CHAPTER 6

Drill exercises
1. Seller of agricultural food products Exempt
2. Furniture shop Vatable
3. Vegetable trader Exempt
4. A private high college Exempt
5. A private hospital Exempt
6. A dentist Vatable
7. Hospital drugstore Vatable
8. A non-profit elementary school Exempt
9. A government college Exempt
10. Restaurant Vatable
11. Bus operator % Tax
12. Hotel Vatable
13. Operator of domestic sea vessel Vatable
14. Life insurance company % tax
15. Mall Vatable
16. Domestic airliner Vatable
17. Lessor vessels or aircraft Vatable
18. Banks % tax
19. Operator of taxi % tax
20. International carriers % tax
21. Keepers of garage % tax
22. Book publishers Exempt
23. Quasi-banks % tax
24. Dealer of household appliances Vatable
25. Dealer of commercial lot Vatable
26. Insurance agent Vatable
27. Employee Exempt
28. Contractor Vatable
29. Processor of sardines Vatable
30. Auto parts dealer Vatable
31. Manufacturer of hog feeds Exempt
32. Seller of fertilizer and seeds Exempt
33. Fisherman Exempt
34. Fish vendor Exempt
35. Textile manufacturer Vatable

True or False 1
T 1. A person who exceeded the VAT-threshold in any 12-month period must register as a VAT-
taxpayer.
T 2. The VAT applies on receipts or sales other than those exempted and those specifically subject
to percentage tax.
T 3. A person with vatable sales or receipts not exceeding the VAT-threshold may register as a non-
VAT taxpayers.
T 4. A person with vatable sales or receipts not exceeding the VAT-threshold may register as a VAT-
taxpayer.
Note: (by optional registration) the statement did not say “must”
T 5. A person who commences business with an expectation to exceed the VAT-threshold must
register as a VAT-taxpayer.
Note: see revenue regulation provisions
F 6. A registrable person is exempt from VAT.
 Note: He is vatable.
T 7. A VAT-registered person is exempt from VAT on VAT-exempt sales.
Note: VAT exempt sales are not subject to VAT regardless of the seller
T 8. A non-VAT taxpayer shall not bill VAT on his sale.
F 9. A VAT-registered person is liable to VAT on exempt sales and services specifically subject to
percentage tax.
Note: Only on vatable sales
F 10. The threshold for franchise grantees of electricity is P10,000,000.
Note: Franchise grantees of gas and water only.
T 11. The VAT threshold for sellers of goods or services is P3,000,000.
T 12. The VAT threshold for franchise grantees of gas and water is P10,000,000.
T 13. The VAT threshold applicable to professional practitioners is P3,000,000.
T 14. Exempt sales shall not be billed with an output VAT.
F 15. A sale to the government shall not be billed with output VAT since it is exempt from VAT.
Note: It is subject to 12% output VAT

True or False 2
F 1. Export sales shall be billed with output VAT.
Note: No output VAT because the VAT rate is 0%
F 2. The export sale of a VAT-taxpayer is an exempt sale.
Note: It is a zero-rated sale. For a non-VAT taxpayer, it is exempt.
F 3. A non-VAT-registered person who invoiced VAT on his sale shall be subject to 12% VAT without
the benefit of an input VAT 3% percentage tax, and 25% surcharge.
Note: 50% surcharge
T 4. Exempt sales which are billed as regular sales shall be considered as regular vatable sales.
F 5. The VAT payable of a VAT-registrable person is the output VAT without benefit of input VAT plus
3% percentage tax.
Note: Output VAT but without benefit of input VAT, no percentage tax.
T 6. No input VAT traceable to exempt can be claimed sales as tax credit.
F 7. No input VAT traceable to government sales is claimable as tax credit.
Note: The 7% standard input VAT is claimable in lieu of the actual input VAT.
F 8. A VAT-registered person shall be subject to a final withholding VAT of 12% on sales to the
government.
Note: 5% final withholding VAT
F 9. The VAT payable of any person is always 3% of the value-added on the sales of goods.
Note: Sometimes it becomes 12% of the sale when no input VAT is claimable
T 10. The claimable input VAT on government sales is 7% of the sales.
T 11. The VAT payable on zero-rated sales is always zero.
Note: Technically true because the VAT payable is always negative
F 12. There is no way VAT payable could be negative in a particular month or quarter.
T 13. VAT is paid in three monthly installments similar to the percentage tax.
Note: Two monthly installments, and a quarterly payment
F 14. Exempt sales must be indicated as such; otherwise, they will be regarded as regular sales.
T 15. The standard input VAT is 5% of government sales.

Multiple Choice – Theory: Part 1

1. All of these are vatable, except
a. Engineering contractors
b. Lawyers
c. Employee
d. Brokers

2. What is non VAT-exempt?

a. Importation of agricultural or marine food products
b. Gross receipts of professional practitioners
c. Receipts from taxicabs
d. Gross receipts of hospitals
3. Which is vatable?
a. Sale of fertilizers
b. Sales of fruit
c. Sale of bamboo handicrafts
d. Sale of vegetables

4. All of these businesses are vatable, except

a. Non-life insurance business
b. Banks
c. Security dealers
d. Merchandisers

5. Which is vatable?
a. Fruit dealer
b. Department store
c. Cooperative
d. Meat vendor

6. Which of the following will pay VAT?

a. Farmer
b. Food processor
c. Rice or corn miller
d. Fruit dealer

7. Which will not pay VAT?

a. International carrier
b. Domestic air carrier
c. Domestic sea carrier
d. All of these

8. Which of the following is vatable?

a. An operator of cockpits
b. A disco
c. A bowling alley
d. An operator of a race track

9. Which is vatable?
a. Local water districts
b. Gasoline stations
c. Internet service providers
d. Schools

10. Which is vatable?

a. Sale of buses and jeepneys
b. Sale of vessels
c. Sale of aircraft
d. Lease of vessels or aircrafts

11. Which will not pay VAT on its receipts?

a. Hospitals
b. Real property dealers
c. Bookstores
d. Taxicab operators
12. Which is vatable?
a. Sales of agricultural or marine food products
b. Gross receipts of medical practitioners
c. Sales of books
d. Sales of fertilizers, seeds and seedlings

13. Which statement is correct?

a. Husband and wife are considered separate taxpayers for business tax purposes.
b. For purposes of the VAT threshold, both exempt sales and receipts from services subject to
percentage tax must be included.
c. A VAT-registered taxpayer must pay VAT on services subject to percentage tax.
d. All of these

14. What is the general lock-in period for those who voluntarily register as VAT taxpayers?
a. 3 years
b. 5 years
c. 1 year
d. Perpetual

15. To franchise grantees of radio or television, the VAT-registration shall be

a. Revocable in 3 years.
b. Irrevocable in 3 years.
c. Revocable in 1 year.
d. Irrevocable perpetually.

