General Principles

Question 1

1. The process or means by which the sovereign, through its law-making body, raises income to
   defray the expenses of the government
   a. Toll
   b. License fee
   c. Taxation
   d. Assessment

Answer 1

C

Question 2

2. The proportional contribution by persons and property levied by the law-making body of the State
   by virtue of its sovereignty for the support of the government and all public needs is referred to as
   a. Taxes
   b. Toll
   c. License fees
   d. Assessment

Answer 2

A

Question 3

3. The primary purpose of taxation is
   a. To encourage the growth of some industries through the proper use of incentives
   b. To implement the police power of the State
   c. To reduce excessive inequalities of wealth
   d. To raise revenue for governmental needs

Answer 3

D

Question 4

4. Which of the following is not a secondary purpose of taxation?
   a. To serve as key instrument of social control
   b. To effect a more equitable distribution of wealth among people
   c. To achieve social and economic stability
   d. To raise revenue to defray the necessary expenses of the government

Answer 4

D

Question 5

5. Which theory in taxation states that without taxes, a government would be paralyzed for lack of
   power to activate and operate it, resulting in its destruction?
   a. Power to destroy theory
   b. Lifeblood theory
   c. Sumptuary theory
   d. Symbiotic doctrine

Answer 5

B

Question 6

6. Which among the following concepts of taxation is the basis for the situs of income taxation?
   a. Lifeblood doctrine of taxation
   b. Symbiotic relation in taxation
   c. Compensatory purpose of taxation
   d. Sumptuary purpose of taxation

Answer 6

B

Question 7

7. Treating persons who are similarly situated in the same manner
   a. Uniformity of taxation
   b. Equality of taxation
   c. Due process of law
   d. Non-delegation of legislative power

Answer 7

B

Question 8

8. One of the characteristics of a tax is
   a. A tax is a pecuniary burden and the law may not allow payment in kind
   b. It is dependent upon the will or contractual assent, express or implied, of the person taxed
   c. It is levied by the state by virtue of its sovereignty
   d. It is collected for public and private purposes

Answer 8

C

Question 9

9. One of the characteristics of internal revenue tax is that they are
   a. Criminal in nature
   b. Penal in nature
   c. Political in nature
   d. Civil in nature

Answer 9

D

Question 10

10. Which of the following is a nature of taxation?
    a. The power is granted by legislative action
    b. It is essentially an administrative function
    c. It is generally payable in money
    d. Without it the state can continue to exist

Answer 10

None

Question 11

11. Being legislative in nature, the power to tax may not be delegated, except
    a. To local governments or political subdivisions
    b. When allowed by the Constitution
    c. When delegation relates merely to administrative implementation that may call for some
    degree of discretionary powers under a set of sufficient standards expressed by law or
    implied from the policy and purpose of the Act
    d. All of the choices

Answer 11

D

Question 12

12. Although the power of taxation is basically legislative in character, it is not the function of Congress
    to
    a. Fix with certainty the amount of taxes
    b. Collect the tax levied under the law
    c. Identify who should collect the tax
    d. Determine who should be subject to the tax

Answer 12

B; it is the duty of BIR

Question 13

13. The levying and imposition of tax and the collection of tax are processes which constitute the taxation system
    a. Basis of taxation
    b. Aspects of taxation
    c. Nature of taxation
    d. Theory of taxation

Answer 13

B

Question 14

14. The official action of an officer authorized by law in ascertaining the amount of tax due under the
    law from a taxpayer is
    a. Assessment
    b. Delinquency
    c. Deficiency
    d. Distraint

Answer 14

A

Question 15

15. The actual effort exerted by the government to effect the exaction of what is due from the taxpayer is known as
    a. Assessment
    b. Levy
    c. Payment
    d. Collection

Answer 15

D

Question 16

16. Deals with the provisions of the law which determines the person or property to be taxed, the sums to be raised, the rate thereof, and the time and manner of levying, receiving and collecting
    taxes
    a. Collection
    b. Payment
    c. Enforced contribution
    d. Levy

Answer 16

D

Question 17

17. When the power to tax is delegated to the local government
    a. Only the local executive can exercise the power
    b. Only the legislative branch of the local government can exercise the power
    c. The local executive and the legislative branch of the government can exercise the power
    d. Neither the local executive nor the legislative branch of the local government can exercise
    the power

Answer 17

C

Question 18

18. Levying of local government taxes may be exercised by
    a. The local executive only
    b. The legislative branch of the local government only
    c. The local executive and the legislative branch of the local government unit
    d. Neither the local executive nor the legislative branch of the local government can exercise
    the power

Answer 18

B

Question 19

19. Where does taxing power of the provinces, municipalities and cities precede from?
    a. Constitutional grant
    b. Legislative enactment
    c. Presidential decree or Executive act
    d. Local legislation

Answer 19

A

Question 20

20. All of the following, except one, are basic principles of the sound tax system
    a. Fiscal adequacy
    b. Theoretical justice
    c. Administrative feasibility
    d. Inherent in sovereignty

Answer 20

D

Question 21

21. Under this basic principle of sound tax system, the government should not incur a deficit
    a. Theoretical justice
    b. Administrative feasibility
    c. Fiscal adequacy
    d. None of the above

Answer 21

C

Question 22

B22. The tax imposed should be proportionate to the taxpayer’s ability to pay
a. Fiscal adequacy
b. Equality or theoretical justice
c. Administrative feasibility
d. Intellectual sensitivity

