Value added tax semi finals PDF

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Value added tax a. Is an indirect national tax levied on the value added in the production of a good (or service) as it moves through the various stages of production b. Is ad valorem tax c. Is preferred in place of a personal income tax by many economists because income taxes are a disincentive to ...

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1. Value added tax a. Is an indirect national tax levied on the value added in the production of a good (or service) as it moves through the various stages of production b. Is ad valorem tax c. Is preferred in place of a personal income tax by many economists because income taxes are a disincentive to work, whereas a VAT discourages unnecessary consumption. d. All of t he above

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2. Which of the following is incorrect? a. A vat-taxable article may be exempt from vat b. A vat-taxable article may be subject to vat c. A taxpayer may have two businesses where one is subject to vat and the other is subject to percentage tax d. Manufacturers and importers of goods are subject to excise tax

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3. Which is correct? a. Without a business pursued in the Philippines (except importation) by the tax payer, 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

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4. Which statement is wrong? 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 nonprofit private organization c. Isolated services in the Philippines by non-resident foreign persons d. Isolated sale of goods or services

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5. The term “in the course of trade and business” does not include a. Regular conduct or pursuit of a commercial or economic activity b. Incidental business transactions c. Transactions by any person, regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members) or government entity d. None of the above

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6. Which of the following is incorrect? a. An article exempt from vat may be exempt from percentage tax b. An article subjected to excise tax may be subjected to vat c. An article subjected to vat may be subjected to percentage tax d. None of the above

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7. Which of the following is not a business tax? a. Excise tax b. Value-added tax c. Other percentage tax d. Income tax

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8. Statement 1: For a person to be subjected to any business tax, it is necessary that he is regularly engaged in the conduct or pursuit of an economic activity. Statement 2: A non-resident foreign person performing isolated transaction in the Philippines shall be liable to VAT. A B C D Statement 1 True True False False Statement 2 True False True False

9. Statement 1: Non-stock and non-profit private organizations which sell exclusively to their members in the regular conduct or pursuit or commercial or economic activity are 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

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10. Who is the one statutorily liable for the payment of VAT? a. Consumer b. Buyer c. Seller d. Buyer or seller 11. An individual who is not an employee nor a license professional, deriving gross sales or receipts not exceeding P 100,000 from activities principally for subsistence or livelihood a. Minimum Wage Earner b. Marginal Income Earner c. Ambulant Vendor d. A privileged store

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12. Which is correct? a. An excise tax which imposes a tax based on weight or volume capacity or any other physical unit measurement is called specific tax b. An excise tax which imposes a tax based on selling price or other specified value of the article is called ad valorem tax. c. A percentage tax which is imposed whether the transaction resulted in a gain or loss is called transaction tax d. All of the above

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13. What is incorrect? a. A taxpayer whose annual gross receipts or sales exceed P 3,000,000 shall pay vat even if not registered. b. A taxpayer whose annual receipts or sales do not exceed P 3,000,000 but who is vat registered shall pay vat c. A non-resident lessor or foreign licensor who is not vat-registered is subject to vat d. An individual taxpayer whose gross sales or receipts do not exceed P 100,000 is exempt from VAT provided he pays the 3% other percentage tax.

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14. Which of the following has an option to register under the VAT system in 2018? I. Common carriers by air transporting passengers, the gross receipts of which do not exceed P 3,000,000 II. Radio and/or television broadcasting companies whose annual gross receipts of the preceding year exceeds P 10,000,000 III. Operator of cockpit, the receipts of which do not exceed P 3,000,000 during the year IV. Seller f at-subject services the gross receipts of which do not exceed P 3,000,000 a. IV only b. I and III only c. I and IV only d. All of the above 15. In 2016, the following gross receipts/sales were recorded by Juan: Gross receipts from practice of profession Gross sales from trading activities Gross-sales – sale of agriculture food products

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P 1,250,000 600,000 475,000

Assuming Juan is non-vat registered, will he be subject to vat? a. No, because his gross receipts/sales in each business do not exceed the vat threshold of P 1,919,500 b. Yes, because if a professional, aside from the practice of his profession, also derives revenue from other lines of business which are otherwise subject to VAT, the same shall be combined for purpose of determining whether the threshold has been exceeded c. No, because he is not vat registered d. None of the above

