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Income tax > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

______ is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence

A

Corporation

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2
Q

Section 10 RCCP provides that any person, partnership, association, or corporation, singly or jointly with others may organize a corporation for any lawful purpose or purposes with how many members?

A

not more than 15

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3
Q

what are the classification non-taxable corporation of joint venture?

A
  1. for the undertaking of a construction projects
  2. should involve joining or pooling of resources by licensed local contracts
  3. these local contractors are engaged in construction business; and
  4. the joint venture itself must likewise be duly licensed as such by the PCAB of the DTI
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4
Q

A classification of corporation that created or organized under and by the virtue of the Philippine laws?

A

Domestic

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5
Q

a classification of corporation that organized in accordance with laws of their respective countries?

A

Foreign

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6
Q

Those engaged in trade or business within the Philippines

A

Resident Foreign Corporation

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7
Q

Those not engaged in trade or business within the Philippines

A

Non- Resident Foreign Corporation

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8
Q

this are the partnership formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business

A

General Professional Partnerships

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9
Q

These are all corporations, agencies, or instrumentalities owned or controlled by the Government

A

Government-owned or Controlled Corporations (GOCCs), Agencies or Instrumentalities

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10
Q

Dividends received from non-resident foreign corporations

A

Foreign-sourced Dividends

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11
Q

_____ are taxable on income from sources within and without the Philippines

A

Domestic Corporations

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12
Q

____ whether resident or non-resident are taxable only on income from the Philippine sources

A

Foreign Corporations

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13
Q

give the corresponding tax rate in business income earned by the corporation of each year:
1997
1998
1999
2000- Oct. 2005
Nov. 2005-2008
2009
2020 (effectivity july 1)

A

in order:
35%
34%
33%
32%
35%
30%
25%

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14
Q

what is CREATE Act

A

Corporate Recovery and Tax Incentives for Enterprises Act or R.A 11534

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15
Q

true or false:
passive income are taxed at fixed rates ranging from 6%- 20%

A

true

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16
Q

a type of income that cause a minimal effort

A

passive income

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17
Q

true or false:
passive income is included in gross income computation

A

false, not included

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17
Q

true or false:
passive income is subject to a separate and final tax.

A

true

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18
Q

is a new type of corporation under the revised corporation code of the Philippines

A

One person Corporation

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19
Q

is a corporation with single stockholder, who may be a natural person, a trust or an estate

A

One Person Corporation

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20
Q

true or false:
domestic and resident foreign corporations are subject to the MINIMUM CORPORATION INCOME TAX (MCIT)

A

true

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21
Q

per republic act 9856 and revenue regulation 13-2011, _______ is a stock corporation established in accordance with the Corporation Code of the Philippines and the rules and regulations promulgated by the SEC, principally for the purpose of owning income-generating real estate assets.

A

Real Estate Investment Trust (REIT)

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22
Q

It means real property which is held for the purpose of generating a regular stream of income such as rentals, tolls fees, user’s fees and the like.

A

Income-generating real estate

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23
Q

it means share stock issued by a REIT or derivatives thereof

A

Investor Securities

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24
Q

refers to an individual citizen of the Philippines who is working abroad, including one who has retained or reacquired his Philippines citizen under R.A 9225

A

Overseas Filipino Investor

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25
Q

means a stockholder who is, directly or indirectly, the beneficial owner of more than 10% of any class of investor securities of the REIT combined

A

Principal stockholder

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26
Q

means a company listed with the exchange and which, upon and after listing have at least 1,000 public shareholders each owning at least 50 shares of any class.

A

Public company

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27
Q

own at least one-third of the outstanding capital stock of the REIT

A

public company

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28
Q

means net income earned for the taxable year, as adjusted for unrealized gains and losses/expenses and impairment losses and other items in accordance with internationally accepted accounting standards.

A

Distributable Income

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29
Q

Institutions that shall be covered by the preferential 10% corporate income tax rate are?

A
  1. Proprietary Educational Institutions
  2. Hospitals which are non-profit
  3. Non-Stock, Non-Profit (NSNP) Educational Institutions
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30
Q

Refers to any private schools maintained and administered by private individuals or groups, with an issued permit to operate from the DepEd or the CHED or the TESDA

A

Proprietary Educational Institutions

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31
Q

refer to any private hospitals, which are non-profit for the purpose of these Regulations, maintained and administered by private individuals or groups

A

Hospitals which are non-profit

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32
Q

are those institutions mentioned in the first paragraph of section 4(3) article XIV of the 1987 constitution and section 30(H) of the NIRC, as amended, whose revenues and assets that are used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties

A

Non-Stock, Non-Profit (NSNP) Educational Institutions

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33
Q

as used in the definition of NSNP Educational Institutions and Proprietary Hospitals, means that no net income or asset accrues to or benefits any member or specific person, with all the net income or assets devoted to the institution’s purposes and all its activities conducted for profit

A

Non-profit

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34
Q

it means any trade, business, or other activity, the conduct of which is not substantially related to the exercise or performance by such educational institution or hospital of its primary purpose or function

A

Unrelated Trade, Business or Other Activity

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35
Q

to be exempt under section 30(E) of the tax code, charitable institution must meet the following requirements;

A
  1. it must be a non-stock corporation or association
  2. it must be organized exclusively for charitable purposes
  3. it must be operated exclusively for charitable purposes
  4. no part of its net income or asset shall belong or inure to the benefit of any member, organizer, officer, or any specific person.
36
Q

What is GOCCs

A

Government-Owned or Controlled Corporations, Agencies or Instrumentalities

37
Q

Which government-owned corporations or agencies are exempt from paying the tax rate imposed by the Code on corporations or associations engaged in similar business activities?

