ELCN17B – TAXATION d. Court of Tax Appeals.

Review of Tax 1 and Tax 2

7. Section 2 of the National Internal Revenue Code of 1997, as
PRELIM PERIOD amended, states the powers and duties of the BIR. Which of the
Activity 1 following is not included?
Choose the letter of the BEST answer. Write E if the a. Assessment of taxes.
answer is not in the choices provided.
b. Collection of taxes and penalties connected thereof.
c. Execution of judgements in all cases decided in
1. The power of the state by which the sovereign raises revenue to
favor of BIR by the CTA.
defray the necessary expenses of the government.
d. Amending provisions of the National Internal
a. Taxation.
Revenue Code.
b. Eminent Domain.
c. Police Power. NOTE 6&7:
d. Tax.  The Bureau of Internal Revenue shall be under the supervision
NOTE: and control of the Department of Finance and its powers and
 The power to tax is inherent in sovereignty duties shall comprehend the assessment and collection of all
 The power to tax is legislative in character national internal revenue taxes, fees, and charges, and the
enforcement of all forfeitures, penalties, and fines connected
therewith, including the execution of judgments in all cases
2. The power of the state to take private property for public use upon decided in its favor by the Court of Tax Appeals and the
payment of just compensation. ordinary courts.
a. Taxation.
b. Eminent Domain. 8. The BIR shall be headed by the Commissioner of Internal
c. Police Power. Revenue (CIR) and ___ assistant chiefs to be known as Deputy
Commissioners pursuant to Section 3 of the tax code, as
d. Tax.
amended.
a. 2.
3. The power of the state to enact laws to promote public health, public
morals, public safety and the general welfare of the people. b. 3.
a. Taxation. c. 4.
b. Eminent Domain. d. 5.
c. Police Power.
NOTE:
d. Tax.
 1 Commissioner of Internal Revenue (chief)
 4 Assistant chiefs (Deputy Commisionners)
4. Statement 1: Taxation, as one of the powers of the state, is inherent in
sovereignty.
9. Which of the following is not included as a power of the
Statement 2: Taxes are the lifeblood of the government.
Commissioner of Internal Revenue (CIR) pursuant to Sections
a. Both statements are correct. 4, 5, and 6 of the tax code, as amended?
b. Both statements are incorrect. a. Interpret and decide tax case, subject to the exclusive
c. Only statement 1 is correct. appellate jurisdiction of the CTA. (section 4)
d. Only statement 1 is incorrect. b. Obtain information, and to summon, examine, and take
testimony of persons. (section 5)
5. Statement 1: The inherent power of taxation gives the government the c. Make assessments and prescribe additional requirements
right to tax citizens and properties even outside its jurisdiction. for tax administration and enforcement. (section 6)
Statement 2: Taxation is indispensable and inevitable price for d. All of the above are powers of the CIR.
civilized society without which the government would be paralyzed.
a. Both statements are correct. 10. Statement 1: The power of taxation is an inherent and
b. Both statements are incorrect. indispensable power of the State and as “taxes are the lifeblood
c. Only statement 1 is correct. of the government”, the power of the legislature is unlimited
d. Only statement 1 is incorrect. and plenary.
Statement 2: The power of taxation is sometimes called the
power to destroy.
NOTE:
 No state may tax anything not within its jurisdiction without violating
a. Both statements are correct.
the due process clause of the constitution. The taxing power of a b. Both statements are incorrect.
state does not extend beyond its territorial limits, but within such c. Only statement 1 is correct.
limits it may tax persons, property, income, or business d. Only statement 1 is incorrect.
 Taxation may be exercised only within the territorial jurisdiction
of that taxing authority
11. Which of the following statements is incorrect?
6. The Government agency responsible for the assessment and a. The legislature is given a wide range of discretion in
collection of all national internal revenue tax is the: determining what to tax, the purpose of the tax, how much
the tax will be, who will be taxed, and where the tax will
a. Department of Finance.
be imposed.
b. Bureau of Internal Revenue.
c. Congress.
 b. In order to maintain the general public’s trust and confidence in
the Government, the power to tax must be used justly and not
treacherously.
c. Tax laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the
same manner, the conditions not being different both in the
privileges conferred and the liabilities imposed.
d. The power of taxation is inherently executive and may be
imposed or revoked only by the executive branch and
moreover, this plenary power of taxation cannot be
delegated to any other branch of the Government or private
persons, unless its delegation is authorized by the
Constitution itself.
NOTE:
 A state legislature has a plenary law-making power over all
subjects, whether pertaining to persons or things, within its territorial
jurisdiction, either to introduce new laws or repeal the old, unless
prohibited expressly or by implication by the federal constitution or
limited or restrained by its own
 Scope of the taxation power: (CUPS)
o Comprehensive
o Unlimited
o Plenary
o Supreme
 Marshall Doctrine: power to destroy
 Taxation power can be used as an instrument of police power
 To discourage or prohibit undesirable activities or occupation
 If it is used solely for the purpose of raising revenue, it does not
include power to destroy
12. Statement 1: The power to fill in details and manner as to the
enforcement and administration of a law may be delegated to various
specialized administrative agencies, like to the Secretary of Finance.
Statement 2: If there is a conflict between the tax code and the rules
