200K X 10%)

10. Zamboanga Corporation, a resident corporation, is a venturer in Southern Filippine Ventures (SPV), an
incorporated joint venture formed under Philippine laws. Zamboanga owns 30% interest in SPV. During 2014, SPV
reported P3,000,000 profit and declared P1,000,000 in dividends. How much final tax will be withheld from the
dividend distribution to Zamboanga
Corporation?
a. P100,000 c. P90,000
b. P30,000 d.P0

11. Petrodrill Ventures is a joint venture which operates under a service contract with the government. Petrodrill is
30% owned by individual investors. The owned by corporate oil exploration companies. Petrodrill reported profit
which was to be distributed.
a. P200,000 c. P140,000
b. P60,000 d.PO

12. Mr. Bayugan published his book abroad for the international market. During first quarter, he earned a gross
royalty of P1,000,000. How much final tax will be withheld by the foreign publisher?
a. P250,000 c. P100,000
b. P200,000 d.PO

13. Sison Inc. is the only corporate shareholder of Surigao Inc. owning 60% of its outstanding voting shares. During
the year, Surigao Inc, declared a P1,000,000 dividend. Compute the final income tax to be withheld by Surigao.
a. P100,000 c. P40,000
b. P60,000 d.PO

P1M X 40% X 10%) The problem is asking for final tax to be withheld to all not from the
dividend income of Sison.)

14. Mr. Tuao won an P800,000 prize in a national dancing competition. The organizer of the event declared that the
P800,000 grand prize was "tax free." How much final tax must be remitted by the organizer to the BIR?
a. P200,000 c. P88,889
b. P 160,000 d. PO

(P800K/80% X 20%)

15. Mr. Crocodile owns a mining property in Prosperidad. He allowed a mining

company to operate under a condition that he will be paid 10% royalty on the
gold production. The mining company produced P8,000,000 worth of gold during
the year. How much net royalties will be paid to Mr. Crocodile?
a. P800,000 c. P720,000
b. P640,000 d. P160,000

(P8M X 10% X 80%)

Multiple Choice - Problems 3

1. Mr. Aguak earned the following prizes from two different competitions:
Date Event Gross Prize
January 4, 2017 Singing competition P12,000
February 14, 2017 Painting competition P10,100
Compute the total final tax that should have been withheld from the above prizes.
a. P5,500 c. P3,000
b. P4,420 d. P2.400
2. Mr. Rems Orayt participated in two different events on January 4, 2020:
Date Organizer Competition Gross Prize
January 4, 2020 Ang Mahiwagang Boses Singing P 10,000
January 4, 2020 Sexy Body Foundation Dancing P 11,000
Compute the total final tax that should have been withheld from the above prizes.
A. P0 c. P3,000
b. P4,420 d. P2,000

The P10K final tax threshold on prizes is on a per event and per organizer basis).

3. Mr. Conrado won the P50,000,000 6/49 Superlotto Jackpot of the Philippine
Charity Sweepstakes Office. How much final tax will be withheld?
a. P 500,000 c. P100,000
b. P200,000 d. PO

Starting Jan 1,2018 under the TRAIN LAW, PCSO lotto winnings will be subject to a final withholding tax of 20%
when the winnings is more than P10,000.
When the winnings is less than P10,000 it is exempt.

4. Ms. Matti won a gold medal and P50,000 cash prize for chess competition in the Palarong Pambansa. How much
final tax should be withheld from the prize?
a. P20,000 c. P5,000
b. P10,000 d. PO

The passive income of an individual is subject to Final Tax except for the exemptions provided by
the National Internal Revenue Code (NIRC). Passive Income is an income earned aside from the
Business Income or Salary Income.
For residents, individuals who are residing in the Philippines, the Final Tax is 20% of the Income
or Gross Receipts. Prizes above P10,000 are subject to a 20% Final Tax while prizes received
amounting to P10,000 or less are subject to regular Income Tax and not Final Tax. However,
prizes from any contest joined without effort and prizes from sports competitions authorized by
sports organizations are EXEMPTED from the Final Tax. Based on the given data, the prize
received was P50,000.However, the competition was from Palarong Pambansa which is a sports
organization. Therefore, the P50,000 prize is EXEMPT from the Final Tax.

