Theos-tax - Business Taxation PDF

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Mark Smith, a resident alien, purchased from the United States, three Asus Laptops and one MacBook. The Laptops are meant to be used for his IT business and the MacBook is for his own personal use. Which among the following is correct? a. Mark is not subject to business tax because he purchased it f...

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1. Mark Smith, a resident alien, purchased from the United States, three Asus Laptops and one MacBook. The Laptops are meant to be used for his IT business and the MacBook is for his own personal use. Which among the following is correct? a. Mark is not subject to business tax because he purchased it from a non-resident seller b. Mark is subject to business tax on all of his purchase regardless of the use of the item because he purchased it from a foreign seller c. Mark is not subject to consumption tax because he is an alien, hence, the transaction is exempt d. Mark is subject to business tax only on the three Asus laptops because these will be used for business 2. Mandatory or voluntary registration as VAT taxpayer under the general threshold is a. b. c. d.

revocable within a year revocable anytime perpetually irrevocable revocable after the lapse of three years

3. Tammy, an optometrist, sells eyeglasses for a living. One day, two customers went into her store to purchase eyeglasses. Tim, a person suffering from blindness, purchased sunglasses, and his father, Jaime, an 80 year old man, who suffers from an amputated leg, purchased corrective eye glasses. Which among the following is correct? a. Tammy should not charge both Tim and Jaime’s purchases with consumption tax because they are both PWDs b. Tammy should charge Tim’s purchase with consumption tax because he is not a senior citizen, and Jaime’s purchase should be exempt from consumption tax because he is a senior citizen c. Tammy should charge Tim’s purchase with consumption tax because he is not yet a senior citizen, and Jaime’s purchase should be exempt from consumption tax because his leg is amputated d. Tammy should charge Tim’s purchase with consumption tax because he is a PWD, and Jaime’s purchase should be exempt from consumption tax because he is a senior citizen 4. Which of the following is incorrect? a. b. c. d.

None of the above An article exempt from vat may be exempt from percentage tax An article subjected to vat may be subjected to percentage An article subjected to excise tax may be subjected to vat

5. When is the deadline for filing VAT returns for the month of November 2021? a. b. c. d.

December 15, 2021 December 10, 2021 December 25, 2021 December 20, 2021

Statement 1: Generally, Domestic Consumptions are taxable consumptions

Statement 2: VAT on importation is directly computed on landed costs or total purchase costs of importation without any deduction or tax credit a. b. c. d.

False, True False, False True, False True, True

Juan, a 70 year old business man, purchased at Maria’s pharmacy, medicine and vitamins. Juan saw in his receipt that he was charged with consumption tax. Which among the following contentions of Juan is correct? a. He should not be charged with consumption tax on both his medicine and vitamins as these purchases are exempt from tax because he is a senior citizen b. He should not be charged with consumption tax because medicine and vitamins are both basic human necessities as identified in the tax code c. He should not be charged with consumption tax on his medicine because he is a senior citizen, however, Maria is correct in charging him consumption tax on the vitamins d. He should be charged with consumption tax on both his medicine and vitamins because he receives benefit from the consumption of medicine and vitamins Morgan, purchased the following animals from a store: a gold fish, a rabbit, a chicken hen, and a goat. Among the purchases he made, which is not exempt from consumption tax? a. b. c. d.

Goat Rabbit Chicken Hen Gold fish

Importation of personal and household effects shall be exempt from VAT if: I - belonging to residents of the Philippines returning from abroad and non-resident citizens coming to resettle in the Philippines. II - such goods (personal and household effects) are exempt from customs duties under the Tariff and Customs Code of the Philippines a. b. c. d.

