TAX 303 INTRODUCTION TO BUSINESS TAX QUESTION AND ANSWERS
(INCOME TAXATION)
1. Business taxes are
Imposed upon onerous transfers such as sale, barter, exchange or importation.
2. Under the tax code, the following are major internal revenue business taxes except:
a. Value-added tax c. Excise tax
b. Percentage Tax d. Income tax
3. Which is correct?
a. Without the business pursued in the Philippines (except importation) by the
taxpayer, value added-tax cannot be imposed.
b. “In the course of trade or business” means the regular conduct or pursuit of a
commercial or an economic activity including transactions incidental thereto,
by any person regardless of whether or not the person engaged therein is a
non-stock, non-profit private organization or government entity.
c. Services rendered in the Philippines by a non-resident foreign person shall be
considered as being rendered in the course of trade or business even if the
performance is not regular.
d. All Of the Above
4. Which statement is false?
D. Isolated sale of goods or services for gross selling price or receipts of
P950,000.
5. The provisions of vat law shall apply to person whose undertakings are intended to
be pursued on a going concern basis where the end view is to realize unrestricted
amounts of pecuniary gains or profits from those who may avail of the goods they
sell or the services they render. Which of the following statements is correct?
a. Services rendered in the Philippines by a citizen or resident person shall be
considered as being rendered in the course of trade or business even if the
performance is not regular.
b. Services rendered in the Philippines by a non-resident foreign person shall be
considered as being rendered in the course of trade or business even if the
performance is not regular.
c. Both a and b
d. Neither A nor B
6. Statement 1: Business taxes are based on gross income.
Statement 2: Business tax is in addition to income
taxes. ONLY STATEMENT 2 IS CORRECT
,7. Which of the following statements is correct? In the case of sale, barter or exchange
or real property subject to vat.
a. Gross selling price shall mean the consideration stated in the sales document
or the fair market value, whichever is higher.
b. Fair market value shall mean whichever is higher of the fair market value as
determined by the BIR Commissioner or the fair market value as shown in
schedule of values of the Provincial and City Assessors.
c. Gross selling price, in the absence of zonal value or fair market value as
determined by the BIR Commissioner, shall refer to the market value shown
in the latest real property tax declaration or the consideration, whichever is
higher.
d. All of the above
8. Which of the following statements is correct?
I. Vat may be imposed together with the other percentage tax.
II. Vat may be imposed together with excise tax.
III. Vat and other percentage tax may be imposed together with income
tax.
II and III only
9. Statement 1: Gross selling price means the total amount of money or its equivalent
which is the purchaser pays or is obligated to pay to the seller in consideration of the
sale, barter or exchange of the goods or properties excluding VAT.
Statement 2: The excise tax, if any, on such goods or properties shall form part of
the gross selling price.
Both statements are correct.
10. As to tax rate, value added tax is an example of
Regressive tax
11. Which of the following statements is correct?
a. The seller of goods/services is the one statutorily liable to pay vat.
b. The “burden of the tax” is borne by the final consumers although the
procedures and suppliers of these goods and services are the ones who have
to file their vat returns to the Bureau of Internal Revenue. Hence, what is
transferred or shifted to the consumers is not the liability to pay the tax, but
the tax burden.
c. Both a and B
12. Which is correct?
a. All vat-exempt taxpayers shall be subject to other percentage taxes.
b. A taxpayer who is subject to percentage tax on his gross receipts will also be
subject to income tax on his net income.
, c. Both a and b
d. Neither a nor b
13. Georgia is a manufacturer of GJ supermini-cigarettes. In making sales, taxes on the
products and transactions are passed on to the buyers. For vat purposes, which of
the following forms part of the gross selling price?
Excise Tax
14. Alex imported cigarettes for sale in the Philippines. What business tax will Alex
pay? 1st Answer: Alex will pay Vat on importation and on the sale of the cigarettes.
2nd Answer: He will pay excise tax on importation of the cigarettes.
BOTH ANSWERS ARE INCORRECT
15. Which is correct?
a. Vat registered person whose gross sales do not exceed P3 M
b. A nonresident lessor or foreign licensor who is not vat registered.
c. Any person who is required to register under the vat system but failed to register.
d. None of the above
16. A non-VAT registered whose sales for the year exceeded P3 M is
Subject to percentage tax
17. Which is correct?
A percentage tax which is imposed whether the transaction resulted in again
or loss is called transaction tax.
18. A taxpayer imported cigarettes from China for sale. At later date, he sold the
cigarettes in the Philippines. He is subject to value-added tax. He is also subject to
business tax of
INCOME TAX
19. Which of the following is/are correct?
I. Persons whose transactions are exempt from value added tax under Section
109 because their gross sales/and or receipts do not exceed P3M may
voluntarily apply for registration under the VAT system.
II. A VAT-registered person whose gross sales and/or receipts for two (2)
consecutive years did not exceeded P3M may apply for cancellation of VAT
and revert to being VAT-exempt under section 109.
