BUSINESS TAX: VALUE ADDED TAX

Prepared by: Rex B. Banggawan, MBA, CPA

1.) Which of the following sales is not considered for purposes of the VAT threshold?
A. Sale of refined sugar
B. Receipts from sale of gold to the BSP
C. Monthly residential rentals of P16,000 a unit
D. Monthly commercial rentals of P12,0000 a unit

2.) A corporation established in Japan is operating a branch and a wholly owned subsidiary here in the

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Philippines. Which is correct regarding the proper tax compliance of the following?
A. A consolidated VAT return encompassing the foreign parent company, the resident branch and
the subsidiary shall be prepared.

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B. A consolidated VAT encompassing the resident branch and the subsidiary shall be prepared.
C. The branch and the subsidiary shall file separate VAT returns.

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D. The branch, the subsidiary and the parent company shall file separate VAT returns.

3.) Sales from which of the following entities shall be included in the VAT returns of Mr. X
A.) business partnership where X owns more than 50% interest
B.) A foreign branch established by Mr. X
C.) A corporation sole established by X
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D.) A sole proprietorship business established by Mr. X
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4.) A domestic corporation has its head office in Baguio City and a branch office in Quezon City. Which is
correct with respect to the tax compliance of the corporation?
A. The corporation shall file its consolidated VAT return in the RDO of Baguio City.
B. The corporation and its branch shall file separate VAT returns in their respective RDOs.
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C. The corporation may alternatively file its consolidated VAT return in the RDO of either Baguio
City or Quezon City.
D. The head office and the branch must secure separate tax identification numbers.
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5.) Mark had the following sources of income:

I. Hairdressing business III. Barbecue stand
II. Meat shop IV. Profit sharing from GPP
Which of the foregoing is subject to VAT?
A. All except IV
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B. All except II
C. I and II only
D. I only

6.) Mr. Andres has an accounting practice with P2.5M annual receipts. Mrs. Andres is a beautician with
P40M annual receipts. Which is correct?
A. Mr. and Mrs. Andres shall file a consolidated VAT return and a consolidated income tax return.
 B. Mr. Andres shall separately pay percentage tax while Mrs. Andres pay VAT but they must file a
consolidated income tax return.
C. Mr. Andres shall pay percentage tax while Mrs. Andress pay VAT. As such, they must file
separate income tax returns.
D. None of these.

7.) Which of the following is a correct statement regarding VAT?

A.) A negative VAT due is a VAT refundable or creditable
B.) Both output VAT and input VAT arise from business transactions.

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C.) Output VAT may arise from non-business transactions but input VAT must arise from business
transactions.
D.) An individual taxpayer must separately file a VAT return for every line of proprietorship business.

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8.) Which of the following will result to the payment of VAT?

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A. Sales to government entities
B. Export sales
C. Exempt sales
A.) A only C. All of these
B.) A and B only D. None of these R
9.) A service provider billed a customer P112,000 which includes P4,000 delivery charge and VAT. The
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customer demanded a P8,000 discount for minor non-conformance in the specification which was
granted by the provider. The customer paid P84,000 initial payment. What is the output VAT?
A.) P 12,000 C. P 10,080
B.) P 11,143 D. P 9,000
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10.) A VAT taxpayer seeds and fertilizers to the following:

- VAT registered persons P 100,000
- Non-VAT registered persons 150,000
- Non-business persons 300,000
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Compute the output VAT?

A.) P 66,000 C.) P 12,000
B.) P 48,000 D.) P 0

11.)
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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 C. Both statements
B. Statement 2 D. Neither statement
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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 C. Both statements
B. Statement 2 D. Neither statement

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13.) What 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

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C. Output VAT plus 3% percentage tax and 50% surcharge
D. 3% percentage tax

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14.) Which is a source of input VAT?
A. Purchase of agricultural or marine food products from VAT-sellers
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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
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15.) Which is subject to withholding VAT?

A. Regular sales of real properties
B. Zero-rated sales
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C. Sales to the government

D. Purchase of service from non-residents

16.) A VAT taxpayer cannot claim the actual input VAT credit on
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I. Regular sales III. Government sales

II. Zero-rated sales IV. Exempt sales

A. I and II only C. IV only

B. III and IV only D. None of these
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17.) 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

18.) An agricultural supplier had the following sales during the last 12-month period:
Sales of fertilizers and corn seeds P 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

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19.) Mrs. Anonuevo had the following sources of income in the past 12 months:

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Salaries P 3,200,000
Professional fees 800,000

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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.
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C. She shall pay percentage tax on the professional fees only.
D. She shall pay VAT on the professional fees only.
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20.) Aciga Corporation had the following sales in the past 12-month period:

Home office sales P 2,000,000

Branch 1 sales 1,200,000
Branch 2 sales 1,000,000
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Total company sales P 4,200,000

Which is correct?
A. Home office shall pay VAT.
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B. Branch 1 and branch 2 shall pay percentage tax.

