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INCOME TAXATION > CHAPTER 3 BOOK-BASED > Flashcards

CHAPTER 3 BOOK-BASED Flashcards

1
Q

CLASSIFICATION OF INCOME TAXPAYERS (Other than Individuals)

A
  1. Corporations
  2. General Professional Partnership
  3. Estates and Trusts.
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2
Q

Those created or organized under and by virtue of Philippine laws.

A

Domestic

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3
Q

List down corporations under domestic

A
  1. Domestic corporation, in general, including One Person Corporation
  2. Government-owned and-controlled corporations
  3. Taxable partnerships
  4. Proprietary educational institutions
  5. Non-profit hospitals
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4
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 (Revised Corporation Code of the Philippines, Section 2).

A

Corporation.

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5
Q

Section 10 of the RCCP provides that any person, partnership, association or corporation, singly or jointly with others but not more than______ in number, may organize a corporation for any lawful purpose or purposes.

A

15

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6
Q

is a new type of corporation under the Revised Corporation Code of the Philippines (effective March 8, 2019).
-is a corporation with a single stockholder, who may be a natural person, a trust or an estate (Ser 116). One person may incorporate two or more OPCs.

A

One Person Corporation (OPC)

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7
Q

Applies to a foreign corporation engaged in trade or business within the Philippines.

A

Resident Foreign Corporation

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8
Q

Applies to a foreign corporation not engaged in trade or business within the Philippines

A

Non-Resident Foreign Corporation

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9
Q

_______shall include “soliciting orders, service contracts, opening offices, whether called “liaison’ offices or branches;

A

doing business

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10
Q

Partnerships 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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11
Q

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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12
Q

Dividends received from non-resident foreign corporations.

A

Foreign-Sourced Dividends.

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13
Q

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

A

Domestic corporations

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14
Q

whether resident or non-resident, are taxable only on income from Philippine sources.

A

Foreign corporations

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15
Q

T OR F

Domestic corporations classified as Micro, Small and Medium Enterprises (MSMEs) with net taxable income not exceeding P5,000,000 AND total assets not exceeding P100,000,000, excluding the land on which the particular business entity’s office, plant and equipment are situated, shall be taxed at 20% effective July 1, 2020.

A

True

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16
Q
  • 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.
  • For tax purposes, it is considered a taxpayer engaged in the real estate business. Hence, real properties owned by this are considered ordinary assets.
A

Real Estate Investment Trust (REIT)

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17
Q

means real property which is held for the purpose of generating a regular stream of income such as rentals, toll fees, user’s fees and the like, as may be further defined and identified by the SEC.

A

Income-generating real estate

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18
Q

mean shares of stock issued by a REIT or derivatives thereof.

A

Investor securities

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19
Q

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

A

Overseas Filipino investor

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20
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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21
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 and who, in the aggregate, own at least one-third (1/3) of the outstanding capital stock of the REIT. (Rev. Reg. 3-2020 amending Rev. Reg. 11-2019)

A

Public company

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22
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. ____ excludes proceeds from the sale of the REIT’s assets that are re-invested in the REIT within 1 year from the date of the sale.

A

Distributable income

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23
Q

A REIT’s _____ means gross income less all allowable deductions (itemized or optional standard deductions) and the dividends distributed by a REIT out of its distributable income as of the end of the taxable year as: (a) dividends to owners of the common shares; and (b) dividends to owners of the preferred shares pursuant to their rights and limitations specified in the articles of incorporation of the REIT.

A

taxable net income

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24
Q

T OR F

A REIT shall be taxable on all income derived from sources within the Philippines at the applicable income tax rate of 30% as provided under Sec. 27(A) of the NIRC on its taxable net income as defined in these Regulations. Provided, that in no case shall a REIT be subject to a minimum corporate income tax, as provided under Sec. 27 (E) of the NIRC. (Rev. Reg. 3-2020
amending Rev. Reg. 11-2019).