16. which is not vatable as a separate entity?

a. A branch
b. A subsidiary company
c. A spouse
d. A parent company

17. Statement 1: Sellers of services are subject to VAT on gross receipts.

Statement 2: Sellers of goods are subject to VAT on gross selling price.
Which is correct?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2

18. Statement 1: As a rule, percentage tax is paid monthly.

Statement 2: VAT is paid monthly and quarterly
Which is false?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2

19. Statement 1: “Gross receipt” means collections and advances by clients.

Statement 2: “Gross selling price” means gross sales including delivery charges and excise tax on
the sales if any.
Which is incorrect?
a. Both statements
b. Neither statement
 c. Statement 1
d. Statement 2

20. Statement 1: Discounts that are contingent to a future event are deductible from gross selling
price.
Statement 2: Expenses of the service provider that are reimbursed by the client forms part of the
gross receipt.
Which is incorrect?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2

Multiple Choice – Theory: Part 2

1. Which is non-vatable?
a. Exempt sales billed as regular sales by VAT persons
b. Export sales of VAT-registered persons
c. Regular sales of registrable persons
d. Export sales of non-VAT registered persons

2. Statement 1: Input VAT is creditable only by VAT-registered taxpayers.

Statement 2: Input VAT is deductible by non-VAT taxpayers against their gross income for purposes
of income tax.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement

3. Statement 1: A VAT taxpayer who purchases goods from non-VAT suppliers will effectively pay a
VAT equivalent to the output VAT.
Statement 2: No output VAT shall be billed on export sales and exempt sales.
Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement

4. Which is the tax payable by a non-VAT taxpayer who issues a VAT invoice or VAT official receipt?
a. Output VAT plus 3% percentage tax
b. Output VAT less input VAT, plus 3% percentage tax and 50% surcharge
c. Output VAT plus 3% percentage tax and 50% surcharge
d. 3% percentage tax

5. What is the business tax payable by a person who is VAT-registrable?

a. The output VAT
b. The input VAT
c. Output VAT less input VAT
d. Output VAT plus 3% percentage tax

6. The claimable input VAT is 12% of purchases from

a. VAT-registered taxpayers.
b. Non-VAT-registered taxpayers.
c. A or B
 d. None of these

7. Which is a source of input VAT?

a. Purchase of agricultural or marine food products from VAT-sellers
b. Purchase of agricultural or marine food products from non-VAT-sellers
c. Purchase of vatable goods or services from non-VAT suppliers
d. Purchase of vatable goods or services from VAT suppliers

8. Which is not a sales category for VAT taxpayers?

a. Exempt sales
b. Zero-rated sales
c. Sales to the government
d. Sales to non-profit institutions

9. What is the VAT due and payable on regular sales?

a. Output VAT less input VAT
b. Output VAT less input VAT plus 3% percentage tax
c. Output VAT + 3% percentage tax
d. Output VAT + 3% percentage tax plus surcharge

10. Which is subject to withholding VAT?

a. Regular sales of real properties
b. Zero-rated sales
c. Sales to the government
d. Exempt sales

11. A VAT taxpayer can claim the actual input VAT credit on
a. Regular sales
b. Zero-rated sales
c. Government sales
d. A and B

12. Which is a possible source of input VAT?

a. Importation
b. Purchase from VAT-sellers
c. Purchase from no-VAT sellers
d. A and B

13. A VAT taxpayer can claim the actual input VAT credit on
a. Regular sales
b. Zero-rated sales
c. Government sales
d. A and B

14. A VAT taxpayer may claim only partial or full input VAT credit on
a. Regular sales
b. Zero-rated sales
c. Government sales
d. A and B

15. The output VAT on government sales is

a. 12% of sales
b. 0% of sales
c. None
 d. 12% of value added

16. The output VAT on export sales is

a. 12% of sales
b. 0% of sales
c. None
d. 12% of value added

17. The output VAT on exempt sale is

a. 12% of sales
b. 0% of sales
c. None
d. 12% of value added

18. No input VAT is creditable on

a. Government sales
b. Regular sales
c. Export sales
d. Exempt sales

19. The claimable input VAT on government sales is

a. 12% of purchases from VAT suppliers
b. 12% of purchases from non-VAT suppliers or VAT suppliers
c. 7% of purchases from VAT suppliers
d. 7% of sales

20. Statement 1: The VAT due and payable on regular sales is always positive.
Statement 2: The VAT due and payable on export sales is always negative.
Which statement is generally correct?
a. Both statements
b. Neither statement
c. Statement 1
d. Statement 2

21. Statement 1: Sellers always pay VAT on government sales.

Statement 2: Sellers will not pay VAT on export sales.
Which is incorrect?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement

22. Which is a correct statement regarding the VAT?

a. The taxable quarter of any taxpayer must be aligned to the calendar year.
b. The taxable quarter of an individual taxpayer must be aligned to the calendar year.
c. The taxable quarter of a corporate taxpayer must be aligned to the calendar year.
d. All of these.

23. Statement 1: The VAT returns for the first two months of the quarter are prepared on a monthly
basis.
Statement 2: The VAT return on the third month of the quarter reflects a monthly balance.
Which is incorrect?
a. Statement 1
b. Statement 2
 c. Both statements
d. Neither statement

24. Statement 1: VAT paid in the first two months of the quarter is deductible against the Output VAT
for the entire quarter.
Statement 2: The VAT paid in a quarter is deductible against the output VAT of future quarters of
the taxable year.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement

25. The monthly VAT return is referred to as

a. BIR Form 2551M
b. BIR Form 2550M
c. BIR Form 2551Q
d. BIR Form 2550Q

Multiple Choice – Problems: Part 1

1. An agricultural supplier had the following sales during the last 12-month period:
Sales of fertilizers and corn seeds 1,200,000
Sales of seedlings 400,000
Farm equipment 700,000

What is the business tax liability of this taxpayer?

a. VAT on all these categories of sale
b. VAT on equipment and seedlings
c. Percentage tax on equipment and seedlings
d. Percentage tax on farm equipment

2. Mrs. Escala had the following sources of income in the past 12 months:
Salaries 1,200,000
Professional fees 800,000

Which is correct?
a. She shall be subject to VAT on the salaries and professional fees.
b. She shall be subject to percentage tax on the salaries and professional fees.
c. She shall pay percentage tax on the professional fees only.
d. She shall pay VAT on the professional fees only.