A
  1. Government Service Insurance System (GSIS)
  2. Social Security System (SSS)
  3. Philippine Health Insurance Corporation (PHIC)
  4. Home Development Mutual Fund (HDMF), effective April 11, 2021
  5. Local Water Districts (LWD)
38
Q

True or False:
Philippine Charity Sweepstakes Office is no longer exempt from income tax under TRAIN

A

true

39
Q

What is PCSO?

A

Philippine Charity Sweepstakes Office

40
Q

What is PAGCOR?

A

Philippine Amusement and Gaming Corporation

41
Q

Tax treatment of PAGCOR:
Presidential Decree (PD) 1869, as amended, classified PAGCOR’s INCOME into two

A
  1. income from its operations conducted under its Franchise, pursuant to Sec. 13(2) (a) thereof (income from gaming operation)
  2. income from its operation of necessary and related services under Sec. 14(5) thereof (income from other related services)
42
Q

what is POGO?

A

Philippine offshore Gaming Operations

43
Q

refers to any natural person regardless of citizenship or residence, or juridical person regardless of place organization, which provides ancillary services to an offshore gaming licensee or any offshore gaming operator with licensed acquired from other jurisdictions.

A

accredited service provider

44
Q

refers to the total amount of money that offshore gaming customers wager

A

Gross Wager

44
Q

refers to the amount that derived after dividing the minimum monthly fee or its equivalent, as imposed by POGO LICENSING AUTHORITY, by the rate of prescribed regulatory fee.

A

Agreed Pre-Determined Minimum Revenue from Gaming Operations

45
Q

means gross wagers less payouts

A

Gross Gaming Revenue or Receipts
(GRR)

46
Q

refers to income or earnings realized or derived within the Philippines by Foreign-based OGLs/ and all other income earnings realized or derived Philippine-based OGLs that are not classified as income from gaming operations

A

Income from Non-Gaming Operations

47
Q

refers to a representative in the Philippines of a Foreign-based OGL who shall act as a resident agent for the mere purpose of receiving summons, notices and other legal processes for the OGL and to comply with the disclosure requirements of the Securities and Exchange Commissions (SEC)

A

OGL-GAMING AGENT

47
Q

refers to an offshore gaming operator, whether organized in the Philippines or abroad, duly licensed and authorized through a gaming license issued by a POGO licensing authority to conduct offshore gaming operations, including the acceptance of bets from offshore customers.

A

Offshore Gaming Licensee (OGL)

48
Q

refer to the total amount paid out to offshore gaming customers for winning

A

Payouts

49
Q

refers to the operations by an OGL of online games of chance or sporting events via the internet using a network and software or program, exclusively for offshore customers/players who are non-Filipinos

A

Philippine Offshore Gaming Operation (POGO)

50
Q

refers to the Philippine Amusement and Gaming Corporation (PAGCOR) or any special economic zone authority, tourism zone authority or freeport authority authorized by their respective charters to issue gaming licenses and accreditation to POGO entities

A

POGO licensing authority

51
Q

refers to a consultant or entity engaged by a POGO licensing authority to determine the GGR of OGLs

A

Third-Party Auditor

52
Q

Shall mean a branch established in the Philippines by multinational companies which are engaged in services

A

Regional Operating Headquarters (ROHQs)

53
Q

Shall mean a branch established in the Philippines by a multinational companies and which headquarters do not earn or derive income from the Philippines

A

Regional or Area Headquarters (RHQs)

54
Q

_____ is the pertinent items of gross income less the deductions authorized for such types of income.

A

taxable income

55
Q

it means no part of its income is distributable as dividends to its members, trustees, or officers, and that any profit obtained as an incident to its operations shall, whenever necessary or proper, be used for the purpose/s for which the NSNP was organized

A

Non-Stock

56
Q

it means that no net income or asset accrues to, or benefits, any member or specific person, with all the net income or assets devoted to the NSNP’s purposes and all its activities are conducted not for profit

A

Non-Profit

57
Q

it refers to an autonomous and duly registered associations of persons, with a common bond of interest, who have voluntarily joined together- to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits, of the undertaking in accordance with universally accepted cooperatives principles.

A

Cooperative

57
Q

refers to the accumulated amount of money annually deducted from the net surplus, which shall be done 50% for the first 5 years of operation after registration and at least 10% of the net surplus.