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16. Pedro is a 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 (3) taxes listed below that he pays forms part of the gross selling price? a. Excise tax b. Value-added tax c. Percentage tax d. None of the choices 17. Which of the following taxes describes the value added tax? a. Income tax b. Sales tax c. Indirect tax d. Personal tax 18. Registration of taxpayers under the vat system may be classified as, except a. Mandatory vat registration b. Optional vat registration c. Mixed vat registration d. None of the above 19. The following data were provided by spouses’ Pedro and Ana. In 2018, Pedro’s gross receipts from his practice of profession was P 2,850,000 while her wife, Ana, has gross sales of P 2,200,000 derived from her trading business. Assuming they are not at registered, will they be subject to vat? a. Yes, because their aggregate gross receipts/sales exceeded the vat threshold of P 3,000,000 b. No, because for purposes of vat threshold, husband and wife shall be considered as separate taxpayers c. Yes, because their gross receipts/sales are not specifically exempt from vat as provided in the Tax Code d. None of the above 20. JJ is a certified public accountant. He applied for work and was hired by a Firm which is engaged in Business Process Outsourcing business handling accounting work for US entities. He was paid for his services. How should JJ treat such payment for business tax purposes? a. Subject to 12% VAT b. Subject to Percentage Tax c. Exempt from VAT and Percentage Tax d. It is a zero-rated transaction 21. Where even if there is a business, there is no vat imposable when I. A business is pursued by an individual where the aggregate gross sales and or receipts do not exceed P 100,000 during any twelve-month period II. Sale of real properties for low cost housing III. Sale of real properties for socialized housing

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IV. V. a. b. c. d.

Sale of residential lot at P 1,500,000 per unit and below beginning January 1, 2018 Sale of house and lot and other residential dwellings valued at P 2,500,000 and below beginning January 1, 2018 I, II and III only III and III only III,IV and V only All of the above

22. One of the following is not an activity subject to VAT: a. Sale in retail of goods by a dealer b. Sale of Bamboo poles a dealer c. Sublease of real property in the course of business d. Importation of ordinary feeds for poultry chicken 23. The following are exempt from vat, except a. Sale of marinated fish b. Sale of gold to the Bangko Sentral ng Pilipinas c. Association dues, membership fees, and other assessments and charges collected by home owners associations and condominium corporations d. None of the above 24. Which of the following shall be except from VAT? a. Common carriers transporting passengers by air within the Philippines b. Common carriers transporting passengers by sea within the Philippines c. Common carriers transporting passengers by land within the Philippines d. Common carriers transporting cargoes by air within the Philippines 25. A dealer in securities sold unlisted shares of stocks of a domestic corporation in 2018 and derived a gain of P 100,000 therefrom. The sale is: a. Subject to capital gains tax b. Subject to percentage tax of ½ of 1% of gross selling price c. Subject to 12% vat d. Exempt from business tax 26. Where even if there is no business, vat is imposable on: I. Importations of goods for personal use II. Services rendered in the Philippines by non-resident foreign persons, even isolated, shall be considered as being rendered in the course of trade or business. a. I only b. II only c. I and II d. None of the above

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27. The following are exempt from vat, except a. Sale of 1 sack of rice b. Sale of lechon manok c. Sale of pet food d. Sale of newspaper 28. Which of the following shall be exempt from vat? a. Services of banks b. Services of money changers and pawnshop c. Services of credit cooperatives d. All of the above 29. Which of the following carrier shall be subject to value-added tax? a. Sea carrier as Resident Foreign Corporation, annual gross receipts is P 2,000,000 b. Air carrier as Resident Foreign Corporation, annual gross receipts is P 2,000,000 c. Sea carrier classified as Domestic Corporation, voyage is from Philippines to Japan, annual gross receipts is P 2,000,000 d. None of the choices 30. Sale of the following real properties beginning January 1, 2018 are subject to vat except: a. Residential lot, held for sale in the ordinary course of business, sold for P 1,600,000 b. Residential house and lot, held for sale in the ordinary course of trade, sold for P 2,700,000 c. Sale of real property used in the ordinary course of business d. Sale of real property not primarily held for sale in the ordinary course of business 31. Statement 1: The sale of two(2) adjacent residential lots in the course of trade or business to one buyer within the same taxable year for P 1,000,000 each is subject to vat Statement 2: The sale of parking lot as an adjunct of a condominium unit in the course of trade or business at a gross selling price of P 500,000 is exempt from vat as long as its price, together with the unit, does not exceed P 3,199,200. A B C D Statement 1 True True False False Statement 2 True False True False 32. Assume the taxable year in the preceding number is 2018, the sale shall be classified as a. 12% VAT transactions b. 0% VAT transactions c. VAT exempt transactions d. None of the foregoing

33. In 2018, a subdivision developer sold five (5) residential house and lots, each to different vendees, for P 3,000,000 per lot, or a total sales of P 15,000,000 for the taxable period. These sales shall be classified as: a. 12% VAT transactions

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b. 0% VAT transactions c. VAT exempt transactions d. None of the foregoing 34. Statement 1 : Lease of a parking lot attached to a residential unit at P 8,000 per month is exempt from vat. Statement 2 : Lease of 8 residential units at P 18,500 per month is subject to vat.