3. Aciga Corporation had the following sales in the past 12-month period:
Home office sales 2,000,000
Branch 1 sales 1,200,000
Branch 2 sales 1,000,000
Total company sales 4,200,000

Which is correct?
a. Home office shall pay VAT.
b. Branch 1 and branch 2 shall pay percentage tax.
c. The home office and branches shall all pay VAT.
d. A and B
4. Assuming Aciga Corporation is a parent corporation with two subsidiaries with the following sales
in the past 12-month:
Home office sales 2,000,000
Branch 1 sales 1,200,000
Branch 2 sales 1,000,000
Total company sales 4,200,000

Which is incorrect?
a. Aciga Corporation shall pay VAT.
b. Subsidiary 1 and Subsidiary 2 shall pay percentage taxes.
c. All companies in the group shall pay VAT.
d. A and B

5. Mr. and Mrs. Lallo had the following sales in the past 12 months:
Mr. Lallo Mrs. Lallo Total
Fruits and vegetables sales 1,400,000 - 1,400,000
Fish and meat sales - 1,200,000 1,200,000
Grocery sales 800,000 600,000 1,400,000
Total 2,200,00 1,800,000 4,000,000

Which is correct?
a. Both Mr. and Mrs. Lallo shall pay VAT.
b. Both Mr. and Mrs. Lallo shall pay percentage tax.
c. Mr. Lallo shall pay VAT, but Mrs. Lallo shall pay percentage tax.
d. Mrs. Lallo shall pay VAT, but Mr. Lallo shall pay percentage tax.

6. Mr. Vegetta, a VAT-registered taxpayer, owns a mini-store with the following sales in the past 12
months:
Sales of meat and vegetables 1,800,000
Sales of cooked rice and viands 1,200,000
Sales of snacks and softdrinks 500,000
Total sales 3,500,000

Which is correct?
a. Mr. Vegetta shall pay percentage tax on the sales of rice, viands softdrinks and snacks.
b. Mr. Vegetta shall pay VAT on the sale of rice, viands, snacks and softdrinks.
c. Mr. Vegetta shall pay VAT on all sales.
d. Mr. Vegetta shall pay percentage tax on all sales.

7. A non-VAT realty lessor had the following receipts during a month:

Bed spacers’ rooms with P2,000 monthly rental each 120,000
Houses for rent with P10,000 monthly rental each 1,000,000
Commercial spaces with P5,000 monthly rental each 900,000

Which is correct?
a. The taxpayer shall pay VAT on all receipts.
b. The taxpayer shall pay VAT on the commercial spaces.
c. The taxpayer shall pay percentage tax on all receipts.
d. The taxpayer shall pay percentage tax on the commercial spaces.

8. A service provider had the following data during the month:

 Revenue, including VAT 268,800
Gross receipts, including VAT 180,000
Input VAT 12,000

Assuming the taxpayer is VAT-registered, compute the VAT payable.

a. P7,283
b. P9,600
c. P16,800
d. P19,286

Note: Closest answer. A seller of goods is taxable on “gross receipts” not on revenues.
Output VAT (180,000 x 12/112) = P19,286 – P12,000 input VAT = P7,286

9. Assuming the taxpayer is a VAT-registrable person, compute the VAT payable?

a. P7,283
b. P9,600
c. P16,800
d. P19,286

Note: The output VAT is the VAT due and payable if the taxpayer did not register as VAT taxpayer.

10. A seller of goods had the following data during the month:
Sales invoice (total billed prices) 436,800
Total cash collections 380,800
Sales returns and allowances, billed price 11,200
Input VAT 14,000

Assuming the taxpayer is VAT-registered, compute the VAT payable.

a. P0
b. P26,800
c. P31,600
d. P35,600

Note: Billed prices are inclusive of VAT.

Output VAT (P436,800 – P11,200) x 12/112 = P45,600 – P14,000 input VAT = P31,600

11. Assuming the taxpayer is VAT-registrable person, compute the VAT payable.
a. P0
b. P26,800
c. P45,600
d. P46,800

12. The following sales and purchases were taken from the books of accounts of a VAT taxpayer:
Sales April May June
Sales 625,000 400,000 600,000
Purchases 400,000 420,000 200,000

What is the VAT payable in April?

a. P75,000
b. P48,000
c. P27,000
d. P0
 Note: Data from the books of accounts are exclusive of VAT. Sales and purchases accounts
exclude VAT.
Output VAT (12% of sales) – 75,000; 48,000; 195,000
Input VAT (12% of purchases) – 48,000; 50,400; 122,400
VAT due – 27,000; 2,400; 72,600

13. What is the VAT payable in June?

a. P72,600
b. P72,000
c. P48,000
d. P45,600

A VAT taxpayer had the following sales and purchases during the month:
Sales, excluding VAT 300,000
Purchases, inclusive of P14,000 VAT 280,000

14. The sale is VAT-exempt

a. P20,000
b. P34,000
c. P50,000
d. P57,000

Note: The input VAT on exempt sales will be part of costs. Thus, P300,000 – P280,000 = P20,000.

15. The sale is made to the government

a. P20,000
b. P34,000
c. P41,000
d. P41,000

Note: The P280,000 purchases is inclusive of VAT. Hence, the standard input VAT (7% of the
P300,000 sales can be deducted from the P280,000 purchases. This is because excess actual input
VAT over the standard input VAT is included as part of costs and expenses. While the excess of
standard input VAT over the actual input VAT is included as gain part of gross income.
Hence, P300,000 sales – P280,000 – (7% x P300,000) = P41,000

16. The sale is made to regular customers

a. P20,000
b. P34,000
c. P41,000
d. P50,000

Note: The input VAT must be removed from the purchases (cost of sales).
Hence, P300,000 sales – P280,000 purchases – P14,000 input VAT = P34,000

17. The sale is made by a registrable person

a. P20,000
b. P34,000
c. P41,000
d. P50,000

Note: Input VAT on sales of registrable persons cannot be claimed as input VAT. Since, there is not
express provision that disallowed tax credits can be claimed as a deduction, it is safe to treat it as
 nondeductible against gross income. It must be emphasized that the claim of deductions and tax
credits are construed against the taxpayer.

Multiple Choice – Problems: Part 2

1. A sale was invoiced by a VAT-seller at P500,000. Compute for the Output VAT.
a. P0
b. P50,000
c. P53,571
d. P60,000

Note: P500,000 x 12/112 = P53,571

2. A VAT-registered seller wishes to bill the sale of unprocessed meat for P50,000. At what amount
should the sale be billed?
a. P50,000
b. P51,500
c. P53,571
d. P60,000

Note: Meat is VAT exempt he

3. A VAT-registered department store had an un-invoiced sale with the following selling prices:
1 cavan rice 2,500
Vegetables 1,500
Cooking oil 200
Noodles 1,300
Total sales 5,500

What should be the invoice price?

a. P5,500
b. P5,545
c. P5,665
d. P5,680

Note:
1 cavan rice 2,500 2,500
Vegetables 1,500 1,500
Cooking oil (200 x 200 224
112%)
Noodles (1,300 x 112% 1,300 1,456
Total sales 5,500 5,680

4. The sale of a residential lot was invoiced for P1,680,000.

What is the Output VAT?
a. P0
b. P180,000
c. P200,000
d. P201,600

Note: The sale is exempt since it did not exceed the P1,919,500 price ceiling on the sale of
residential lots.