A

accumulated reserves

58
Q

refers to any business activity or livelihood engaged in by the cooperative where such cooperative generates savings

A

business transaction

59
Q

refers to the property held by the taxpayer but does not include stock in trait of the taxpayer or other property of a kind which would properly be included in inventory of the taxpayer if on hand at the close of the taxable year

A

capital assets

60
Q

refers to the certificate issued annually by the CDA two cooperatives which comply with the requirements provided in CDA-memorandum Circular 2008-03

A

certificate of good standing

61
Q

refers to the certificate/ruling issued by bir granting exemption to a cooperative

A

certificate of tax exemption/ruling

62
Q

refers to the government agency created under R.A 6939 monday to register, regulate and develop cooperatives.

A

cooperative development authority
(CDA)

63
Q

refers to the interest earned by the member’s paid-up to the capitalization of the cooperative

A

interest on share capital

64
Q

it is based on the average share capital contribution of members computed on a per month basis against the preset amount earmarked by the board of directors for interest on share capital

A

interest on share capital

65
Q

refers to the refund or return to the members of net savings generated from the operations of the cooperative

A

patronage refund

66
Q

refers to the operative act granting juridical personality to a proposed cooperative as evidenced by a certificate of registration issued by the CDA

A

registration

67
Q

refers to the transactions of cooperatives which are part of the objectives and purposes, as enumerated in the articles of cooperation.

A

related operations/transactions

68
Q

refers to the cooperative activity that provides goods and services to members where the cooperative generates not savings/surplus

A

transaction with members

69
Q

refers to the cooperative activity that provides goods and services to non members where the cooperative generates net savings/surplus

A

transaction with non-members

70
Q

refers to the net amount arising from the operations of the cooperative after deducting the operational expenses from revenue generated, not construed as profit, but as excess of payments made by the members for the loans borrowed or the goods and services brought

A

undivided net surplus/undivided net savings

71
Q

refers to transactions of cooperatives which are not part of the objectives and purposes as enumerated in the articles of cooperation

A

unrelated transactions

72
Q

classification of cooperatives according to the extent of the tax exemptions granted

A
  1. those julie registered cooperatives which transact business with members only
  2. those julie registered cooperative which transact business with both members and non-members
73
Q

all cooperatives, regardless of classification shall be subject to:

A
  1. capital gains tax from sale of shares of stock or sale
  2. documentary stamp taxes on transaction of cooperatives dealing with non-members
  3. VAT billed on purchases of goods and services
  4. withholding tax on compensation/ wages
  5. all other taxes for which cooperatives are directly liable and not otherwise expressly exempted by any law
74
Q

examples of passive income

A
  1. interest
  2. royalties
  3. dividends
  4. capital gains
75
Q

Types of Domestic Corporation?

A
  1. one personal corporation
  2. government–owned and –controlled corporations
  3. taxable partnership
  4. proprietary educational institution
  5. non-profit hospitals
76
Q

service fees payable by a Philippine company to a non-resident foreign corporation are exempt from the FWT if it can be established that

A

a. the services are performed by a foreign corporation not engaged in trade or business in the philippines

b. the said income is derived from sources outside the philippines

77
Q

the foreign source dividends shall be exempt if all of the following conditions can occur;

A
  1. the dividends actually received or limited into the philippines are reinvested in the business operations of the domestic corporation within the next taxable year
  2. the dividends shall only be used to fund the working capital requirements, capital expenditures, dividend payments, investment in domestic subsidies, and infrastructure project
  3. the domestic corporation holds directly at least 20% in value of the outstanding shares of the foreign corporation and has held the shareholdings uninterruptedly for a minimum of two years at the time of dividend distribution
78
Q

the phrase ‘_______’ for the purpose of determining whether the 20 lender rule applies means every transaction executed in the primary or secondary market in connection with the purchase or sale of securities

A

‘at any one time’

79
Q

to qualify for the tax incentives under sec. 5 of RR 13-2011, a REIT must:

A

a. be a public company and maintain its status as a public company

b. for the DST incentive on transfer of real property provided for under section 6 of RR 13-2011 and list with an exchange within 2 years from the date of initial availment of DST incentive and maintain the listed status of the investor securities on the exchange and the registration of the investor securities by the SEC

c. distribute at least 90% of its distributable income as required under the ACT and its IRR, as revised

d. comply with its reinvestment plan, a certificate by the commission

80
Q

in general, cash or property dividends paid by REIT shall be subject to a final tax of 10%, unless:

A

a. the dividends are received by a non-resident alien individual or a non-resident foreign corporation entitled to claim a preferential withholding tax rate of less than 10% pursue one to an applicable tax treaty

b. the dividends are received by a domestic corporation or resident foreign corporation, or an overseas filipino investor in which case, they are exempt from income tax or any withholding tax.

81
Q

in general, cash or property dividends paid by a REIT shall be subject to a final tax of how many?

A

10%

82
Q

what republic act granted income tax exemption to local water districts (LWD)

A

Republic Act 10026

83
Q

the supreme court held the PAGCOR’S income from skimming operation shall be subject to how many percent tax rate

A

5% franchise tax

84
Q

what is PSALM?

A

Power Sector Assets and Liabilities Management Corporation

85
Q

What is P.E

A

Permanent Establishment

Income tax (7 decks)

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