CHAPTER 1

I. PROBLEM 1
1. Free Company, a resident business, renders services to Mr.
Erlwin, a resident person who is not engaged in business.

Identify the statutory taxpayer and the type of consumption

tax
a. Free Company – business tax
b. Mr. Erlwin – VAT on importation
c. Mr. Erlwin – Business tax
d. Free Company – VAT on importation

2. Baliwag Company, a non-resident business, purchased P200,000

from Cauayan Company, a resident business. Which will pay the
consumption tax on this transaction?
a. Cauayan Company
b. Baliwag Company
c. Both
d. Neither

3. Heidenberg Corporation, a resident business, purchased

P100,000 goods from Kiwi Company, a non-resident business.

Identify the statutory taxpayer and the type of consumption

tax.
a. Heidenberg company – business tax
b. Kiwi Company – business tax
c. Heidenberg Company – VAT on importation
d. Kiwi Company – VAT on importation

4. Mr. Cedric, an employee, sold his residential lot to Mrs.

Corneto, a real property dealer. Who is subject to consumption
tax with respect to this transaction?
a. Mr. Cedric
b. Mrs. Corneto
c. A and B
d. Neither

5. Mr. Porma made a casual sale involving a car to Mrs. Tutyal, a

resident buyer. Mr. Porma is not a car dealer. Who is subject
to consumption tax?
 a. Mr. Porma
b. Mrs. Tutyal
c. Both
d. Neither

6. Mr. Llama, an employee, imported a pair of shoes from

Hongkong. Which consumption tax is the liable to pay?
a. Business tax
b. VAT on importation
c. Both
d. None

7. Kapederasyon, a charitable non-profit corporation, imports

various office supplies from XG Manufacturing Industries in
China. Which is correct?
a. Kapederasyon is exempt from VAT on importation
b. Kapederasyon is subject to VAT on importation
c. XG Manufacturing Industries is subject to business tax
d. XG Manufacturing Industries shall pay the VAT on the
importation.
 ANSWERS:

1. A
2. D
3. C
4. D
5. D
6. B
7. B