5. The sale of a residential dwelling was invoiced for P3,920,000.

What is the Output VAT?
a. P0
b. P420,000
c. P462,000
d. P470,400
 Note: The price exceeds the P3,199,200 price ceilings. Hence, the invoice is inclusive of VAT. The
VAT is computed as P3,920,000 x 12/112 = P420,000.

6. The sale of fruits was involved in a VAT invoice at P24,000.

What is the output VAT?
a. P0
b. P2,571
c. P2,880
d. P4,000

Note: The sale of fruit is VAT exempt. However, if it is invoiced in a VAT invoice not on an “exempt”
invoice, the sale will be treated as a regular vatable sale.
The VAT can be computed as P24,000 x 12/112 = P2,571.

7. A taxpayer had the following purchases of vatable goods, exclusive of VAT:

Purchases from non-VAT suppliers 180,000
Purchased from VAT-suppliers 1,000,000
Total purchases 1,180,000

What is the input VAT?

a. P107,143
b. P120,000
c. P126,429
d. P141,600

Note: P1,000,000 purchases from VAT suppliers x 12%.

8. A non-VAT registered taxpayer purchased goods which was invoiced by the seller as follows:
Selling price 50,000
Output VAT 6,000
Total invoice 56,000

What is the claimable input VAT?

a. P0
b. P6,000
c. P6,720
d. P7,200

Note: A non-VAT taxpayer cannot claim input VAT.

9. In the immediately preceding problem, what is the claimable input VAT if the purchaser is a VAT-
registered taxpayer?
a. P0
b. P6,000
c. P6,720
d. P7,200

Note: The input VAT of the purchaser shall be the output VAT billed by the seller.

10. An insurance company had the following gross receipts:

Last Current
12-months month
Sales of fertilizers and seeds 4,600,000 700,000
Sales of equipment 1,920,000 200,000
Input VAT on processed foods 140,000 10,000

What is the VAT payable for the current month?

a. P0
 b. P14,000
c. P24,000
d. P108,000

Note: The VAT payable shall be computed out of vatable receipts (non-life premiums only)
Output VAT (P200,000 x 12%) = P24,000 – P0 input VAT = P24,000

11. A VAT-registered taxpayer with several businesses had the following sales:
Last Current
12-months month
Sales of fertilizers and seeds 1,800,000 200,000
Sales of equipment 1,500,000 150,000
Input VAT on processed foods 140,000 13,000

Compute the VAT payable for the current month.

a. P0
b. P5,000
c. P18,000
d. P29,000

Note: Even if the taxpayer did not exceed the VAT threshold in the past 12 months if it is
registered as a VAT taxpayer, it will be nonetheless subject to VAT.
Output VAT (P150,000 x 12%) – P13,000 input VAT = P5,000

12. A VAT taxpayer is engaged in mixed transactions:

Exempt sales Export sales Regular sales
Output VAT N/A - 300,000
Input VAT 12,000 36,000 200,000

What is the creditable input VAT?

a. P0
b. P200,000
c. P236,000
d. P248,000

Note: Input VAT traceable to exempt sales are non-creditable.

P36,000 + P200,000 = P236,000.

13. In the immediately preceding problem, what is the VAT payable?

a. P100,000
b. P64,000
c. P52,000
d. P0

Note: (P300,000 – P236,000 = P64,000)

14. The taxpayer made a sale P400,000 to the government from goods he purchased for P300,000
from VAT taxpayers.
What is the actual input VAT?
a. P0
b. P20,000
c. P28,000
d. P36,000

Note: The P300,000 purchases is understandable exclusive of VAT because there is no

15. A VAT taxpayer sold goods to the government for P1,000,000 and paid P40,000 input VAT traceable
to the sale. What is the creditable input VAT on government sale?
a. P0
b. P40,000
 c. P50,000
d. P70,000

Note: The creditable input VAT on government sale is the standard input VAT equivalent to 7% of
the sale. Hence, 7% x P1,000,000 = P70,000

16. A VAT-taxpayer exported P1,000,000 worth of goods. It incurred P36,000 input VAT on such sales.
What is the creditable input VAT?
a. P0
b. P36,000
c. P50,000
d. P70,000

17. A non-VAT-taxpayer exported P1,000,000 worth of goods. It incurred P36,000 input VAT on such
sales. What is the creditable input VAT?
a. P0
b. P36,000
c. P50,000
d. P70,000

Note: The export sales of non-VAT sellers is an exempt sales. Input VAT traceable to it are
noncreditable but are part of costs and expenses.

18. A taxpayer collected the following from lessors of commercial spaces:

Billing for rentals 1,500,000
Less: Creditable withholding tax 75,000
Net receipt 1,425,000

Compute the output VAT?

a. P0
b. P160,714
c. P180,000
d. P200,000

Note: The output VAT must be based on the gross receipts not on the net receipts. The billing
should be understood to include the output VAT but since there is no answer for 12/112 x
P1,500,000. The same is impliedly exclusive of VAT.
The Output VAT should therefore be computed as P1,500,000 x 12% = P180,000.

19. A VAT taxpayer received a 5% creditable withholding tax plus P48,150 cash from a VAT invoice.
What is the output VAT?
a. P5,159
b. 5,778
c. 5,373
d. 5,400

Note: If X is invoice price, (95%X + 12% = P48,150); X = P45,000;

Then the Output VAT is P45,000 x 12% = P5,400.

20. A VAT taxpayer received a sum of P74,900 and a P3,500 certificate of creditable withholding tax.
What is the output VAT?
a. P9,396
b. P8,568
c. P8,400
d. P8,988

Note: Invoice price = P74,900 + P3,500 = P78,400.