and regulations implemented by the BIR, administrative rules from
the BIR shall prevail.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement 1 is correct.
d. Only statement 1 is incorrect.
NOTE:
 The grant of the rule-making power to administrative agencies is a
relaxation of the principle of separation of powers and is an
exception to the non-delegation of legislative powers.
 Sources of Tax Laws
 Philippine 1987 Constitution.
 National Internal Revenue Code of 1997, as amended.
 Local Government Code
 Tax Treaties
 Jurisprudence
 BIR Issuances
o Revenue Regulations (RR)
o Are issuances signed by the Secretary of Finance,
upon recommendation of the Commissioner of
Internal Revenue, that specify, prescribe or define
rules and regulations for the effective enforcement
of the provisions of the National Internal Revenue
Code (NIRC) and related statutes.
o Revenue Memorandum Circulars (RMC)
o Are issuances that publish pertinent and applicable
portions, as well as amplifications, of laws, rules,
regulations and precedents issued by the BIR and
other agencies/offices
o Revenue Memorandum Order (RMO)
o Are issuances that provide directives or
instructions; prescribe guidelines; and outline
processes, operations, activities, workflows,
methods and procedures necessary in the
implementation of stated policies, goals,
objectives, plans and programs of the Bureau
in all areas of operations, except auditing.
o Revenue Administrative Orders (RAO)
o Revenue Delegation of Authority Orders (RDAO)
13. On December 29, 2022, ABC Company sold merchandise
inventory to XYZ Company for Five hundred million pesos
(P500M). The president of ABC Company knows that the
transaction would mean higher tax base, thus, will result in
more taxes. He then instructed the accountant not to declare the
sale until next taxable year, to lessen the company’s current
income tax. The company is said to be
a. Tax Avoiding
b. Tax Evading.
c. Tax Planning.
d. Tax Shifting.
NOTE:
 Tax avoidance - when the taxpayer minimizes his tax liability
by taking advantage of legally available tax planning
opportunities (tax minimization)
 Tax evasion - when the taxpayer resorts to unlawful means to
lessen or to get away with his tax liability (tax dodging)
 Tax exemption is a grant of immunity to particular persons or
corporations.
o Burden of proof: taxpayer
o he must be able to justify his claim by the
clearest grant of organic or statute law and
cannot be permitted to exist upon vague
implications.
 Vague tax law
o Burden of proof: government
14. The law must be capable of convenient, just and effective
administration of tax. This principle is called:
a. Fiscal adequacy
b. Theoretical justice
c. Administrative feasibility
d. Equality of Taxation
NOTE:
SOUND TAX SYSTEM
 Fiscal adequacy — the sources of revenues must be adequate
to meet government expenditures and their variations;
 Ability-to-pay — the tax burden must be in proportion to the
taxpayer's ability to pay; and
 Administrative feasibility — the tax system should be capable
of being effectively administered and enforced with the least
inconvenience to the taxpayer
15. A taxpayer is being assessed of tax deficiencies through a Letter
of Authority from the BIR. Which of the following is not a valid
defense for the taxpayer if he wishes to refute the tax deficiency
allegations from the BIR?
a. He has been deprived of due process.
b. There is a lack of territorial jurisdiction.
c. The prescriptive period for the tax has elapsed.
d. He will derive no benefit from the tax.
 b. Direct duplicate taxation is a valid defense against a
NOTE: tax measure if it is violative of the equal protection
 Letter of Authority (LOA) clause.
 authority given to the appropriate revenue officer assigned c. Absence of any of the elements of direct double
to perform assessment functions. taxation makes it indirect double taxation.
 enables revenue officer to examine the books of account and
d. A 20% final withholding tax on interest income
other accounting records of a taxpayer for the purpose of
on bank deposits and a 5% gross receipts tax on
collecting the correct amount of tax.
banks is a direct duplicate taxation.
 Due Process - No person shall be deprived of life, liberty, or property
NOTE:
without due process of law, nor shall any person be denied the equal
protection of the laws  the GRT is a percentage tax; and the FWT is an income tax.
 Taxation may be exercised only within the territorial jurisdiction  Percentage tax
of that taxing authority  is a national tax
 Prescription of tax assessment and collection (Sec. 203)  measured by a certain percentage of the gross selling
 Except as provided in Section 222, internal revenue taxes price or gross value in money of goods sold, bartered or
shall be assessed within three (3) years after the last day imported; or of the gross receipts or earnings derived by
prescribed by law for the filing of the return any person engaged in the sale of services.
 no proceeding in court without assessment for the collection of  It is not subject to withholding.
such taxes shall be begun after the expiration of such period:  Income tax
 where a return is filed beyond the period  is a national tax
prescribed by law - the three (3)-year period  imposed on the net or the gross income realized in a
shall be counted from the day the return was taxable year.
filed.  It is subject to withholding.
 a return filed before the last day prescribed
by law – the 3-year period shall be counted  Withholding tax system
from the last day of filing  Payee: taxpayer
 the person on whom the tax is imposed;
EXAMPLE:  have the benefit of Creditable
withholding tax (CWT)
 Can be used as tax credit
 They have CWT because the
amount withheld is still part of their
income.
 Records the account CWT