A

FALSE - all income derived from sources within and WITHOUT the Philippines

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25
Q

.Refer to any private schools (“which are non-profit; this provision has been removed, see footnote), maintained and administered by private individuals or groups, with an issued permit to operate from the Department of Education (DepEd) or the Commission on Higher Education (CHED) or the Technical Education and Skills Development Authority (TESDA), as the case may be, under existing laws and regulations

A

Proprietary Educational Institutions

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26
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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26
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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27
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 not for profit.

A

Non-Profit.

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28
Q

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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29
Q

Government-Owned or -Controlled Corporations, Agencies or Instrumentalities (GOCCS EXEMPT from tax

A
  1. Government Service Insurance System (GSIS),
  2. Social Security System (SSS),
  3. Philippine Health and Insurance Corporation ( PHIC),
  4. Home Development Mutual Fund (HDMF) (effective Apr. 11, 2021),
  5. Local Water Districts (LWD).
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30
Q

is no longer exempt from income tax under TRAIN.

A

Philippine Charity Sweepstakes Office (PCSO)

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31
Q

is subject to the corporate income tax following the provision of R.A. 9337 that removed ____ from the list of GOCCs which are exempted from the payment of income tax

A

Philippine Amusement and Gaming Corporation (PAGCOR)

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32
Q

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 operations) ; and (2) income from its operation of necessary and related services under Sec. 14 (5) thereof (income from other related services).

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33
Q

Per Revenue Memorandum Circulars 33-2013 and 32-2022, PAGCOR’s income from gaming operations includes, among others:

A
  1. Income from its casino operations;
  2. Income from dollar pit operations;
  3. Income from bingo operations, including all variations thereof; and
  4. Income from mobile bingo operations operated by it, with agents on commission basis. Provided, however, that the agent’s commission income shall be subject to regular income tax, and consequently, to withholding tax under existing regulations.
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34
Q

T OR F
PAGCOR’s other income that are not connected with the foregoing operations are likewise subject to corporate income tax, VAT and other applicable taxes under the
NIRC, as amended.

A

TRUE

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34
Q

PAGCOR’s income from other related services

A
  1. Regulatory/license fees from licensed private casinos;
  2. Regulatory/license fees from private bingo operations, including all variations thereof;
  3. Regulatory/license fees from private, internet casino gaming, internet sports betting and private mobile gaming operations;
  4. Regulatory/license fees from private poker operations;
  5. Regulatory/license fees from private junket operations;
  6. Regulatory/license fees from SM demo units;
  7. Regulatory/license fees from all other electronic derivatives of brick and mortar games regulated by PAGCOR;
  8. Income from other necessary and related services, shows and entertainment.
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35
Q

is the online and/or remote or off-site wagering/betting on live cockfighting matches, events, and/or activities streamed or broadcasted live from cockpit arena/s licensed or authorized by the Local Government Units having jurisdiction thereof

A

Electronic Sabong or e-Sabong

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36
Q

T OR F
Gaming Income from e-Sabong Operation by an e-Sabong Operator, shall be subject to a 25% franchise tax, which shall be in lieu of all internal revenue taxes except VAT or percentage tax, depending on the threshold.

A

FALSE- 5%

37
Q

These companies are now subject to the regular corporate income tax rates.

A

Mutual Life Insurance Companies

38
Q

Association or condominium dues, membership fees and other assessments or charges, which are held in trust by the condominium corporation to be used solely for administrative expenses, are excluded from the condominium corporation’s gross income, hence, not subject to income and withholding tax

A

Homeowners’ Association

39
Q

Revenue Memorandum Circular 35-2012 clarifies the taxability of clubs organized and operated exclusively for pleasure, recreation, and other non-profit purposes. Income from whatever source, including but not limited to membership fees, assessment dues, rental income and service fees, of clubs organized and operated exclusively for pleasure, recreation, and other non-profit purposes, are subject to income tax.

A

Recreational Clubs

40
Q

refers to any natural person regardless of citizenship or residence, or juridical person regardless of place of organization, which provides ancillary services to an Offshore Gaming Licensee (OGL) or any other offshore gaming operator with license acquired from other jurisdictions. Such ancillary service may include, but shall not be limited to customer and technical relations and support, information technology, gaming software, data provision, payment solutions, and live studio and streaming services.