Then the Output VAT shall be P78,400 x 12/112 = P8,400.
CHAPTER 7
True or False 1
False 1. Sellers of services are subject to VAT on their gross sales or receipts. (GR)
False 2. Sellers of goods are subject to VAT on gross receipts. (GSP)
False 3. Sellers of properties are subject to VAT on the fair market value of the property sold or
disposed of. (FMV or GSP)
False 4. Gross receipts include agency monies and bank loans received by the taxpayer.
True 5. When the discount exceeds 30% of the actual market value, the selling price is
considered unreasonably lower.
False 6. If the selling price exceeds the fair value, the basis of the output VAT is the fair value.
False 7. If the selling price is below fair value, the basis of the output VAT is the fair value.
False 8. If the selling price is unreasonably lower, the basis of the output VAT is the selling price.
(FMV)
False 9. “Gross receipt” means collections including evidences of indebtedness such as
promissory notes given by the client. (except notes)
True 10. Advances given by the client are included in gross receipts.
False 11. Client expenses reimbursed by the client to the business taxpayer are part of gross
receipt.
True 12. Out-of-pocket expenses of the services provider reimbursed by the client are part of
gross receipt.
False 13. Only dealers in real properties are subject to VAT on the sale of real properties.
(Ordinary assets are also vatable)
True 14. A person not engaged in business is not subject to VAT on his sale of goods or
properties.
False 15. For purposes of the VAT, fair value of real property means the higher of independent
appraisal value and zonal value. (AV or ZV whichever is higher)
False 16. If the VAT is based on the fair value of the property, the same is presumed to be
inclusive of the VAT. (exclusive)
False 17. The VAT on the installment sale of goods may be reported in installment. (only real
property)
False 18. The VAT on the sale of real property is always reported in installment.
False 19. The installment reporting of output VAT on services is as allowed so long as the initial
payments do not exceed 25% of the agreed contract price. (not services, real property
only)
False 20. The installment reporting of VAT must be over the estimated life of the property in
months or 60 months whichever is lower.

True or False 2
True 1. The sale of properties considered ordinary assets is subject to output VAT.
True 2. The sale of real property on the deferred payment basis not on the installment basis,
shall be subject to VAT similar to a cash sale.
True 3. Interest and penalties are subject to VAT in the months they are collected.
True 4. The sale of capital assets such as investments is not subject to output VAT.
True 5. The donation of business properties considered ordinary assets by the business owner is
a transaction “deemed sale”.
False 6. The distribution of cash dividends is a deemed sale subject to output VAT.
False 7. The distribution of property dividend in the form of stocks of another corporation is
subject to output VAT. (unless taxpayer is dealer in securities)
False 8. The sales of all ordinary assets are exempt from VAT.
False 9. The exchange of investments in payment of debt is a deemed sales transaction subject
to VAT.
False 10. The exchange of residence in payment of debt is subject to VAT as a deemed sale
transaction.
False 11. Consignment is deemed sold if not returned by the consignee in 30 days. (60 days)
True 12. The consignee is subject to VAT on the commission income on sales of consigned goods.
True 13. The consignor is subject to VAT on the sales of consigned goods by its consignees.
True 14. The vatable inventories and properties of a VAT taxpayer upon retirement or cessation
of business are subject to VAT as deemed sales.
True 15. The output VAT on deemed sales upon retirement or cessation of business shall be
 based on the market price or cost of goods whichever is lower.
True 16. The commissioner shall determine the market value in cases of transactions deemed
sales and sales with unreasonably lower gross selling prices.
False 17. The change in corporate control over a corporation is considered a deemed sale
transaction.
False 18. When a business changes its trade name, vatable items or properties in its possession
shall be deemed sold at the date of change.
True 19. The consolidation of a corporation with another corporation is not considered a deemed
sale transaction.
False 20. The merger between two corporations shall result in a deemed sale transaction.

Multiple Choice – Theory: Part 1

1. What is the tax basis of the output VAT on sales of services?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher

2. What is the tax basis of the output VAT on sales of goods?

a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher

3. What is the tax basis of the output VAT on exchange of properties?

a. Gross selling price
b. Gross receipts
c. Fair value of properties received
d. Fair value of gross selling price whichever is higher

4. What is the tax basis of the output VAT on sales of real properties?
a. Selling price
b. Gross receipts
c. Fair value
d. Fair value or selling price whichever is higher

5. What is the tax basis of the output VAT on sales of goods with unreasonably lower selling price?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher

6. What is the tax basis of the output VAT on installment sales?

a. Gross selling price
b. Installment received
c. Fair value of property sold
d. Fair value or gross selling price whichever is higher

7. What is the tax basis of the output VAT on deemed sales?

a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher
8. Which of the following selling prices is considered unreasonably lower?
Fair value Selling price Discount
a. 200,000 240,000 -None-
b. 250,000 172,500 77,500
c. 400,000 300,000 100,000
d. 500,000 380,000 120,000

9. Which of these is excluded in the gross selling price?

a. Excise tax
b. Output tax
c. Contract price
d. Delivery charges

10. Which of the following is excluded in gross receipts?

a. Cash collection
b. Check collection
c. Promissory note given by the buyer
d. None of these

11. Which is not considered in the determination of the tax base of the VAT on sale of real properties?
a. Selling price
b. Zonal value
c. Assessed value
d. Appraisal value

12. Which of the following is subject to the Output tax?

a. Sale of books
b. Sale of agricultural or marine food products
c. Sale of non-food agricultural or marine products
d. Sale of educational services by a school

13. Which is subject to Output tax?

a. Gross receipts of domestic common carriers by land
b. Gross receipts of international common carriers
c. Gross receipts of banks
d. Gross receipts of non-life insurance companies

14. Which is subject to the 12% regular output tax?

a. Sale of residential dwelling with P1,500,000 unit price
b. Gross receipts from residential dwelling with P15,000 monthly rental
c. Receipts from publishing of books
d. Gross receipts of hospital

15. Which is not subject to the 12% output tax?

a. Gross receipts from restaurant
b. Gross receipts from professional practice
c. Gross receipts from race track operations
d. Sale of medicines

Multiple Choice – Theory: Part 2

1. Which of the following is subject to output tax if sold by a person not engaged in business?
a. Sale of personal residence
b. Sale of car
 c. Sale of investment in stocks
d. None of these

2. Which of the following when sold will result in an output VAT?

a. Vegetables
b. Furniture
c. Fruits
d. Rice

3. A real property is sold by a dealer for P1,900,000. The property had a zonal value of P2,000,000,
assessed value of P1,800,000 and independent appraisal value of P2,400,000.
What is the “gross selling price” for VAT purposes?
a. P1,800,000
b. P1,900,000
c. P2,000,000
d. P2,400,000

4. Which of the following is not subject to output tax when sold by a realty dealer?
a. Sale of properties held for sale
b. Sale of properties used in business
c. Sale of investment in stocks
d. Exchange of properties held for sale in settlement of debt

5. The output VAT on the installment sale of property may be reported in installment if
a. The ration of initial payment exceeds 25% of the selling price.
b. The ration of initial payment exceeds 25% of the fair value.
c. The ration of initial payment does not exceed 25% of the selling price.
d. The ration of initial payment does not exceed 25% of the fair value.