 Payor: separate entity

 acts as no more than an agent of the
government for the collection of the tax
in order to ensure its payment.
 The one who withhold the tax from the
payee and remit it to the BIR
16. These are formal interpretations of the Tax Code, as amended, and
 Records the account EWT
are usually promulgated alone by the Secretary of Finance or in some
EXAMPLE:
cases, issued jointly with other Government agencies.
a. Revenue Regulations.
b. Supreme Court Decisions.
c. Court of Tax Appeals Decisions.
d. Revenue Memorandum Circulars.

17. The following constitute double taxation, except:

a. Both taxes are levied for the same purpose.  Services are subject to EWT
 BIR Form 2307
b. Both taxes are imposed in the same amount.
o Shows the amount withheld
c. Both taxes are imposed by the same taxing authority. o Submitted by the seller to claim creditable
d. Both taxes are imposed upon the same person. withholding tax or tax credit against tax
payable.
NOTE:
• Double taxation is taxing the same property twice when it should be 19. How much is the revenue to be reported by a VAT registered
taxed only once. Otherwise described as "direct duplicate taxation," lessor from rental payments made by a VAT registered lessee
the two taxes must be: from which total cash that will be received by the lessor and
a) imposed on the same subject matter; paid by the lessee is P107,000?
b) imposed for the same purpose; a. P107,000.00.
c) imposed by the same taxing authority; b. P95,535.71.
d) imposed within the same jurisdiction; c. P100,000.00.
e) imposed during the same taxing period; and
f) of the same kind or character.
d. P119,840.00.