NEITHER I NOR II
20. Which is incorrect?
A person whose gross sales or receipts do not exceed P100,000 is exempt
from VAT provided he pays the 3% other percentage tax.
, TRUE OR FALSE-SET A
1. Under RR-4-2007, agricultural and marine food products are shall be considered in their
original state even if they have undergone this simple processes of preparation or
preservation for the market, such as freezing, drying, salting, broiling, roasting, smoking
or stripping.- TRUE
2. Polished and/or husked rice, corn grits, raw cane sugar and molasses, ordinary salt, and
copra shall be not considered in their original state, hence subject to vat. – FALSE
3. Sale of flowers, in its original state is exempt from VAT. – FALSE
4. Sale of drugs and medicines of pharmacy run by the hospital to outpatients are subject
to VAT – TRUE
5. Pharmacy items used in the performance of medical procedures in hospital units such as
in the operating and delivery rooms and by other departments are considered part of
medical services rendered by the hospital, hence, not subject to VAT. -TRUE
6. Hospitals, clinics may allow their medical practitioners to receive payment of
professional fees directly from patients who were admitted and confined to such
hospital -FALSE
7. Professional fees of medical practitioners paid by the patients who were admitted and
confined to a hospital or clinic are subject to value added tax. - FALSE
8. Agricultural contract growers are subject to vat - FALSE
9. Contract for a package receiving eggs from breeder farm, sorting, and delivering them to
other contract grower are example of services offered by an agricultural contract
grower.
- TRUE
10. Raw sugar for tax purposes refers only to muscovado sugar. - TRUE
11. Gross receipts of duly registered credit/multi-purpose cooperatives from lending
activities to non-members are subject to value added tax. -FALSE
12. Non-stock, non-profit private organizations which sell exclusively to their members in
the regular conduct or pursuit of commercial or economic activity are exempt from
value added tax.- TRUE
13. Government entities engaged in commercial or economic activity are generally exempt
from value added tax. – FALSE
14. Domestic sale of a vat-registered person to a person or entity who is granted indirect
tax exempt from VAT. – FALSE
15. Sale of passenger tickets by sea vessel from the Philippines to a foreign country is VAT
exempt transaction. – FALSE
16. The term “goods” for VAT purposes shall mean all tangible and intangible objects which
are capable of pecuniary estimate and shall include, but not limited to radio, television,
satellite transmission and cable television time. – TRUE
17. Export sale by a vat registered entity is exempt from vat - FALSE
(INCOME TAXATION)
1. Business taxes are
Imposed upon onerous transfers such as sale, barter, exchange or importation.
2. Under the tax code, the following are major internal revenue business taxes except:
a. Value-added tax c. Excise tax
b. Percentage Tax d. Income tax
3. Which is correct?
a. Without the business pursued in the Philippines (except importation) by the
taxpayer, value added-tax cannot be imposed.
b. “In the course of trade or business” means the regular conduct or pursuit of a
commercial or an economic activity including transactions incidental thereto,
by any person regardless of whether or not the person engaged therein is a
non-stock, non-profit private organization or government entity.
c. Services rendered in the Philippines by a non-resident foreign person shall be
considered as being rendered in the course of trade or business even if the
performance is not regular.
d. All Of the Above
4. Which statement is false?
D. Isolated sale of goods or services for gross selling price or receipts of
P950,000.
5. The provisions of vat law shall apply to person whose undertakings are intended to
be pursued on a going concern basis where the end view is to realize unrestricted
amounts of pecuniary gains or profits from those who may avail of the goods they
sell or the services they render. Which of the following statements is correct?
a. Services rendered in the Philippines by a citizen or resident person shall be
considered as being rendered in the course of trade or business even if the
performance is not regular.
b. Services rendered in the Philippines by a non-resident foreign person shall be
considered as being rendered in the course of trade or business even if the
performance is not regular.
c. Both a and b
d. Neither A nor B
6. Statement 1: Business taxes are based on gross income.
Statement 2: Business tax is in addition to income
taxes. ONLY STATEMENT 2 IS CORRECT
,7. Which of the following statements is correct? In the case of sale, barter or exchange
or real property subject to vat.
a. Gross selling price shall mean the consideration stated in the sales document
or the fair market value, whichever is higher.
b. Fair market value shall mean whichever is higher of the fair market value as
determined by the BIR Commissioner or the fair market value as shown in
schedule of values of the Provincial and City Assessors.
c. Gross selling price, in the absence of zonal value or fair market value as
determined by the BIR Commissioner, shall refer to the market value shown
in the latest real property tax declaration or the consideration, whichever is
higher.
d. All of the above
8. Which of the following statements is correct?
I. Vat may be imposed together with the other percentage tax.
II. Vat may be imposed together with excise tax.
III. Vat and other percentage tax may be imposed together with income
tax.