6. Which is not a deemed sales transaction?

a. Distribution of property dividend
b. Dacion en pago
c. Consignment of goods when actual sale is made within 60 days
d. Cessation of status as VAT taxpayer

7. Which is a deemed sales transaction subject to VAT?

a. Retirement of business by a non-VAT taxpayer
b. Dacion en pago of properties by a person not engaged in business
c. Distribution of property dividend by a VAT taxpayer
d. All of these

8. Which of the following dividend declaration is a deemed sale subject to VAT?

a. Distribution of stock dividends
b. Distribution of investments as property dividends
c. Distribution of cash dividends
d. Distribution of properties held for sale as dividends

9. Which of the following properties is not subject to VAT in a foreclosure sale (i.e. dacion en pago)?
a. Cars held for sale
b. Machineries
c. Corporate building
d. Vacant lot not used in business

10. Which is a deemed sale transaction?

 a. Change in corporate name
b. Merger or consolidation of corporations
c. Sale of the entire business
d. Placement of an investment by a shareholder

11. Statement 1: If the output VAT is erroneously billed, the amount shown in the invoice is deemed
exclusive of VAT.
Statement 2: If the output Vat is not separately indicated in the invoice, it shall be computed as
12/112 of the invoice price.
Which statement is false?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement

12. Statement 1: By revenue regulation, the VAT shall be displayed separately from the selling price in
the invoice.
Statement 2: If the seller failed to indicate the VAT on the invoice, the sale shall be presumed
exempt.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement

13. Statement 1: Only VAT taxpayers are generally subject to the output tax.
Statement 2: Non-VAT taxpayers never pay the 12% output tax.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement

Note: Non-VAT taxpayers who issues VAT invoice or OR will pay VAT.

14. Which is subject to the 12% regular output VAT?

a. Sale of silver to the Bangko Sentral ng Pilipinas
b. Sale of services to a non-resident person
c. Sale of office supplies to the Asian Development Bank
d. Export sale by a non-VAT taxpayer

15. Which of the following receipts from a domestic common carrier are not subject to regular output
tax?
a. Receipts from transport of passengers by land
b. Receipts from transport of cargoes by land
c. Receipts from transport of passengers by sea
d. Receipts from transport of cargoes by air

Multiple Choice – Problems: Part 1

1. A non-VAT taxpayer sold goods for P20,000, half of which are paid by the buyer who gave a
promissory note for the balance. The output VAT is
a. P0
b. P1,200
 c. P2,400
d. P4,800

Note: A non-VAT taxpayer is not subject to VAT.

2. A VAT-taxpayer sold goods for P40,000 which excludes a P1,000 delivery charge and VAT. The
buyer paid P30,000 downpayment and promised to pay the P11,000 balance plus the VAT in 30
days.
What is the output VAT?
a. P4,920
b. P4,800
c. P3,600
d. P0

Note: (P40,000 + P1,000) x 12% = P4,920

3. A VAT-taxpayer compiled the following for the purpose of filing his BIR Form 2550M:
Sales to VAT taxpayers 200,000
Sales to non-VAT taxpayers 150,000
Total 350,000

What is the output VAT?

a. P0
b. P18,000
c. P24,000
d. P42,000

Note: P350,000 x 12% = P42,000

4. A VAT-registered car dealer sold the following goods to a relative:

Selling price 300,000
Fair market value 500,000

What is the output VAT?

a. P0
b. P36,000
c. P42,000
d. P60,000

Note: P500,000 x 12% = P60,000. Unreasonably lower SP.

5. A VAT-registered realty dealer sold a parking lot on the following terms:

Zonal value (fair value) 2,000,000
Less: 10% discount 200,000
Selling price 1,800,000

Compute the output VAT.

a. P0
b. P168,000
c. P216,000
d. P240,000

Note: P2,000,000 x 12% = P240,000. Basis is FMV as fixed by law.

6. A VAT- registered seller sold various merchandise at wholesale price, exclusive of VAT:
Product total retail price 300,000
Less: Trade discount (10%) 30,000
Product wholesale price 270,000
Less: Cash discount (5%)* 13,500
Net price due in 15 days 256,500

* If customer pays in 15 days

What is the output VAT?
a. P0
b. P30,780
c. P32,400
d. P36,000

Note: P270,000 x 12% = P32,400. Cash discount is contingent.

7. A non-VAT taxpayer prepared the following summary of sales for the purpose of filing his BIR Form
2551Q:
Sales to VAT taxpayers 200,000
Sales to non-VAT taxpayers 150,000
Total 350,000

Compute the output VAT.

a. P0
b. P18,000
c. P24,000
d. P42,000

Note: Non-VAT taxpayer.

8. Mr. Venta is a VAT-registered seller of “Hot Siopao”. During the month, it sold a total of P400,000
out of which P300,000 were paid by customers. During the month he made a total collection of
P420,000 inclusive of collection of past accounts.
Compute the output VAT.
a. P50,400
b. P48,000
c. P36,000
d. P0

Note: P400,000 x 12% = P48,000. This is sales of goods.

9. A VAT-registered practicing lawyer disclosed the following during a month:

Total professional fees billed 800,000
Total professional fees collected 600,000
Advances by certain clients 200,000

Compute the output VAT.

a. P120,000
b. P96,000
c. P72,000
d. P88,286
 Note: (P600,000 + P200,000) x 12% = P96,000. The term “fees” inherently excludes Output VAT.

10. A VAT-registered service provider prepared the following list of cash collections during a month:
Gross receipts inclusive of VAT 504,000
Client advances 200,000
Proceeds of bank loan 300,000
Total 1,014,000

Compute the output VAT.

a. P54,000
b. P78,000
c. P84,480
d. P108,643

Note: (P504,000 x 12/112) + (P200,000 x 12%)

Multiple Choice – Problems: Part 2

1. A VAT-registered seller of goods billed a customer the following:
List price 800,000
Trade discount 125,000
Net price 675,000
The credit term for the sale was 2%/15, n/60 days.