A

Accredited Service Provider

41
Q

means gross wagers less payouts

A

Gross Gaming Revenue or Receipts (GGR)

42
Q

refers to the amount that is derived after dividing the minimum monthly fee or its equivalent, as imposed by a Philippine Offshore Gaming Operation (POGO) Licensing Authority, by the rate of prescribed regulatory fee.

A

Agreed Pre-Determined Minimum Monthly Revenue from Gaming Operations

43
Q

refer to the total amount of money that offshore gaming customers wager.

A

Gross Wagers

44
Q

refers to income or earnings realized or derived from operating online games of chance or sporting events via the internet using a network and software or program.

A

Income from Gaming Operations

45
Q

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

A

Income from Non-Gaming Operations

46
Q

refers to an offshore gaming operator, whether organized in the Philippines (Philippine-based) or abroad (Offshore or Foreign-based), 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. For purposes of these Regulations, an OGL (also referred to as Interactive Gaming Licensee (IGL) by other POGO Licensing Authorities] shall be considered engaged in doing business in the Philippines.

A

Offshore Gaming Licensee (OGL)

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 Commission (SEC). The ____ Agent shall not be involved with the business operations of the OGL and shall derive no income therefrom.

A

OGL-Gaming Agent

48
Q

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

A

Payouts

49
Q

refers to the operation 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. The term “POGO entities” shall also refer to OGLs and Accredited Service Providers.

A

Philippine Offshore Gaming Operation (POGO)

50
Q

refers to 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. The ______ should be independent, reputable. internationally known, and duly accredited as such by an accrediting or similar agency recognized by industry experts

A

Third-Party Auditor

52
Q

refers to an autonomous and duly registered association 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 cooperative principles.

A

Cooperative

53
Q

refers to the accumulated amount of money annually deducted from the net surplus, which shall be less than fifty (50%) for the first five years of operation after registration and at least ten per centum (10%) of the net surplus thereafter, intended not for-the allocation or distribution to the members but for the protection and stability of the cooperative, commonly referred to as the Reserve Fund.

A

Accumulated Reserves

54
Q

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

A

Business Transaction

55
Q

refers to the property held by the taxpayer (whether or not connected with trade or business), but does not include stock in trade 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, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or property, used in the trade or business, of a character which is subject to the allowance for depreciation.

A

Capital Assets

56
Q

refers to the certificate issued annually by the CDA to cooperatives which comply with the requirements provided in CDA-Memorandum Circular 2008-03, and any subsequent amendments thereto. For internal revenue tax purposes, said _______ is one of the essential requirements for the grant of the Certificate of Tax Exemption/Ruling.

A

Certificate of Good Standing

57
Q

refers to the certificate/ruling issued by BIR granting exemption to a cooperative, which is valid for a period of five (5) years from the date of issue.

A

Certificate of Tax Exemption/Ruling

58
Q

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

A

Cooperative Development Authority (CDA)

59
Q

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

60
Q

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

A

Patronage Refund

61
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

62
Q

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

A

Related operations/transactions

63
Q

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

A

Transaction with members

64
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

65
Q

refers to the net armount arising from the operations of the cooperative after deducting the operational expenses from revenue generated, not construed as profits, but as excess of payments made by the members for the loans borrowed or the goods and services bought- from the cooperative including other inflows of assets resulting from its other operating activities and which shall be deemed to have been returned to them if the same is distributed as prescribed in accordance with Article 86 of R.A. 9520 and the by-laws of the cooperative.

A

Undivided Net Surplus/ Undivided Net Savings

66
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

67
Q

Gaming Operations is taxed at __ gaming tax of the GGR or the agreed predetermined minimum monthly revenue from gaming operations, whichever is ______.

