Tax Review - Overview Vat and Opt (Quiz)

Name: ______________________________ 1.

2.

Which is incorrect? a. A taxpayer whose annual gross receipts/sales exceed P 1,919,500 shall pay VAT even if not VAT registered b. A taxpayer whose annual receipts/sales do not exceed P 1,919,500 but who is VAT registered shall pay Vat. c. The same transaction may be subjected to both income tax and VAT d. Marginal income earners are both exempt from VAT and income tax.

12. Refers to a local sale of service by VAT-registered person to a person or entity who was granted indirect tax exemption under the special laws or international agreement. a. Automatic zero-rated transactions b. Effective zero-rated transactions c. VAT-exempt transactions. d. Zero-rated transactions.

KATRINA invested P500, 000 in the shares of stock of Manila Trading Corp. Later she sold the said shares for only P350, 000. The corporation’s shares are listed and are traded in the local stock exchange. The percentage tax on the sale is: a. None c. P 1, 750 b. P 2, 500 d. P 50, 000

13. Which of the following are zero-rated transactions? a. Sale of services to Asian Development Bank b. Sale of services to Internation Rice Research Institute c. Sale of gold to Bangko Sentral ng Pilipinas d. Sale of services to duly registered and accredited enterprises with Philippine Economic Zone Authority.

(500,000x 0.5&) 3.

4.

5.

6.

The following accounting records reveal: Accounts Receivable, Beginning P 100,000 Accounts Receivable, Ending 110,000 Inventory, Beginning 50,000 Inventory, Ending 65,000 Purchases 90,000 Sales 250,000 Purchase Discount 5,000 Sales Return 10,000 Collections 200,000 Cost of Sales 70,000 How much is the vatable sales? a. P 250,000 c. P 230,000 b. P 240,000 d. P 200,000 How much is the outout VAT? a. P 27,600 b. P 28,800

c. P 30,000 d. P 24,000

How much is the input VAT? a. P 10,200 b. P 10,800

c. P 8,400 d. None

The following events happen in a VAT enterprise: June perfomance of services July received an invoice amount of P 112,000 August paid the services. When and how much input VAT will be claimed? a. July, P12,000 c. August, P12,000 b. July, P13,440 d. August, P13,440

7.

A VAT enterprise had a VAT exempt transaction, however, it only has a VAT invoice. As the accountant of the enterprise what will you advise? a. Stamp “VAT EXEMPT” on the duplicate VAT invoice. b. Charge and collect output VAT from client c. Charge output and refund to client d. Error in transaction does not pay output

8.

When to file VAT return? a. Monthly b. Quarterly

9.

c. Yearly d. Weekly

When will you submit the required sales summary list to the BIR? a. Attached with the monthly VAT return b. Attached with the quarterly VAT return c. Submit only if sales exceeds P 2,500,000 d. Submit even if sales do not exceed P 2,500,000

10. Who are allowed to withhold VAT from its VAT suppliers? a. Entities, organization, business or corporation duly registered with Philippine Economic Zone Authority. b. Non-resident individuals and corporation. c. Government or any of its instrumentalities including government owned and controlled corporation. d. Resident foreign corporation doing business in the Phillippines. 11. Which of the following is subject to other percentage tax? a. Business with annual gross receipts do not exceed P 1,919,500. b. Unregistered VAT enterprises. c. Businesses who are engaged in sale of services and goods.

d.

Businesses who are engaged in importation.