18. Which of the following statement about double taxation is incorrect?

a. There is no constitutional prohibition on double taxation.
SOLUTION:
Revenue (%) 100%
+VAT 12%
- EWT -5%
Total cash (%) 107%

Total Cash 107,000.00

/% 107% 22. Using the information above, what general ledger account
Revenue 100,000.00 should be credited upon remittance of the VAT payable to the
BIR?
a. Sales
b. Output VAT
c. Cash
d. VAT Payable

23. A VAT registered entity has a total Sales for the 2nd quarter of
20. A professional accountant rendered services to a VAT registered
2022 of P13,623,000, composed of sales subject to VAT,
client and received cash of P306,000. The said accountant’s annual
P1,400,000 and VAT exempt sales, P12,223,000. Purchases, on
gross income for the year is P5,000,000. How much is the revenue to
the other hand, amounted to P13,631,300 which is composed of
be reported by the professional accountant?
purchases subject to VAT, P4,330,100 and purchases not subject
a. P300,000.00. to VAT, P9,301,200. Assuming input VAT carryover from
b. P342,720.00. previous quarter is P200,000, how much is the VAT payable for
c. P273,214.29. the quarter?
d. P306,000.00. a. P351,612
b. P1,115,148
SOLUTION: c. P915,148
Revenue (%) 100%
+VAT 12% d. 0
- EWT -10%
Total cash (%) 102%

Total Cash 306,000.00

/% 102%
Revenue 300,000.00

24. Using the information above, how much should be the ending
balance of the account Input VAT in the general ledger at the
end of quarter 2?
a. P351,612
b. P551,612
c. P519,612
*refer to the EWT table for percentage reference
d. 0
21. A VAT registered entity has a total Sales for the 2nd quarter of 2022
of P3,023,000, composed of sales subject to VAT, P2,400,000; zero
rated sales, P200,000; and VAT exempt sales, P423,000. Purchases,
on the other hand, amounted to P631,300 which is composed of
purchases subject to VAT, P330,100 and purchases not subject to
VAT, P301,200. Assuming there is no input VAT carryover from 25. Section 108 of the tax code, as amended, pertains to:
previous quarter, how much is the VAT payable for the quarter? a. VAT on importation.
a. P248,388. b. VAT on sale of goods or properties.
b. P287,004. c. VAT on sale of services and use of properties.
c. P323,148. d. Persons liable for VAT.
d. P212,244.
NOTE:
 Section 106 – VAT on goods and properties
  Section 107 – VAT on importation b) If the sale is exempt from value-added tax, the term VAT-
 Section 108 – VAT on services and use of properties exempt sale shall be written or printed prominently on the
 Section 109 – VAT exemptions invoice or receipt;
 Section 110 – VAT carryover c) If the sale is subject to zero percent (0%) value-added tax,
the term “zero-rated sale” shall be written or printed
prominently on the invoice or receipt.
26. The basis of 12% VAT on sale of goods or properties is:
d) If the sale involved goods, properties or services some of
a. Gross selling price. which are subject to and some of which are VAT zero-
b. Gross receipts. rated or Vat exempt, the invoice or receipt shall clearly
c. Net taxable income. indicate the break-down of the sale price between its
d. Gross receipts less withholding tax. taxable, exempt and zero-rated components, and the
calculation of the value-added tax on each portion of the
NOTE: sale shall be known on the invoice or receipt. Provided,
That the seller may issue separate invoices or receipts for
 Goods and properties – Gross selling price
the taxable, exempt, and zero-rated components of the
 Services – Gross receipts
sale.

