Chapter 15 Excise Tax

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 115 SUGGESTED ANSWERS Chapter 15: EXCISE TAXES

CHAPTER 15

EXCISE TAXES Problem 15 – 1 1. False – excise tax is also imposed on luxurious goods and mineral products. 2. False – excise tax imposed to vehicles is based on the value of the vehicles, hence, an example of advalorem tax. 3. True 4. False – The primary purpose of excise tax is for regulation and protection. 5. True 6. False – P1 per kilo 7. False – 20% of the wholesale price. 8. True – It is the same as distilled spirits. 9. False – Excise tax is a business tax. 10. False – Excise tax is an indirect tax. 11. True 12. False – P10 per ton means based on measure, hence, specific excise tax. 13. False – subject to excise tax of P0.79 per kilo. Problem 15 – 2 1. True 2. False – Excise tax is also imposed on imported goods. 3. False – Excise tax is paid upon transfer or release from the Bureau of Customs. 4. True 5. False – net retail price or retail price basically excludes VAT and excise tax. 6. False – LPG is a separate and distinct product from processed gas. 7. True 8. False – Alcohol products for medicinal purposes are exempt from excise tax. 9. False – The excise taxes imposed on imported articles are paid to the Bureau of Customs. 10. False – Subject to excise tax upon production or importation. 11. True 12. True Problem 15 – 3 1. D 2. D 3. B 4. B 5. D

6. A 7. D 8. A 9. D 10. D

11. C 12. B 13. C 14. B

Problem 15 – 4 C Total sales Divided by net retail price per cigar Number of cigar sold at P600 each Multiplied by excise tax on cigar sold at P600 each [P50 + (15% x 100)] Total excise tax Problem 15 – 5 1. Not in the choices Total sales excluding VAT (P159,500/1.12) Divided by net retail price per liter Number of liters produced Multiplied by applicable excise tax per liter Excise tax 2. Not in the choices

P 1,200,000 600 2,000 65 P 130,000

P142,411 14.50 9,821 P 12.30 P120,798

Total sales including VAT Add: Excise tax Total amount of sales including VAT and excise tax Problem 15 – 6 A Excise tax (P11.65 x 200) Problem 15 – 7 Tax-exempt

P159,500 120,798 P280,298 P 2,330

D

Problem 15 – 8 A Excise tax per proof liter Multiplied by proof liters (200 x 12 x 750/1,000) Excise tax payable Problem 15 – 9 B First P2,100,000 Excess (P1,900,000 x 60%) Excise tax

P 11.65 1,800 P20,970 P 512,000 1,140,000 P1,652,000

Problem 15 – 10 A Exempt from excise tax, hence, P 0. Problem 15 – 11 B Local wholesale price Multiplied by percent of excise tax Excise tax Problem 15 – 12 None

P150,000 20% P 30,000

A

Problem 15 – 13 B Excise tax on: Bunker oils (20,000 liters x P0.30) Grease (2,000 x P4.50) Lubricating oil (8,000 x P4.50) Total Less: Creditable excise tax on bunker oils Excise tax

P 6,000 9,000 36,000 P51,000 6,000 P45,000

Problem 15 – 14 A Zero Problem 15 – 15 Excise tax per metric ton of coal Multiplied by metric tons of coal produced Excise tax

P

10 1,000 P10,000

Problem 15 – 16 Excise taxes: For year 2005 and 2006: (100 x 50 x 10 x P25)

P1,250,000

For year 2007 and 2008: (100 x 50 x 10 x P26.06)

P1,303,000

For year 2009 and 2010: (100 x 50 x 10 x P27.16)

P1,358,000

For year 2011: (100 x 50 x 10 x P28.30)

P1,415,000

Problem 15 – 17 Excise tax: (1,000 x 12 x .750 x P11.65) (1,000 x 12 x 1 x P252)

P 104,850 3,024,000 P3,128,850

Problem 15 – 18 a. (15,000,000/1,000) x P1 b. (1,000,000 x P0.79) c. (50,000 x P2) d. (100,000 x P6.35) e. (5,000 x 500 x 10%) Total excise tax

P 15,000 790,000 100,000 635,000 250,000 P1,790,000

Problem 15 – 19 First P600,000 Excess (P200,00 x 20%) Excise tax

P 12,000 40,000 P 52,000

Problem 15 – 20 Purchase price per car Custom duties Mark-up (P2,100,000 x 30%) Total Add: Excise tax on P2,100,000 Excess (P630,000 x 60%) Total sales price inclusive of excise tax and VAT

P1,500,000 600,000 630,000 P2,730,000 P512,000 378,000

890,000 P3,620,000

Problem 15 – 21 Total kilograms of copper (1,000 tons x 25% x 1,000 kg.) Multiply by world price per kilogram Total in US dollars Multiply by exchange rate of peso per dollar Total Multiply by excise tax rate Excise tax

250,000 $0.60 $ 150,000 P50 P 7,500,000 2% P 150,000

Problem 15 – 22 Quantity (tons of concentrate) Multiplied by kilogram per ton Total kilogram Multiplied by gram per kilogram Total grams Multiplied by percent of metal content Actual grams of metals Multiplied by market price per gram Total in dollars Multiplied by peso rate per dollar Totals in pesos Multiplied by applicable excise tax rate Excise tax

Gold 100 1,000 100,000 1,000 100,000,000 0.02% 20,000 $8 $160,000 P60 P9,600,000 2% P192,000

Copper 100 1,000 100,000 1,000 100,000,000 3.00% 3,000,000 $0.01 $30,000 P60 P1,800,000 1% P18,000

Total

P210,000