14. What input taxes may be credietd? a. Input taxes from non-VAT suppliers b. Input taxes from purchase of direct labor c. Input taxes from importation of goods for sale d. Input taxes from importation of personal and household effects. 15. Diety is non-stock, non-profit organization made an importation of agricultural food product in its original state from a Chinese farmer amounting to P 2,240,000. If you are the Customs Collector, how will you treat such importation? a. Subject to 12% VAT. b. Subject to zero-rated VAT. c. Exempted from VAT. d. Subject to 3% other percentage tax. 16. Mr. San Diego approached you and asked for your professional help with regard to a sale of his ancestral house and lot in the amount of P 5,000,000. Your advise would be: Such transaction will be subject to a. 12% VAT b. Zero-rated VAT c. Exempt from VAT d. 3% other percentage tax (subject to 6% CGT, exempt VAT) 17. Which of the following is exempt from VAT? a. Export sale by non-VAT individuals. b. Foreign currency denominated transactions c. Sale of services to entities duly registered with PEZA d. Sale to Ramon Magsaysay Awards Foundation (b,c,d subject to 0% VAT) 18. Construction by XYZ Construction Corp. of concrete barrier for the Asian Development Bank in Ortigas Center to prevent car bombs ramming the ADB gates along ADB Avenue in Mandaluyong City is subject to what business tax? a. 12% VAT b. 0% VAT c. Exempt from VAT d. None of the above 19. Call Center operated by a domestic enterprises in Makati that exclusively the reservations of a hotel chain which are all located in North America. The services are paid for in US $ and duly accounted for with the rulings of Bangko Sentral ng Pilipinas. Is subject to: a. 12% VAT b. 0% VAT c. Exempt from VAT d. None of the above 20. Sale of orchids by a flower shop which raises its flower in Tagaytay is subject to: a. 12% VAT b. 0% VAT c. Exempt from VAT d. None of the above 21. Which statement is considered correct? a. An excise tax which imposes a tax based on weight or volume capacity or any other physical unit of measurement is called graduated tax.

Name: ______________________________ b.

c. d.

An excise tax which imposes a tax based on selling price or other specified value of the article is called ad valorem tax. A percentage tax which is imposed whether the transaction resulted in a gain or loss is called indirect tax. All of the above.

22. Alamid exported cigarettes to Taiwan for sale. He is subject to the value-added tax. He is also subject to the business tax of: a. Excise tax c. Percentage tax b. Income tax d. None of these

23. Burgos is manufacturer of fermented liquors. In making sales, all taxes on the products and transactions are passed on to the buyers. For purposes of the value-added tax, which of the three taxes listed below that he pays forms part of the gross selling price? a. Excise tax c. Percentage tax b. Value-added tax d. None of these 24. Cantor is a VAT-registered manufacturer of liquors. On his sales in the Philippines, his tax is: a. Excise tax c. Percentage tax b. Value-added tax d. A and B 25. Statement 1: A person subject to excise tax is also subject to value-added tax. Statement 2: A person subject to percentage tax is also subject to value-added tax. a. Both statements are correct b. Both statements are wrong c. Statement 1 is correct while Statement 2 is wrong d. Statement 1 is wrong while Statement 2 is correct 26. Which statement is wrong? Value-added tax on importation of goods: a. Is imposed on an importation for sale or for use in business. b. Is imposed on an importation for personal use. c. Should be paid prior to removal from customs custody. d. Is not available as input tax even if related to business. (input tax on importation is availbale only for business related importation) 27. One of the following statements is incorrect. a. Imported goods which are subject to excise tax are no longer subject to value-added tax. b. VAT on the importation is paid to the Bureau of Customs before the imported goods are released from its custody. c. Expenses incurred after the goods are released from customs custody are disregarded in computing VAT on importation. d. When a person who enjoys tax-exemption on his importation subsequently sells in the Philippines such imported articles to non-exempt person, the purchasernon-exempt person shall pay the VAT on such importation. 28. Which statement is correct? The value-added tax on an importation: a. Should be paid by the tax-exempt importer, if he subsequently sells the goods to a non-tax-exempt purchaser. b. Should be paid by the non-tax-exempt purchaser to whom the tax-exempt importer sells it. c. Is a liability either of the tax-exempt importer or the nontax-exempt purchaser. d. Shall not pay the value-added tax because the transaction was exempt at the point of importation. 29. Three of the following are exempt from the value-added tax. Which is the exception? a. Importation of books and any newspapers, magazines, review or bulletin. b. Importation of agricultural and marine food products in their original state. c. Importation of petroleum products and their raw materials.

d.