Statement 1 Statement 2

A True True

B True False

C False True

D False False

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35. Statement 1: Sale of drugs and medicines prescribed for the treatment/and or prevention of diabetes, high cholesterol and hypertension is exempt from vat beginning January 1, 2019 Statement 2: Importation of drugs and medicines prescribed for the treatment/and or prevention of diabetes, high cholesterol and hypertension is exempt from vat beginning January 1, 2019. A B C D Statement 1 True True False False Statement 2 True False True False

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36. Statement 1: Sale of drugs and medicines of pharmacy run by the hospital to outpatients are subject to VAT. Statement 2: Pharmacy items used in the performance of medical procedures in hospital units such as in the operating and delivery rooms and by the other departments are considered part of medical services rendered by the hospital, hence, not subject to vat. A B C D Statement 1 True True False False Statement 2 True False True False

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37. A telephone Company , VAT-registered, provides services for domestic and overseas calls. It is a taxpayer as far as what business tax is concerned? a. Value-added tax b. Overseas communication tax c. Vat on domestic calls and overseas communications tax on overseas calls d. Franchise tax 38. Which of the following is not subject to VAT by a VAT-registered seller? a. Remaining inventory upon retirement from business b. Sale of company’s used car to its officers c. Sales of goods or services to the national government d. Sale of residential lot amounting to P 1,000,000

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39. The value added tax due on the sale of taxable goods, property and services by any person whether or not he has taken the necessary steps to be registered. a. Input tax b. Output tax c. Excise tax d. Sales tax 40. Which of the following is not deductible from Gross Selling Price for vat purposes? a. Discounts determined and granted at the time of sale, which are expressly indicated in the invoice, the amount thereof forming part of the gross sales duly recorded in the books of accounts. b. Discount determined and granted after the agreed sales quota is met by the buyer. c. Sales discount indicated in the invoice at the time of sale, the grant of which is not dependent upon the happening of a future event, deductible within the same month or quarter given d. Sales returns and allowances for which a proper credit or refund was made during the month or quarter to the buyer for sales previously recorded as taxable sales. 41. Mr. Andres, VAT-registered real estate dealer, transferred a parcel of land held for sale to his son as gift on account of his graduation. For VAT purposes, the transfer is: a. Not subject to VAT because it is gift b. Subject to VAT because it is deemed sale transaction c. Not subject to VAT because it is subject to gift tax d. Subject to VAT because it is considered an actual sale

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42. The following are the data of Davao International for the last quarter of 2018: Sales up to Dec. 15 (invoice value) P 380,800 Purchases up to Dec. 15(net) P 150,000 Additional information: On December 16, 2016, the Company retired from its business and the inventory valued at P 190,000 remained unsold. There is a deferred input tax from the third quarter of P 3,500. How much is the total value-added taxes payable of Davao International? a. P 42,100 b. P 21,500 c. P 22,800 d. P 19,300

43. Sta. Lucia Realty, a real estate dealer, sold a commercial lot mounting to P 800,000. This transaction is a. Vat exempt b. Zero-rated sale

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c. Subject to vat d. Subject to OPT 44. Gross selling price includes all of the following except one. Which one? a. Total amount which the purchaser pays to the seller b. Total amount which the purchaser is obligated to pay to the seller c. Excise tax d. Value-added tax 45. On January 5, 2018, Pinoy Food Corporation, vat-registered sold on account goods for P 112,000 inclusive of vat. The term was: 2/10,n/30. Payment was made on January 10, 2018. The total amount due is: a. P 110,000 b. P 107,800 c. P 112,000 d. P 109,760 46. One of the following is not a transaction deemed sale: a. Transfer, use or consumption not in the course of business of goods or properties originally intended for sale or for use in the course of business b. Distribution or transfer to shareholders or investors of goods or properties as share in the profits of a VAT-registered person or credits in payment of debt c. Retirement from or cessation from business with respect to all goods on hand as of the date of such retirement or cessation d. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned.

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47. Genson Distribution Inc., a VAT taxpayer, had the following data in a month: Cash Sales P 200,000 Open account sales P 500,000 Consignment: 0 to 30 days old (on which there were remittance from Consignees of P 200,000) P 600,000 31 to 60 days old P 700,000 61 days old and above P 900,000 How much is the output tax? a. P 348,000 b. P 216,000 c. P 264,000 d. P 108,000

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48. Ana a vat registered lessor of commercial spaces received P 1,337,500 rentals during the year from various clients, net of the 5% creditable withholding tax on rental income. How much is the correct output vat? a. P 154,080 b. P 142,500 c. P 150,000 d. P 160,500 49. Assume that in the preceding number, Ana is a non-vat registered lessor, how much is her correct business tax? a. P 42,237 b. P 40,125 c. P 38,118 d. P 0 50. Tax credit

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