C. The home office and branches shall all pay VAT.
D. A and B

21.) Mr. Vhinson, a VAT-registered taxpayer, owns a mini-store with the following sales in the past 12
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months:

Sales of meat and vegetables P 1,800,000

Sales of lechon 1,200,000
Sales of snacks and softdrinks 500,000
Total sales P 3,500,000
Which is correct?
A. Mr. Vhinson shall pay percentage tax on the sales of rice, lechon, softdrinks and snacks.
 B. Mr. Vhinson shall pay VAT on the sale of lechon, snacks and softdrinks.
C. Mr. Vhinson shall pay VAT on the sale of snacks and soft drinks.
D. Mr. Vhinson shall pay percentage tax on the sale of snacks and soft drinks.

22.) A commercial lessor collected P1,425,000 net receipts from lessees of commercial spaces.
What is the output VAT?
A. P 0 C. P180,000
B. P160,714 D. P200,000

23.) A VAT taxpayer received a sum of P74,900 and a P3,500 certificate of creditable withholding tax.

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What is the output VAT?
A. P 9,396 c. P 8,400
B. P 8,568 d. P 8,988

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24.) Which of the following selling prices is considered unreasonably lower?

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25.) Which is subject to the 12% regular output tax?
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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
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26.) 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?
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A. P1,800,000 c. P2,000,000
B. P1,900,000 d. P2,400,000
27.) Which is not a deemed sales transaction?
A. Distribution of property dividend
B. Dacion en pago
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C. Destruction of inventory due to fire

D. Cessation of status as VAT taxpayer

28.) 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 in the invoice the that the sale is exempt, the sale of exempt
goods would be presumed vatable.
Which statement is correct?
A. Statement 1 C. Both statements
B. Statement 2 D. Neither statement

29.) 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

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30.) Victor Fines is a VAT-registered operator of buses. During the month, it had the following total
receipts:

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Transport of passengers P 14,000,000
Transport of cargoes and baggage 1,000,000

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Total P 15,000,000
Compute the output VAT.
A. P 0 C. P 1,680,000
B. P 120,000 D. P 1,800,000

Sales invoice (total billed prices) P 436,800

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

Compute the VAT payable assuming the taxpayer is a VAT-registered and a VAT-registrable person,
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respectively.
A. P 0; P31,600 C. P 31,600; P45,600
B. P 26,800; P31,600 D. P 35,600; P45,600
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32.) A VAT taxpayer is engaged in mixed transactions:

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Compute the creditable input VAT and the VAT payable.

A. P 0; P 0 C. P236,000; P64,000
B. P200,000; P52,000 D. P248,000; P 52,000

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

Selling price P 300,000

Fair market value 500,000
What is the output VAT?
A. P 0 C. P 42,000
B. P 36,000 D. P 60,000

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

Zonal value (fair value) P 2,000,000

Less: 10% discount 200,000
Selling price P 1,800,000

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Compute the output VAT.
A. P 168,000 C. P 214,286
B. P 192,857 D. P 240,000

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35.) A VAT-registered service provider prepared the following list of cash collections during a month:

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Gross receipts inclusive of VAT P 504,000
Client advances 200,000
Proceeds of bank loan 300,000
Total

Compute the output VAT.

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P 1,014,000
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A. P 54,000 C. P 84,480
B. P 78,000 D. P 108,643

36.) In June 2021, 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 P 100,000 monthly installments starting June
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2021.

What is the output VAT respectively in June 2021 and July 2021?
A. P300,000; P 0 C. P 15,000; P 15,000
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B. P 240,000; P 0 D. P 12000; P 12,000

37.) 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:
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Compute the output VAT on the deemed sale transaction.

A. P 0 C. P216,000
B. P 168,000 D. P240,000
38.) A VAT-registered dealer sold two adjacent residential units to the same buyer with the following
separate prices:

House and Lot – 1C-A P 1,500,000

House and Lot – 1C-B 2,000,000
The combined property has a zonal value of P3,000,000. What is the output VAT?
A. P 0 C. P 375,000
B. P 240,000 D. P 420,000

39.) A realty development company is commencing business. Because of the large scale of its projected

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operations, it decided to register as a VAT taxpayer. It had the following inventories of properties before
commencement of operations:

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Raw land contributed by shareholders P 11,200,000
Corporate office building 20,000,000

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Various equipment 4,000,000

Compute the transitional input VAT?

A. P 0 C. P624,000
B. P224,000 R
D. P1,200,000

40.) Fish Corporation, a sardines canning company, had the following purchases as inputs for its
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manufacturing operations during a month:
Tin cans, exclusive of VAT P 80,000
Tomatoes 150,000
Sardines 200,000
Labels, exclusive of VAT 20,000
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Total P 450,000
What is the total creditable input VAT of Fish Corporation for the month?
A. P 6,000 C. P15,600
B. P 14,000 D. P18,000
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41.) A VAT taxpayer had the following input VAT during the year:

Input VAT on exempt sales P 204,000

Input VAT on government sales 100,000
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Input VAT on regular sales 174,000

Input VAT on export sales 150,000
Total Input VAT P 628,000
What is the total creditable input VAT?
A. P 0 C. P424,000
B. P 324,000 D. P528,000

42.) A VAT taxpayer incurred the following during the month:

Consultancy fees P 700,000
Salaries expense 400,000
Supplies expense 300,000

Purchases from VAT suppliers were P250,000 supplies and P400,000 equipment. The equipment is
expected to last for 5 years.

What is the creditable input VAT during the month?

A. P 84,000 C. P 114,800

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B. P 114,000 D. P 162,000

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