5. Tiong Sang Department Store conducted a sales promotion where customer

purchases exceeding P1,000 in one transaction shall be entitled to a ticket for a chance to win P500,000 raffle prize.
Mr. Shing won the prize.
How much shall Tiong Sang withhold from the grand prize?
a. P200,000 c. P 50,000
b. P100,000 d. Po
(P500K X 20%)

6. Tacurong, a resident citizen, won $1,000,000 from the US lottery. The lottery winning is
a. exempt from tax c. subject to 10% final tax
b. subject to 20% final tax d. subject to regular tax

Income from lottery just like any other income is subject to the regular taxation and taxation rates of the
country. There are countries that have not customized their systems and hence have adopted withholding
tax because it is hard for them to tax each and every other individual who wins.
It will not be tax exempt since it is not a charity, otherwise some nations tax income from lottery highly to
discourage citizens from participating as it is  seen as an addiction and way of leading the youths to the
wrong direction. it will also not be subjected to a specified rate of final tax unless it is the withholding tax
Lottery winning is subject to regular tax rates as applicable to the individual taxpayer's income 

7. Mr. Curandang submitted a sworn statement regarding the alleged tax evasion practices of Chitie Corporation.
This led the BIR to recover P20,000,000 unpaid taxes. How much net tax informer's reward shall be paid to Mr.
Curandang?
a. P1,800,000 c. P1,000,000
b. P1,600,000 d. P900,000

(P1M maximum x 90%)

8. A concerned government employee furnished the BIR a statement detailing the improper tax practices of a
corporate taxpayer. The information was instrumental to the collection of P500,000 tax. How much informer's tax
reward after tax shall be released to the informant?
a. PO c. P45,000
b. P40,000 d. P50,000

OR

This is in accordance with Section 282 - Informer's Reward to Persons Instrumental in the Discovery of Violations
of the National Internal Revenue Code and in the Discovery and Seizure of Smuggled Goods, under the said
provision, an informer shall be rewarded in a sum equivalent to 10% of the revenues, surcharges or fees recovered
and/or fine or penalty imposed and collected or P1,000,000 per case, whichever is lower. The reward is subject to
10% final withholding tax. So here is the final computation of the rewards:
9. Roy invested P1.000.000 in the tax free" corporate bonds of RBC Corp
The bond pays 8.75% interest annually net of any taxes. How much finala
RBC Corporation withhold from the annual interest payment to Roy?
a P36,000 c. P37,500
b. P16,800 d. PO

(P1M X 8.75%/70% X 30%)

10. A taxpayer wants to manually file his Monthly Remittance Return of Final Income Tax Withheld for the month
of February 2017. What is the deadline for the return?
a. February 14, 2017 c. March 10, 2017
b. February 28, 2017 d. April 15, 2017

the return shall be filed and the tax shall be paid or before the 10th day of the month following the month in which
the withholding was made

11. In reviewing its tax compliance, Rang-ay Banco noted that it failed to remit the P90,000 final taxes it withheld
for the month of February 2017. Compute the total amount of taxes due including the penalties if Rang-ay Banco
settles the obligation on March 20, 2017.
a. P 90,000 c. P113,000
b. P 112,500 d. P 128,000

(Surcharge = P90,000 x 25%, interest is P90,000 x 20% x 10/360, compromise is P15,000 per
table.) Total amount due is P90K+22.5K+500 + P 15K = P128,000

12. Bangko Illustrado failed to withhold the final tax on the P1,200,000 interest expense which was credited to
various accounts of individual depositors in the month of April 2016. It wants to settle the unpaid final withholding
tax on June 10,2017. Compute the surcharge and interest penalty due.
a. P 450,000 c. P 64,000
b. P320,000 d. P 58,000

The interest payment was actually P1,200,000 x 20% final tax rate = P240,000). The
surcharges shall be P240,000 x 25% = P60,000. The interest shall be P240,000 x 20% x 30/360
or P4,000. Total penalties before compromise = P64,000.