27. Which of the following is not included in computing for the 12% (3) The date of transaction, quantity, unit cost and description
VAT on importation? of the goods or properties or nature of the service; and
a. Freight. (4) In the case of sales in the amount of One thousand pesos
b. Arrastre. (P1,000) or more where the sale or transfer is made to a VAT-
c. Wharfage. registered person, the name, business style, if any, address and
Taxpayer Identification Number (TIN) of the purchaser,
d. Withholding tax.
customer or client

NOTES:
(D) Consequence of Issuing Erroneous VAT Invoice or VAT Official
 Freight Charges – amounts paid to a carrier for the transport of
Receipt.-
goods from point of origin to destination.
(1) If a person who is not a VAT-registered person issues an invoice
 Arrastre – the amount which the owner, consignee, or agent of
or receipt showing his Taxpayer Identification Number (TIN),
either, of merchandise or baggage has to pay for the handling,
followed by the word “VAT”;
receiving and custody of the imported or exported merchandise or the
(a) The issuer shall, in addition to any liability to other
baggage of the passengers. (RA 1371)
percentage taxes, be liable to:
 Wharfage - the amount assessed against the cargo of a vessel
 The tax imposed in Section 106 or 108 without the
engaged in the foreign trade, based on the quantity, weight or
benefit of any input tax credit; and
measure received and/or discharged by such vessel
 A 50% surcharge under Section 248(B) of this
Code; [55]
28. Which of the following is not a consequence of issuing erroneous  Basis: portion of vat payable
VAT invoice or VAT official receipt?
a. If a VAT registered person issues a VAT official receipt for a (b) The VAT shall, if the other requisite information required
VAT zero rated transaction and fails to display the term under Subsection (B) hereof is shown on the invoice or
“Zero Rated”, he is not liable for VAT. receipt, be recognized as an input tax credit to the
b. If a non-VAT registered person issues a VAT official receipt, he purchaser under Section 110 of this Code.
shall be liable for VAT. (2) If a VAT-registered person issues a VAT invoice or VAT official
c. If a non-VAT registered person issues a VAT official receipt, he receipt for a VAT-exempt transaction, but fails to display
is liable to pay 50% surcharge. prominently on the invoice or receipt the term ‘VAT exempt
d. If a VAT registered person issues a VAT official receipt for VAT sale,’ the issuer shall be liable to account for the tax imposed
exempt transaction and fails to display the term “VAT exempt”, in section 106 or 108 as if Section 109 did not apply.
he shall be liable for VAT.
29. Which of the following was introduced in TRAIN Law?
NOTES: a. New income tax table.
SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. b. Reduced MCIT.
(A) Invoicing Requirements. - A VAT-registered person shall issue: c. Reduced Percentage Tax
 VAT invoice - sale, barter or exchange of goods or properties; and d. All of the above.
 VAT official receipt - lease of goods or properties, and for every
sale, barter or exchange of services. NOTE:
 B & C– CREATE Law
(B) Information Contained in the VAT Invoice or VAT Official Receipt:
 CREATE – Corporate Recovery and Tax Incentives for
(1) A statement that the seller is a VAT-registered person, followed by
Enterprises (RA 11534)
his TIN; and
 TRAIN – Tax Reform for Acceleration and Inclusion (RA
(2) The total amount which the purchaser pays or is obligated to pay to
10963)
the seller with the indication that such amount includes the value-
added tax. Provided, That:
a) The amount of the tax shall be known as a separate item in the 30. Which of the following is an example of non-taxable De
invoice or receipt; Minimis Benefit?
a. Rice subsidy, P10,000 per month.
b. Laundry allowance, P2,000 per month.
 c. Uniform and clothing allowance, P6,000 per annum.
d. Medical cash allowance, P1,000 per month.
NOTE:
The following shall be considered as “de minimis” benefits not subject to
income tax as well as withholding tax on compensation income of both
managerial, and rank and file employees:
a) Monetized unused vacation leave credits of private employees not
exceeding ten (10) days during the year;
b) Monetized value of vacation and sick leave credits paid to
government officials and employees;
c) Medical cash allowance to dependents of employees, not exceeding
₱1,500 per employee per semester of ₱250 per month; (
d) Rice subsidy of ₱2,000 or one sack of 50kg. rice per month
amounting to not more than ₱2,000; (P40 per kilo)
e) Uniform and clothing allowance not exceeding ₱6,000 per annum (6
syllables = 6,000)
f) Laundry allowance not exceeding P300 per month
o Purely compensation – graduated income tax
with 250k deduction
o Purely business – 8% GIT
o Mixed – compensation: graduated; business:
8% GIT but no 250k deduction because it is
deducted already in graduated income tax rate.
 If the gross sales is more than 3,000,000 or subject to vat,
8% GIT is not applicable.
33. For withholding tax purposes, top withholding agents should:
a. Withheld 2% for service and 1% for goods from
income payments to regular suppliers.
b. Not withheld if a single purchase amounts to P10k or
more.
c. Transact at least 5 times to the same supplier to be
considered as “regular supplier”.
d. Withheld 2% for service and 1% for goods from
casual purchases.