True, False False, False False, True True, True

Maxine, a clerk in the city hall, wanted to earn some additional money, so she put up a stall during the fiesta in her barrio, during the said fiesta, Maximo, a BIR officer advised her to make sure to file and pay her business tax for the stall she put up. Which among the following contentions of Maxine is correct? a. She is required to file and pay business taxes because she is operating a store by sale of goods to earn profit

b. She is not required to file and pay business taxes because she is merely operating a privilege store that would last for three days c. She is not required to file and pay business tax because she is not registered with the BIR as a business, but is registered only as an employee d. She is not required to file and pay business taxes because she is an employee in the city hall Which of the following shall not be exempt from Value-Added Tax? a. Services rendered by regional or area headquarters established in the Philippines by multinational corporations which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia Pacific Region and do not earn or derive income from the Philippines b. Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws c. Services rendered by individual pursuant to an employer employee relationship d. Services rendered by professionals such as CPAs, engineers, lawyers, etc. Which is a tax upon the usage of income? a. b. c. d.

Consumption Tax Savings Tax Business Tax Investment Tax

Tina, a BSA student, purchased from KFC Nepo Mall, a one-piece chicken meal for her lunch. Which among the following is incorrect? a. Tina is will pay business tax on her purchase from KFC because the seller in the transaction is engaged in trade or business b. Tina is not subject to VAT on Importation because she purchased the product within the Philippines c. Tina is not subject to exemption from consumption tax because she purchased human agricultural food that is no longer in its original state d. Tina is subject to consumption tax on her purchase because she is not engaged in trade or business Which of the following is not a business tax? a. b. c. d.

Percentage Tax Value Added Tax Excise tax Income tax

Which of the following transactions by certain cooperatives duly registered and in good standing with the Cooperative Development Authority (CDA) shall not be exempt from VAT? a. None of the choices b. Importation by non-agricultural, non-electric and non-credit cooperatives of machineries and equipment, including spare parts therecf, to be used by them

c. Sales by non-agricultural, non-electric and non-credit cooperatives d. Gross receipts from lending activities by credit or multi purpose cooperatives The exemption from VAT of educational services does not include: a. all of the choices b. other similar services rendered by persons who are not accredited by DepED, the CHED and/or the TESDA c. in-service training d. seminars and review classes The Bureau of Internal revenue approved the closure of business of Na Lugi on March 19, 2020. When is the deadline for filing final VAT returns of Na Lugi? a. b. c. d.

April 20, 2020 April 3, 2020 April 25, 2020 March 31, 2020

Nora, a distributor and seller of tuyo, tinapa, fresh tuna, canned sardines, and canned tuna, has been advised by her accountant to pay her business taxes before she is caught by the BIR for non-filing and payment. Which among the following is correct? a. Nora is exempt from paying business taxes because she is selling marine foods in their original state b. Nora is to pay business taxes only on the canned sardines and canned tuna because these underwent chemical alterations already c. Nora is exempt from paying business taxes on her sale on fresh tuna because these are in their original state, however, the sales on the other products are subject to business tax because they are already processed d. Nora has to pay business taxes on her sales because her sales underwent processing and are no longer in their original state The following goods when imported shall be subject to VAT, except: a. b. c. d.

vehicle professional instruments. vessel machinery

Marine food products which include fish and crustaceans are exempt from VAT. Which of the following is not exempt from VAT? a. b. c. d.

Eels Trout Prawns Aquarium fish

Statement 1: Only goods and services destined for consumption in the Philippines are subject to consumption tax while those destined for consumption abroad are not subject to consumption tax. This ruling adheres to the theory of "Destination Principle" Statement 2: Importation is not a Domestic Consumption a. b. c. d.

True, False True, True False, False False, True

Which is not engaged in business? a. b. c. d.

corporate director security dealer agent broker

A lessor rents his 5 commercial and 10 residential units for monthly rent of P60,000 and P15,500 per unit, respectively. During the taxable year, his accumulated gross receipts amounting to P5,460,0000 (P3,600,000 from commercial units and P1,860.000 from residential units). To what business taxes will he be liable? I - Value-Added Tax II - 3% Percentage under Section 116 of the Tax Code a. b. c. d.

Neither I nor II Both I and II I only II only

A marginal income earner shall pay a. b. c. d.

12% VAT 3% percentage tax none of the choices either of the choices

Which is not subject to excise tax? a. b. c. d.