What is the output VAT?

a. P96,000
b. P81,000
c. P79,380
d. P70,875

Note: P671,000 x 12% = P81,000

2. A VAT-registered seller of goods reported the following during a month:

Gross sales 500,000
Less:
Cash discount for early payment 50,000
Sales returns 20,000 70,000
Net sales 430,000

What is the output VAT for the month?

a. P51,600
b. P54,000
c. P57,600
d. P60,000

Note: (P500,000 – P20,000) x 12% = P57,600

3. A restaurant which also caters for special events had the following date which may be relevant in
filing its BIR Form 2550M:
Gross receipts from customers 500,000
Gross receipts from advanced reservations 50,000
Client balances evidenced by promissory notes 70,000
 Total 620,000

Compute the output VAT.

a. P60,000
b. P66,000
c. P68,400
d. P74,400

Note: (P500,000 + P50,000) x 12% = P66,000

4. A VAT-registered seller merely indicated an amount of P300,000 on a bill without separately

indicating the VAT thereon.
What is the output VAT?
a. P0
b. P32,143
c. P36,000
d. P40,000

Note: P300,000 x (12/112). Presumption: invoice is inclusive of VAT.

5. A VAT-registered seller indicated the following in a VAT invoice evidencing the sale of vegetables:
Selling price 5,000
Output VAT 600
Total amount due 5,600

What is the output VAT?

a. P0
b. P600
c. P6,520
d. P6,720

Note: The Output VAT is correctly billed, hence, it is the output VAT.

6. In the immediately preceding problem, compute the output VAT assuming the sale is made by a
non-VAT seller.
a. P0
b. P600
c. P6,250
d. P6,720

Note: Non-VAT sellers billing VAT are nevertheless subject to VAT.

7. A VAT taxpayer had the following invoiced sales during the first quarter 2020:
January 280,000
February 347,200
March 313,600

What is the reportable output Vat respectively in January, February and March?
a. P33,600; P41,664; P37,632
b. P33,600; P41,664; P112,896
c. P30,000; P37,200; P33,600
d. P30,000; P37,200; P100,800
 Note: Monthly, monthly, and quarterly.

8. A real property dealer sold an agricultural lot for P2,500,000 with the following values:
Appraisal value 3,000,000
Zonal value 2,000,000
Assessed value 1,500,000

Compute the output VAT.

a. P180,000
b. P240,000
c. P300,000
d. P360,000

Note: June is end of second quarter, July and August are months of third quarter, hence, monthly
reporting applies.

9. A VAT-registered building contractor who reports under the calendar year basis had the following
billings and collections (inclusive of VAT) regarding its construction contracts:
Bill Collection
June 448,000 403,200
July 504,000 453,600
August 336,000 302,400

What is the output VAT respectively in June and July?

a. P53,760; P114,240
b. P48,000; P54,000
c. P43,200; P91,800
d. P43,200; P48,600

10. In the immediately preceding problem, what is the output VAT in August?
a. P138,000
b. P124,200
c. P36,000
d. P32,400

Note: P2,500,000 x 12%, appraisal is not used

Multiple Choice – Problems: Part 3

1. In June 2019, a realty dealer sold a residential lot for P2,000,000. The lot had a fair value of
P2,500,000 at the date of sale. The buyer agreed to pay in P100,000 monthly installments starting
June 2019.
What is the output VAT respectively in June 2019 and July 2019?
a. P300,000; P0
b. P240,000; P0
c. P15,000; P15,000
d. P12,000; P12,000

2. On April, 2020, a VAT-registered realty developer sold a condominium unit at a selling price of
P3,600,000. The buyer agreed to pay in 36 monthly installments. The property had a zonal value of
P4,000,000 and assessed value of P3,000,000 at the date of sale.
What is the output VAT on every installment?
a. P13,333
 b. P12,000
c. P10,000
d. P0

Note: IP/SP = 25%. Hence, P4,000,000 x 12% x 1/36 = P13,333

3. A VAT-registered realtor sold a commercial building at a selling price of P20,000,000 payable over
20 monthly installments of P1,000,000. A sample monthly bill of the realtor depicts the following:
Installment due 1,000,000
Plus: Output VAT 144,000
Invoice price 1,144,000

What is the fair value of the property sold?

a. P20,000,000
b. P22,000,000
c. P24,000,000
d. P30,000,000

Note: [(P144,000/12%)/(1/20)] = P24,000,000

4. A realtor sold a commercial land for P1,500,000 on November 2020. A 20% downpayment was
required and the balance was due in 20 monthly installment of P60,000 starting December 2020.
What is the output VAT respectively for November and the quarter ending December 2020?
a. P180,000; P180,000
b. P36,000; P43,200
c. P36,000; P7,200
d. P180,000; P0

Note: IP = (20% x P1.5M) + P60k) = P360k; P360k/P1.5M = 24%; Output VAT = P1.5M x 12% =
P180k
November = P300k/P1.5M x P180k = P36k
December = P60k/P1.5M x P180k = P7.2k; but December is end of quarter; Hence, P36k + P7.2K =
P43.2k

5. A real property developer exchanged one of its land inventories with a zonal value of P2,000,000
and assessed value of P1,500,000 for the stocks of another corporation.

What is the output VAT on the exchange?

a. P0
b. P180,000
c. P214,286
d. P240,000

Note: P2,000,000 x 12% = P240,000

6. A VAT-registered seller of goods reported the following in a month:

Cash sales 200,000
Credit sales 300,000
Installment sales 400,000
Consignment sales (30 days old) 100,000
Total 1,000,000

Compute the output VAT.

 a. P24,000
b. P60,000
c. P72,000
d. P108,000

Note: (P200,000 + P300,000 + P400,000) x 12% = P108,000

7. A VAT-registered seller received the following statement from its consignees:

Gross price 500,000
Less:
Commission (20%) 100,000
Freight charges 20,000
Net remittance 280,000

What should be the output VAT on the sales?

a. P44,000
b. P45,600
c. P57,600
d. P60,000

Note: P500,000 x 12% = P60,000

8. A VAT- registered seller had the following summary of sales and consignments in April:
Cash sales 200,000
Credit sales 150,000
Sales reported by consignees 250,000
Unsold January consignment 50,000
Unsold February consignment 30,000
Unsold March consignment 40,000
Unsold April consignment 65,000

Assuming that the rules on deemed sale was properly applied in prior months, what is the output
VAT for April?
a. P42,000
b. P75,600
c. P78,000
d. P81,600

Note: (P200k + P150k + P250k + P30k) x 12% = P75,600. The January unsold must have been
deemed sold in March.

9. Delfin Corporation, a security dealer, declared the following dividends in March 2020:
Cash dividend 1,200,000
Property dividend 800,000
The property dividend represents various merchandise inventories.