 If the given amount exceeded the threshold for de minimis benefit, NOTE:
the whole amount will become taxable.

31. Compute the withholding tax on compensation for an employee who

earned P20,000 gross salary in a given month.
a. 0.
b. 25.05
c. 153.33
d. Cannot be determined with the given details.

NOTE:
 Refer to table

32. Under what income tax regime will an individual earning business ABC Corporation prepared its income statement for their first three (3)
income save more on income taxes if his annual sales is P2.8M, and years of operation, as follows:
allowable expenses amounts to 25k?
YEAR 1 YEAR 2 YEAR 3
a. 8% gross income tax.
b. Graduated income tax, itemized deduction
25,000,000.00 11,000,000.00 18,000,000.00
Sales
c. Graduated income tax, optional standard deduction. Less: COS 13,000,000.00 10,000,000.00 10,000,000.00
d. All will yield equal benefit.
Gross Income 12,000,000.00 1,000,000.00 8,000,000.00
Less: Expenses
SOLUTION:
Salaries 800,000.00 800,000.00 810,000.00

Advertising 780,000.00 750,000.00 800,000.00

Maintenance 710,000.00 600,000.00 450,000.00

Depreciation 400,000.00 400,000.00 430,000.00

Representation
and
Entertainment 385,000.00 350,000.00 400,000.00

Repairs 80,000.00 150,000.00 50,000.00

Other
Expenditures 50,000.00 70,000.00 10,000.00

Miscellaneous 4,000.00 5,000.00 8,000.00

-
 8% GIT Profit/ Loss 8,791,000.00 2,125,000.00 5,042,000.00
 If the gross sales is below 3,000,000 or not subject to vat, the
taxpayer may opt to use 8% GIT in lieu of percentage tax. Additional information:
 • ABC Corporation is a service type domestic corporation duly
organized and existing under Philippine law.
• Total assets of the Corporation, exclusive of the Land, is P120M,
P125M, and P130M for the first three years of operations,
respectively.
• Salaries Expense includes employer share in government
contributions amounting to P100k, P110k, and P115k from year 1 to
3, respectively.
• Other Expenditures represents the total expenses paid each year with
no valid supporting documentations.

34. How much is the corporate income tax due for Year 1?
a. P2,224,000.
b. P2,197,750.
c. P1,758,200. 37. The year end entry to recognize the effect of income taxes in
d. P1,795,200. year 2 includes:
a. Debit to Income Tax Expense.
b. Debit to Deferred Tax Asset.
c. Credit to Income Tax Payable.
d. Credit to Deferred Tax Liability.