Mineral Products Sin Products Non-essential commodities Food Products

The deduction from Output VAT is called a. Percentage Tax b. Input VAT c. VAT on importation

d. Vat due and payable The export sales of VAT-registered taxpayers are a. b. c. d.

subject to 3% percentage tax subject to zero-rated VAT exempt from business tax subject to 12% VAT

Pedro, was a baker at France for 10 years, he wanted to be at home with his family in the Philippines hence he brought various items with him. Which among the following is false? a. b. c. d.

Two IPhone 12 are exempt from consumption tax One laptop is exempt from consumption tax A baker’s oven that was brought within 90 days after his arrival is exempt from consumption tax 30 pieces mixing bowl is exempt from consumption tax

Which of the following goods when sold or imported shall not be exempt from VAT? a. Livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption b. Breeding stock and genetic materials therefore c. Agricultural and marine foods products in their original state d. Processed or manufactured agricultural and marine food products Which of the following sale or importation of goods shall not be exempt from VAT? a. Fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds b. Fertilizers c. Specialty feeds d. Seeds, seedlings and fingerlings Which is incorrect? a. A non-resident lessor or foreign licensor who is not vat-registered is subject to vat b. A taxpayer whose annual receipts or sales do not exceed P3,000,000 but who is vat registered shall pay vat c. A taxpayer whose annual gross receipts or sales exceed P3,000,000 shall pay vat even if not vat registered d. An individual taxpayer whose gross sales or receipts do not exceed P100,000 is exempt from VAT provided the pays the 3% other percentage tax. Who are subject to VAT? a. b. c. d.

Those who are mandatorily required to register as VAT taxpayers those who are registrable to VAT any of the choices those who optionally register as VAT taxpayer

Which of the following shall not be considered as poultry for VAT exempt transactions purposes? a. b. c. d.

Turkey Fowls Fighting cocks Ducks and geese

Which of the following shall be exempt from VAT? I - Export sales by persons who are not VAT-registered. II - Export sales by persons who are VAT-registered. a. b. c. d.

II only Neither I nor II Both I and II are correct I only

Mang Kanor, is selling chicharron, boiled quail eggs, penoy, and balot through his mini-stall along MacArthur highway that earns less than P100,000 for a year. Kris, a BIR officer, advised Mang Kanor to file and pay consumption taxes for his sale. Which among the following is correct? a. Mang Kanor is required to pay consumption tax on the chicharron and boiled quail eggs’ sales only because these underwent process while penoy and balot are exempt goods b. Mang Kanor is exempt from paying consumption taxes because all his products are exempt goods c. Mang Kanor is required to pay consumption tax because he is selling processed food d. Mang Kanor is exempt from paying consumption tax because he is a marginal income earner and is operating a business for mere subsistence As to incidence of tax, the VAT on importation is a form of a. b. c. d.

Indirect Tax Specific Tax Direct Tax Ad Valorem Tax

Which of the following sales of real properties shall not be exempt from VAT? a. Sale of real properties utilized for low-cost housing as defined by RA No. 7279, otherwise known as the "Urban Development and Housing Act of 1992" and other related laws b. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business c. Sale of real properties utilized for socialized wherein the price ceiling per unit is P450,000.00 or as may from time to time be determined by the HUDCC and the NEDA and other related laws d. Sale of real properties utilized for commercial purposes Deka, purchased from a bookstore downtown, a fantasy fiction book, a biographical anecdote of Philippine Heroes, comic books, and a Meriam Webster dictionary. Which among the following is correct

a. The biographical anecdote of Philippine Heroes and Meriam Webster dictionary are not subject to consumption tax because they are for educational purposes b. The fantasy fiction book and comic books are both subject to consumption tax because they are for entertainment purposes c. The fantasy fiction book, biographical anecdote of Philippine Heroes, comic books, and Meriam Webster dictionary are all subject to exemption from consumption tax d. The fantasy fiction book, biographical anecdote of Philippine Heroes, comic books, and Meriam Webster dictionary are all subject to consumption tax Meat, fruit, fish, vegetables and other agricultural and marine food products shall be considered in their original state even if they have undergone the simple processes of preparation or preservation for the market. Which of the following shall not be considered as simple processes of preparation or preservation for the market? a. b. c. d.