II and III only
9. Statement 1: Gross selling price means the total amount of money or its equivalent
which is the purchaser pays or is obligated to pay to the seller in consideration of the
sale, barter or exchange of the goods or properties excluding VAT.
Statement 2: The excise tax, if any, on such goods or properties shall form part of
the gross selling price.
Both statements are correct.
10. As to tax rate, value added tax is an example of
Regressive tax
11. Which of the following statements is correct?
a. The seller of goods/services is the one statutorily liable to pay vat.
b. The “burden of the tax” is borne by the final consumers although the
procedures and suppliers of these goods and services are the ones who have
to file their vat returns to the Bureau of Internal Revenue. Hence, what is
transferred or shifted to the consumers is not the liability to pay the tax, but
the tax burden.
c. Both a and B
12. Which is correct?
a. All vat-exempt taxpayers shall be subject to other percentage taxes.
b. A taxpayer who is subject to percentage tax on his gross receipts will also be
subject to income tax on his net income.
, c. Both a and b
d. Neither a nor b
13. Georgia is a manufacturer of GJ supermini-cigarettes. In making sales, taxes on the
products and transactions are passed on to the buyers. For vat purposes, which of
the following forms part of the gross selling price?
Excise Tax
14. Alex imported cigarettes for sale in the Philippines. What business tax will Alex
pay? 1st Answer: Alex will pay Vat on importation and on the sale of the cigarettes.
2nd Answer: He will pay excise tax on importation of the cigarettes.
BOTH ANSWERS ARE INCORRECT
15. Which is correct?
a. Vat registered person whose gross sales do not exceed P3 M
b. A nonresident lessor or foreign licensor who is not vat registered.
c. Any person who is required to register under the vat system but failed to register.
d. None of the above
16. A non-VAT registered whose sales for the year exceeded P3 M is
Subject to percentage tax
17. Which is correct?
A percentage tax which is imposed whether the transaction resulted in again
or loss is called transaction tax.
18. A taxpayer imported cigarettes from China for sale. At later date, he sold the
cigarettes in the Philippines. He is subject to value-added tax. He is also subject to
business tax of
INCOME TAX
19. Which of the following is/are correct?
I. Persons whose transactions are exempt from value added tax under Section
109 because their gross sales/and or receipts do not exceed P3M may
voluntarily apply for registration under the VAT system.
II. A VAT-registered person whose gross sales and/or receipts for two (2)
consecutive years did not exceeded P3M may apply for cancellation of VAT
and revert to being VAT-exempt under section 109.
NEITHER I NOR II
20. Which is incorrect?
A person whose gross sales or receipts do not exceed P100,000 is exempt
from VAT provided he pays the 3% other percentage tax.
, TRUE OR FALSE-SET A
1. Under RR-4-2007, agricultural and marine food products are shall be considered in their
original state even if they have undergone this simple processes of preparation or
preservation for the market, such as freezing, drying, salting, broiling, roasting, smoking
or stripping.- TRUE
2. Polished and/or husked rice, corn grits, raw cane sugar and molasses, ordinary salt, and
copra shall be not considered in their original state, hence subject to vat. – FALSE
3. Sale of flowers, in its original state is exempt from VAT. – FALSE
4. Sale of drugs and medicines of pharmacy run by the hospital to outpatients are subject
to VAT – TRUE
5. Pharmacy items used in the performance of medical procedures in hospital units such as
in the operating and delivery rooms and by other departments are considered part of
medical services rendered by the hospital, hence, not subject to VAT. -TRUE
6. Hospitals, clinics may allow their medical practitioners to receive payment of
professional fees directly from patients who were admitted and confined to such
hospital -FALSE
7. Professional fees of medical practitioners paid by the patients who were admitted and
confined to a hospital or clinic are subject to value added tax. - FALSE
8. Agricultural contract growers are subject to vat - FALSE
9. Contract for a package receiving eggs from breeder farm, sorting, and delivering them to
other contract grower are example of services offered by an agricultural contract
grower.
- TRUE
10. Raw sugar for tax purposes refers only to muscovado sugar. - TRUE
11. Gross receipts of duly registered credit/multi-purpose cooperatives from lending
activities to non-members are subject to value added tax. -FALSE
12. Non-stock, non-profit private organizations which sell exclusively to their members in
the regular conduct or pursuit of commercial or economic activity are exempt from
value added tax.- TRUE
13. Government entities engaged in commercial or economic activity are generally exempt
from value added tax. – FALSE
14. Domestic sale of a vat-registered person to a person or entity who is granted indirect
tax exempt from VAT. – FALSE
15. Sale of passenger tickets by sea vessel from the Philippines to a foreign country is VAT
exempt transaction. – FALSE
16. The term “goods” for VAT purposes shall mean all tangible and intangible objects which
are capable of pecuniary estimate and shall include, but not limited to radio, television,
satellite transmission and cable television time. – TRUE
17. Export sale by a vat registered entity is exempt from vat - FALSE