38. How much is the corporate income tax due for Year 3?
a. P1,318,000.
b. P864,250.
c. P806,750.
d. Zero.
NOTE:
 Entertainment and Representation Exp
 Services – 1%
 Goods – 0.5%
 Expenditures with no valid supporting docs – not deductible
 Domestic Corporation
 25%
 Taxable income: 5M and above
 Asset: 100M and above (excluding land)
 20%
 Taxable income – less than 5M
 Asset: less than 100M (excluding land)

35. The year end entry to recognize the effect of income taxes in year 1
includes:
a. Debit to Income Tax Payable.
b. Debit to Income Tax Expense. 39. The year end entry to recognize the effect of income taxes in
c. Debit to Deferred Tax Asset. year 3 includes:
d. Credit to Deferred Tax Liability. a. Debit to Income Tax Expense, P1,318,000.
b. Debit to Income Tax Expense, P864,250.
c. Credit to Income Tax Payable, P806,750.
d. Credit to Deferred Tax Liability, P806,750.

36. How much is the corporate income tax due for Year 2?
a. P453,750.
b. P531,250.
c. P425,000.
d. Zero.
NOTE:
 NOLCO – next 3 years
  Income tax expense – NOLCO is disregarded. (Taxable income * b. P7,616.
tax rate) c. P6,916.
d. P6,800.
40. Which of the following is not a VAT exempt transaction pursuant to
Section 109 of the Tax Code, as amended?
a. Sale or importation of agricultural and marine food products in
their original state.
b. Services subject to percentage tax under Title V of the tax code,
as amended.
c. Lease of a residential unit with a monthly rental not exceeding
P15,000.
d. Sale of power or fuel generated through renewable energy
sources of energy.
45. Which of the following taxpayers is taxable on income from all
NOTE: sources within the Philippines?
 D – zero – rated tax
a. Domestic Corporations.
b. Resident Alien.
41. For the year 2023, Mr. Fredrinn purchased a condominium unit from
Mr. Bane, a unit owner, amounting to P3,000,000. In the same year, c. Resident Citizen.
Mr. Fredrinn purchased a parking space from the condominium d. All of the above.
developer amounting to P800,000. How much is the total VAT paid
by Mr. Fredrinn for the year 2023? 46. Which of the following interest income by a resident taxpayer is
a. P456,000. subject to 15%?
b. P360,000. a. Interest income from peso bank deposits. (20%)
c. P96,000. b. Interest income from deposit substitutes. (20%)
d. Zero. c. Interest income trust funds. (20%)
d. Interest income on dollar deposits.

NOTE:
interest income received by an individual taxpayer (except a nonresident
individual) from a depository bank under the expanded foreign
currency deposit system (EFCDs) shall be subject to a final income tax at
the rate of fifteen percent (15%) of such interest income
NOTE: 47. The following taxpayers who received dividend income from a
 Condominium purchased from non-dealer of real properties domestic corporation will receive net of 10% final withholding
(CAPITAL ASSET) – subject to 6% CGT tax, except:
a. Resident citizen.
42. The taxpayer in estate tax is: b. Nonresident citizen.
a. The decedent. c. Resident alien.
b. The estate. d. Nonresident alien engaged in trade or business
c. The heirs. (NRA-ETB)
d. The administrator.
48. Share in the net distributable income of a general copartnership
by a resident citizen is subject to:
NOTE:
 Estate tax – 6% of net estate
a. 10% final withholding tax.
 Formula: b. 20% final withholding tax.
c. Graduated income tax.
d. Exempt from withholding tax.