Compute the output VAT.

a. P0
b. P96,000
c. P144,000
d. P240,000

Note: P800,000 x 12% = P96,000

10. After consecutive years of persistent losses, Luigi Corporation decided to liquidate its business. It
had the following items in its possession upon termination of operations:
Book Fair value
value
Receivables 1,200,000 1,200,000
Investments 200,000 400,000
Inventories 600,000 700,000
Properties and equipment 1,200,000 800,000

Compute the output VAT on the deemed sale transaction.

a. P0
b. P168,000
c. P216,000
d. P240,000

Note: (P600,000 + P800,000) x 12% = P168,000

Multiple Choice – Problems: Part 4

1. Mr. Yaobang is a VAT-registered professional. He also owns a hotel and has a professional practice.
He instructed his accounting staff to indicate zero-rated sales in hotel receipts
During the month, he had the following receipts from his business and exercise of profession:
Gross receipts from profession 1,000,000
Gross receipts from hotel 800,000
Total 1,800,000

Compute the output VAT.

a. P0
b. P96,000
c. P120,000
d. P216,000

Note: P1,800,000 x 12% = P216,000

2. Mang Juan applied for the cancellation of his VAT registration. His application was granted by the
BIR. At that time, he had the following inventories of vatable goods:
Supplies, bought from non-VAT suppliers 50,000
Supplies, bought from VAT suppliers 80,000
Merchandise, bought from VAT suppliers 100,000
Merchandise, bought from non-VAT suppliers 20,000
Total 250,000

Compute the output VAT on the deemed sales.

a. P0
b. P8,400
c. P21,600
d. P30,000

Note: P250,000 x 12% = P30,000

3. A VAT-registered farm supply dealer sold the following during a month:

Fertilizers 200,000
 Corn seeds 250,000
Farm equipment 1,200,000
Pesticides 300,000
Total 1,950,000

What is the output VAT?

a. P234,000
b. P204,000
c. P180,000
d. P144,000

Note: (P1,200,000 + P300,000) x 12% = P180,000

4. A VAT-registered bookstore had the following revenues during a month:

Commission income on sales of books 300,000
Sales of books held as inventory 400,000
Sales of school supplies 900,000
Total 1,000,000

Compute the output VAT.

a. P192,000
b. P156,000
c. P144,000
d. P108,000

Note: (P900,000 + P300,000) x 12% = P144,000

5. A VAT taxpayer made the following sales during the quarter:

Domestic sales:
Sales of VAT-exempt goods 1,200,000
Sales of vatable goods 900,000

Export sales 800,000

What is the output VAT?

a. P348,000
b. P252,000
c. P204,000
d. P108,000

Note: P900,000 x 12% = P108,000. Zero-rated sales do not result in any output VAT.

6. Oval Corporation owns a coliseum which caters to large indoor events. The coliseum had the
following receipts during a month:
Sources of gross receipts Amount
Professional basketball games 400,000
Professional boxing competitions 500,000
Amateur basketball games 100,000
Amateur boxing competitions 150,000
Musical concerts 250,000
Religious gatherings 50,000
Other special events or gatherings 120,000
 Total 1,570,000

What is the output VAT?

a. P188,400
b. P168,214
c. P80,400
d. P71,786

Note: (P100k + P150K + P250K + P50k + P120k) x 12% = P80,400. Professional basketball and
boxing are subject to % taxes.

7. King Bank presented the following gross receipts during the quarter:
Interest income – short term loans 4,000,000
Interest income – long-term loans 1,200,00
Rental of ROPA 800,000
Processing fees 200,000
Total 6,200,000

Compute the output VAT.

a. P0
b. P107,143
c. P120,000
d. P744,000

Note: Banks are subject to % tax.

8. Phil-Air is a domestic air carrier with both domestic and international operations. During a month, it
had the following gross receipts:
Domestic operations
Transport of passengers 40,000,000
Transport of cargoes 12,000,000

International operations
Transport of passengers 30,000,000
Transport of cargoes 8,000,000

Compute the output VAT.

a. P1,440,000
b. P4,800,000
c. P6,240,000
d. P10,800,000

Note: (P40M + P12M) x 12% = P6,240,000. International operations is zero-rated.

9. Cebu Ferries has a fleet of ships traversing the islands of Bohol and Cebu. It reported the following
total receipts during a month:
Transport of passengers 8,000,000
Transport of cargoes and baggage 1,000,000
Total 9,000,000

Compute the output VAT.

a. P0
b. P120,000
 c. P960,000
d. P1,080,000

Note: P9,000,000 x 12% = P1,080,000

10. Victor Lines is a VAT-registered operator of buses. During the month, it had the following total
receipts:
Transport of passengers 14,000,000
Transport of cargoes and baggage 1,000,000
Total 15,000,000

Compute the output VAT.

a. P0
b. P120,000
c. P1,680,000
d. P1,800,000

Note: P1,000,000 x 12% = P120,000. The passenger receipts is subject to 3% tax.

11. Mr. Asuncion is a non-VAT registered operator of 40 taxis. During a month, he collected a total
receipt of P1,300,000 under the “boundary” system.
Compute the output VAT.
a. P0
b. P278,572
c. P312,000
d. P321,000

Note: Non-VAT taxpayer, taxi operators are subject to % tax.

12. A non-VAT registered radio broadcasting company collected a total of P800,000 during a month.
Compute the output VAT.
a. P0
b. P48,000
c. P85,714
d. P96,000

Note: It is subject to % tax.

13. A VAT-registered real property dealer sold the following during a quarter:
House and Lot – 2B-A 2,000,000
House and Lot – 2B-D 3,000,000
House and Lot – 2C-E 4,000,000
Residential Lot – 1A 1,000,000
Residential Lot – 2B 2,000,000
Total sales 12,000,000

Compute the total output VAT.

a. P0
b. P720,000
c. P1,080,000
d. P1,320,000
 Note: (P4,000,000 + P2,000,000) x 12% = P720,000. Remember the exemption limits on house &
lot = P3,199,200 and residential lot = P1,919,500.

14. A VAT-registered dealer sold two residential units to the same buyer with the following separate
prices:
House and Lot – 1C-A 1,500,000
House and Lot – 1C-B 2,000,000

What is the output VAT?

a. P0
b. P180,000
c. P240,000
d. P420,000

Note: (P1.5M + P2M) x 12% = P240,000. Adjacent lots are consolidated for purposes of the
exemption threshold.

15. A VAT-registered realty dealer sold the following adjacent residential lots to the same buyer. The
separate deeds of sale had the following respective prices:
Residential Lot – 2A 800,000
House and Lot – 2B 900,000

What is the output VAT?

a. P0
b. P96,000
c. P108,000
d. P204,000

Note: The consolidation/aggregation rules applies to house and lot and house and lot, and
residential lot and residential lot.

16. An insurance company had the following gross receipts during a month:
Cash collections from life premiums 1,800,000
Notes receivable for life premiums 200,000
Cash collections from non-life premiums 1,100,0000
Notes receivable for non-life premiums 300,000

What is the output VAT?

a. P0
b. P360,000
c. P180,000
d. P132,000

Note: P1.1M x 12% = 132,000