Freezing Drying Roasting Canning

Which of the following shall not be considered livestock for VAT exempt transactions purposes? a. b. c. d.

Race horses Cows Bulls and calves Sheep

Which of the following statements is incorrect? a. Any business pursued by an individual whose aggregate gross sales or receipts do not exceed P100,000 during any 12-month period shall be considered principally for subsistence or livelihood and not in the course of trade or business b. A taxpayer whose gross receipts during the previous year exceed P3,000,000 is not required to pay VAT if he fails to register under VAT system c. The payment of VAT is monthly for both sale of goods and sale of services d. A VAT-registered taxpayer can pass on the VAT even to buyers who are not VAT- registered One of the following statements is INCORRECT? a. Imported goods which are subject to excise tax are no longer subject to VAT b. All of the choices are incorrect c. VAT on importation is paid to the Bureau of Customs before the imported goods are released from its custody d. Expenses incurred after the goods are released from Customs custody are disregarded in computing the VAT on importation Refers to transactions which are subject to 12% output VAT, whether such taxpayer is registered or registrable in accordance with Section 236 of the Tax Code.

a. b. c. d.

Taxable transaction Zero-rated transaction Exempt transaction None of the choices

Facilitator Foods Processing Phils Inc. is engaged in the business of meat processing. The meat being processed is imported from the U.S.A. Processes include thawing, cutting, boiling, packing and freezing. Is the importation exempt from VAT? a. b. c. d.

Yes, because it is still on their original state Yes, because it is consumed abroad none of the above No, because it is use in business

Statement 1: Exemption from income tax means exemption from business tax. Statement 2: Exemption from business tax means exemption from income tax. a. b. c. d.

False, False True, True True, False False, True

Jose San owns a restaurant. His gross receipts for the first month of the current year is P500,000. He asks you if he is required to register under the VAT system. What will your advice be? a. San Jose is not required to register under the VAT system because his gross receipts will not exceed the VAT threshold amount during the year b. Mr. San Jose may or may not register under the VAT system because it is not clear that his gross receipts will exceed the VAT threshold amount during the year c. San Jose has to register under the VAT system because his gross receipts will exceed the VAT threshold amount during the year d. San Jose is not required to register under the VAT system because owners of restaurant are generally exempted from VAT In case of importation, where the goods were imported by a VAT-exempt person are then subsequently sold in the Philippines to a taxable persons. Who is liable for the payment of VAT: a. b. c. d.

Both choices The VAT-exempt importer Neither of the choices The non-exempt buyer of goods

Statement 1: The consignor is subject to VAT on the sales of consigned goods by its consignees. Statement 2: The output VAT on deemed sales upon retirement or cessation of business shall be based on the market price or cost of goods whichever is higher. a. False, True

b. True, False c. True, True d. False, False Statement 1: VAT taxpayers are required to report their receipts or sales in two monthly VAT returns, 2551M for the first two months of the quarter and one quarterly VAT return, 2551Q on the third and last month of the quarter. Statement 2: Percentage taxpayers file their monthly percentage returns, 2550M for the three months of the quarter. a. b. c. d.

False, True True, True False, False True, False

I. Transport of passengers by international carriers is subject to VAT. II. Transport of cargo by international carriers is exempt from tax. a. b. c. d.

True, True False, True False, False True, False

Mabiga Cooperative is an agricultural cooperative which processes the coffee production of its members for sale to NesFe Corporation, a coffee processing company selling bottled instant cofee. Mabiga imported a coffee drier from Colombia Coffee Machineries Corporation. After 3 years of active use, Mabiga disposed the drier to Pedro Mabanag, a member. a. b. c. d.

Sale of coffee to NesFe Corporation Sale of coffee drier to Mr. Mabanag Importation of coffee drier from Colombia Sale of coffee by members to Mabiga Cooperative

Statement 1: If goods enter the Philippines, it will not be taxed to consumption tax at the point of entry. Statement 2: If goods are exported, it is effectively not subject to consumption tax a. b. c. d.

True, False True, True False, True False, False

Importation of which of the following if belonging to persons coming to settle in the Philippines for their own use and not for sal...