Importation or sale of fish, prawn, livestock and poultry feeds. 30. Which statement is not correct? Transactions considered “in the course of trade or business” and, therefore, subject to the business taxes include: a. Regular conduct or pursuit of a commercial or an economic activity by a stock private organization. b. Regular conduct or pursuit of a commercial or an economic activity by a non-stock, non-profit private organization. c. Isolated services in the Philippines by non-resident foreign persons. d. Isolated sale of goods or services for a gross selling price or receipts of P 500,000. 31. Statement 1: Non-stock and non-profit private organizations which sell exclusively to their members in the regular conduct or pursuit of commercial or economic activity are not exempt from value-added tax. Statement 2: Government entities engaged in commercial or economic activity are generally exempt from value-added tax. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct. 32. Statement 1: Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed transactions) may opt that the VAT apply to his transactions which would have been exempt under Sec. 109 (1) of the Tax Code as amended. Statement 2: A seller or lessor of VAT-subject goods, properties or services whose actual or expected gross sales and/or receipt do not exceed P1,919,500 for any 12-month period who registers under the VAT system shall be subject to zero rate on his exports. a. Both I and II are true b. Both I and II are false c. Only I is true d. Only II is true 33. Which of the following statements is incorrect? a. A taxpayer whose annual gross receipts/sales exceed P 1,919,500 shall pay VAT even if he is not VAT registered. b. A taxpayer whose annual gross receipts/sales do not exceed P 1,919,500 but who is VAT-registered shall pay VAT. c. Percentage tax may be imposed together with VAT. d. Percentage tax maybe imposed together with excise tax. 34. One of the following statements is incorrect, which is it? a. Imported goods which are subject to excise tax are no longer subject to VAT. b. VAT on importation is paid to the Bureau of Customs before the imported good are released from its custody. c. Expenses incurred after the goods are released from Customs custody are disregarded in computing the VAT on importation d. When a person who enjoys a tax-exemption on his importation subsequently sells in the Philippines such imported articles to a non-exempt person, the purchasernon-exempt person shall pay the VAT on such importation. 35. Which of the following importation is subject to VAT? a. Importation of frozen meat b. Importation of apples for personal consumption c. Importation of bamboo poles d. Importation of grapes for sales

Tax Rates Coverage

Basis

Tax Rate

Name: ______________________________ Persons exempt from VAT Gross Sales or under Sec. 116 Receipts

3%

Domestic carriers and keepers of garages

Gross Receipts

3%

Gross Receipts

3%

Gross Receipts

2%

Radio and television Gross Receipts broadcasting companies whose annual gross receipts of the preceding year do not exceed P 10,000,000 and did not opt to register asVAT taxpayer

3%

Finance Companies

International Carriers: International air/shipping carriers doing business in the Philippines

Interest, commissions and discounts paid from their loan transactions from finance companies as well as income from financial leasing shall be taxed based on the remaining maturities of instruments:

Franchise Grantees: Electric , gas and water utilities

Banks and non-bank financing intermediaries

On interest, 5% discounts and other items of gross income paid to finance companies and other financial intermediaries not performing quasi banking functions

• Short term 5% maturity (not over 2 years)

Interest, commissions and discounts from lending activities as well as income from leasing on the basis of remaining maturities of instruments:

• Medium term (over 2 years but not over 4 years)

3%

• Long Term Maturity ο Over 4 years but 1% not over 7 years

• Short term 5% maturity (not over 2 years)

ο Over 7 years

0%

• Medium term 3% maturity (over 2 years but not over 4 years)

Life Insurance Companies Total premiums (except purely cooperative collected companies or associations)

5%

• Long term maturity

Agents of foreign insurance companies: (except reinsurance premium)

1% ο Over 4 years but not over 7 years

Total premium collected

10%

Total premium collected

5%

Cockpits

Gross receipts

18%

Cabarets, Night or Day Clubs

Gross receipts

18%

Boxing exhibitions

Gross receipts

10%

Professional basketball games

Gross receipts

15%

Jai-alai and race track

Gross receipts

30%

0% ο Over 7 years On Dividends

0%

On royalties, rentals 5% of properties, real or personal, profits from exchange and all other items treated as gross income under Sec. 32 of the Code

Proprietors, lessee or operator of the following:

Name: ______________________________ (operators shall withheld tax on winnings) Every stock broker who effected a sale, barter, exchange or other disposition of shares of stock listed and traded through the Local Stock Exchange (LSE) other than the sale by a dealer in securities

Gross selling price ½ of 1% or gross value in money of shares of stocks sold, bartered, exchanged or otherwise disposed

A corporate issuer/stock broker, whether domestic of foreign, engaged in the sale, barter, exchange or other disposition through Initial Public Offering

Gross selling price or gross value of in money of shares of stocks sold, bartered, exchanged or

(IPO)/secondary public offering of shares of stock in closely held corporations

otherwise disposed in accordance with the proportion of stocks sold, bartered or exchanged or after listing in the stock exchange • Up to 25 %

4%

• Over 25% but not 2% over 33 1/3% • Over 33 1/3 %

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