A
  • 5%
  • higher
68
Q

Non-Gaming Operations is subjected to tax at ___

A

25% of the taxable income

69
Q

Income Taxation of Alien Individuals Employed by POGO Entities ___

A
  • shall have TIN (Taxable Identification Number)
  • pay withholding tax of 25% on their gross income and shall not be pay lower than P12,500
70
Q

Branch Profits Remittances is subjected to tax of __ which shall be based on the total profits applied

A

15%

71
Q

ROHQs is subjected to tax at __ of their taxable income

  • Under the CREATE Act, it is subjected to __ of their taxable income
A
  • 10%
  • 25%
72
Q

T or F
RHQs shall not be subjected to income tax

A

T

73
Q

Non-Resident Foreign Corporation, in General is taxed at ___

A

25%

74
Q

Non-Resident Cinematography Film Owner, Lessor or Distributor is taxed at __ of their gross income

A

25%

75
Q

Non-Resident Owner or Lessor of Vessels Chartered by Philippines National is taxed at __ of gross rentals, lease or charter fees

A

4.50%

76
Q

Non-Resident Owner or Lessor of Aircraft, Machinery and Other Equipment is taxed at __ of gross rentals, charters and other fees

A

7.5%

77
Q

refers to a foreign airline corporation doing business in the Philippines which has been granted landing rights in any Philippine port to perform international air transportation services/activities or flight operations anywhere in the world.

A

International Air Carrier

78
Q

refer to international air carriers having or maintaining flight operations to and from the Philippines.

A

On-line carriers

79
Q

refer to international air carriers having no flight operations to and from the Philippines.

A

Off-line carriers

80
Q

refers to a foreign shipping corporation doing business in the Philippines, having touched or with the intention of touching any Philippine port, to perform international sea transportation services/activities from the Philippines to anywhere in the world and vice versa, in the case…

A

International Sea Carrier

81
Q

T or F
Non-Resident Foreign Corporations are liable to income tax imposed in the Philippines only on income from services performed in the Philippines

A

T

82
Q

T or F
Foreign loans contracted from August 1, 1986, are taxed at 20% in the Philippines.

A

T

83
Q

T or F
1. Interest on Foreign Loans
Under tax treaties, reduced rates apply:
- US: Interest on a loan from a US corporation guaranteed by the US Eximbank is exempt.
- Korea: Interest on a loan to the Export-Import Bank of Korea is also exempt.
- Japan: Interest on a loan qualifies for a 10% tax if the recipient is the beneficial owner.
- Belgium: Interest paid to a Belgian company is taxed at 10%.
- Singapore and Thailand: Interest payments to residents are taxed at 15% under these treaties.

A

T

84
Q

T or F
Dividends paid to an NRFC are typically taxed at 25%, but this can be reduced to 15% if:
- The NRFC’s home country allows a tax credit equal to the Philippines’ 10% tax, or
- The NRFC’s home country doesn’t tax dividends from a Philippine company.

A

T

85
Q

T or F
2. Dividends Received by NRFCs:
Under tax treaties, reduced rates apply:
- Netherlands, Germany, Korea, Switzerland: Tax rates can be as low as 10% if certain ownership conditions are met.
- Singapore, Australia, Hong Kong: Dividends are taxed at 15%.
- US: Dividends are taxed at 20% if the US corporation owns at least 10% of the Philippine company’s shares

A

T

86
Q

T or F
3. Capital Gains Tax on Sale of Shares:
- A 15% final tax applies to the sale of shares in a domestic company that are not traded on the stock exchange.

A

T

87
Q

T or F
4. Foreign Currency Transactions by Banks:
- Banks’ foreign currency dealings with non-residents and local commercial banks are exempt from income tax.

A

T

88
Q

T or F
5. Royalty Payments:
Royalties paid to non-residents are subject to different preferential tax rates under various tax treaties:
- Japan: Royalty payments are taxed at 10% or 15% depending on the type of payment.
- US and Netherlands: Royalties are taxed at 10%.
- France and UK: Royalties are taxed at 15% under specific conditions.

A

T

89
Q

T or F
6. Tax Treaty Relief:
The BIR used to require a 15-day advance application for tax treaty benefits. However, courts have ruled that failure to meet this deadline should not prevent a taxpayer from receiving treaty benefits, as long as the conditions of the treaty are met.

A

T

90
Q

are items or amounts which the law allows to be deducted from gross income in order to arrive at the taxable income.

A

Allowable Deductions

91
Q

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

the amount or tax base upon which tax rate is applied to arrive at the tax due

A

Taxable Income

INCOME TAXATION (13 decks)

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