49. The income tax due of a mixed income earner who opted to be
taxed at 8% income tax rate shall be:
a. The tax due from compensation, computed using the
43. An act of liberality whereby one disposes gratuitously a thing or right graduated tax rate.
in favor of another who accepts it.
b. The tax due from self-employment and/or practice of
a. Succession. profession, resulting from the multiplication of the
b. Occupation. 8% income tax rate with the total of the gross
c. Donation. sales/receipts and other non-operating income/
d. Tradition (sale) c. Either A or B, depending on what will the mixed
income earner declare.
44. Senior Chang, a resident citizen, 70 years of age, bought a medicine d. The sum of A and B.
with a selling price of P9,520 inclusive of VAT. How much is the net
amount to be paid by Senior Chang? 50. A VAT registered taxpayer, engaged in selling services, was
a. P8,500. being assessed by the BIR upon its tax audit of underdeclaration
 of income resulting to an income tax deficiency. The BIR examiner 53. Nie Goh, an American-Chinese singer, went to the Philippines
compared sales per income tax return and total sales per VAT returns in 2022 to do a two-day concert after which he will return to
and come up with a conclusion that the taxpayer is not reporting a China. For income tax purposes, he is classified in the year
certain amount of sales in its income tax return because total sales per 2022 as:
VAT returns were higher than sales per income tax return. What a. Resident Alien.
would be the possible reason for the higher amount of sales per VAT
b. Nonresident Alien engaged in trade or business.
returns as compared to sales per income tax return assuming the
taxpayer correctly reported its sales for both returns? c. Resident Citizen.
a. Realized foreign exchange gains. d. Nonresident Citizen.
b. Year-end accrual of certain income.
NOTE:
c. Collections of revenue from prior year.
 NRA who stayed more than 180 days in PH – considered as
d. Uncollected revenue of the current year.
NRAETB

54. A nonresident alien not engaged in trade or business derived

P100,000 interest income from his long-term bank deposit here
in the Philippines. How much is the income tax due of the said
alien?
a. P10,000.
b. P15,000.
NOTE: c. P20,000.
 ITR – accrual d. Exempt from income tax.
 VAT Returns – actually or constructively received

51. Which of the following transactions is subject to 6% capital gains

tax?
a. Sale of condominium units by a real estate dealer. 55. CREATE Law is:
b. Sale of real property utilized for office use. a. RA 11435
c. Sale of apartment houses. b. RA 11534
d. Sale of vacant lot by an employee. c. RA 19063
d. RA 10963
NOTE:
 CGT – 6% of SP or FV, whichever is higher
56. The BIR form for VAT filing is:
 FV – Zonal value or FV, whichever is higher
 Requisite: a. 2550Q.
 Purchased from non-dealer of real estate b. 2551Q.
 Capital asset c. 1601C.
d. 0619E.
 Capital assets shall refer to all real properties held by a taxpayer, 57. The taxpayer or its authorized representative or tax agent may
whether or not connected with his trade or business, and which are
protest administratively against the aforesaid FLD/FAN within
not included among the real properties considered as ordinary assets
____ days from date of receipt thereof.
under Sec. 39(A)(1) of the Code.
 Ordinary assets shall refer to all real properties specifically a. 30.
excluded from the definition of capital assets under Sec. 39(A)(1) of b. 180.
the Code, namely: c. 60.
1) Stock in trade of a taxpayer or other real property included in d. 15.
the inventory
2) Real property held by the taxpayer primarily for sale
3) Real property used in trade or business (i.e., buildings and/or 58. The basis of 12% VAT on sale of goods or properties is:
improvements) subject to allowance for depre a. Gross selling price.
4) Real property used in trade or business of the taxpayer. b. Gross receipts.
c. Net taxable income.
d. Gross receipts less withholding tax.
52. One of the following is not a Constitutional Limitation on the power
of taxation. Which is it?
59. A tax imposed and prescribed on the items of income payable to
a. Exemption from taxes of revenues and assets of natural or juridical persons, residing in the Philippines, by a
educational institutions, including grants, endowments, payor-corporation/person (buyer) which shall be credited
donations and contributions. against the income tax liability of the taxpayer (seller) for the
b. Non-impairment of the jurisdiction of Supreme Court in taxable year.
tax cases. a. Value-added-tax
c. Exemption of the government from taxes. b. Withholding Tax on Compensation
d. Non-infringement of religious freedom and worship. c. Income Tax
d. Creditable Withholding Tax
60. Exclusion from income tax of employees’ share in SSS, PHIC, and
HDMF contribution is mentioned on what specific section of the Tax
Code, as amended?
a. Section 32 (A)
b. Section 24 (A)
c. Section 32 (B)
d. Section 24 (B)