Answer 22

B

Question 23

23. The tax laws must be capable of convenient, just and effective administration
    a. Fiscal adequacy
    b. Equality or theoretical justice
    c. Administrative feasibility
    d. Intellectual sensitivity

Answer 23

C

Question 24

24. The following, except one, are basic principles of a sound tax system
    a. It should be capable of being effectively enforced
    b. It must be progressive
    c. Sources of revenue must be sufficient to meet government expenditures and other public needs
    d. It should be exercised to promote public welfare

Answer 24

D

Question 25

25. The power to demand proportionate contributions from persons and property to defray the expenses of the government
    a. Power of taxation
    b. Police power
    c. Power of eminent domain
    d. Power of recall

Answer 25

A

Question 26

26. The power of the state or those to whom the power has been delegated to take private property for public use upon paying to the owner a just compensation
    a. Power of eminent domain
    b. Police power
    c. Power of taxation
    d. People power

Answer 26

A

Question 27

27. The power of the state to enact such laws in relation to persons and property as may promote public health, public morals, public safety and the general welfare of the people
    a. Power of eminent domain
    b. Police power
    c. Power of taxation
    d. People power

Answer 27

B

Question 28

28. The following are similarities of the inherent power of taxation, eminent domain and police power,
    except one
    a. Are necessary attributes of sovereignty
    b. Interfere with private rights and property
    c. Affect all persons or the public
    d. Are legislative in implementation

Answer 28

C

Question 29

29. Which statement refers to police power as distinguished from taxation?
    a. It can only be imposed on specific property or properties
    b. The amount imposed depends on whether the activity is useful or not
    c. It involves the taking of property by the government
    d. The amount imposed has no limits

Answer 29

B

Question 30

30. Which of the following may not raise money for the government
    a. Power of taxation
    b. Police power
    c. Power of eminent domain
    d. Privatization of government’s capital assets

Answer 30

C

Question 31

31. In this power of the State, the person who is parting with his money or property is presumed to receive a benefit
    a. Taxation
    b. Police power
    c. Eminent domain
    d. Forfeiture power

Answer 31

A

Question 32

32. Which of the following statements is correct?
    a. Non-payment of tax and debt is a ground for imprisonment
    b. The power to tax may include the power to destroy
    c. Provisions in the Philippine Constitution on taxation are grants of power
    d. Lands and buildings being used actually, directly and exclusively for religious and charitable purposes by churches and charitable institutions are exempt from income and property taxes

Answer 32

B

Question 33

33. They restrict the exercise of the power of taxation although they are not embodied in the Constitution
    a. Theoretical justice
    b. Legislative in character
    c. Inherent limitations
    d. Constitutional limitations

Answer 33

C

Question 34

34. Those restrictions on the exercise of the power of taxation that are found in the Constitution or implied from its provisions
    a. Theoretical justice
    b. Legislative in character
    c. Inherent limitations
    d. Constitutional limitations

Answer 34

D

Question 35

35. Which of the following statements is not correct?
    a. Taxes may be imposed to raise revenues or to provide disincentives to certain activities within the state
    b. The state can have the power of taxation even if the Constitution does not expressly give it the power to tax
    c. For the exercise of the power of taxation, the state can tax anything at any time
    d. The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers

Answer 35

D

Question 36

36. This is an inherent limitation on the power of taxation
    a. Rule on uniformity and equity in taxation
    b. Due process of law and equal protection of the laws
    c. Non-impairment of the jurisdiction of the Supreme Court in tax cases
    d. Tax must be for the public purpose

Answer 36

D

Question 37

37. This is a constitutional limitation on the power of taxation
    a. Tax laws must be applied within the territorial jurisdiction of the state
    b. Exemption of government agencies and instrumentalities from taxation
    c. No appropriation of public money for religious purposes
    d. Power to tax cannot be delegated to private persons or entities

Answer 37

C

Question 38

38. A tax must be imposed for public purpose. Which of the following is not a public purpose?
    a. National defense
    b. Public education
    c. Improvement of the sugar and coconut industries
    d. Improvement of a subdivision road

Answer 38

D

Question 39

39. Which of the following statements is incorrect?
    a. No person shall be imprisoned for non-payment of debt or non-payment of taxes
    b. The passage of laws granting tax exemptions requires the concurrence by majority of all the members of Congress
    c. The Supreme Court’s jurisdiction over tax cases cannot be impaired
    d. The revenues and assets of non-stock, non-profit educational institutions and donations for educational purposes are exempted from taxes and duties

Answer 39

A

Question 40

40. Toll as distinguished from tax
    a. Demand of sovereignty
    b. Imposed by government only
    c. Amount is based on the cost of construction of public improvement used
    d. Paid for the support of the government

Answer 40

C

Question 41

41. All of the following, except one, are characteristics of a toll
    a. Demand of proprietorship
    b. Compensation for the use of another’s property
    c. Maybe imposed by private individuals
    d. Levied for the support of the government

Answer 41

D

Question 42

42. One of the following is not a characteristic of a special assessment
    a. It has special application only to a particular time and place
    b. It is levied only on land
    c. May be levied on business
    d. Based wholly on benefits

Answer 42

C

Question 43

43. Tax imposed by the national government and as effective within the entire jurisdiction thereof
    a. National tax
    b. Local tax
    c. Proportional tax
    d. General tax

Answer 43

A

Question 44

44. Taxes imposed by a political subdivision of the state and is effective only within the territorial
    boundaries thereof
    a. National tax
    b. Local tax
    c. Progressive tax
    d. Regressive tax

Answer 44

B

Question 45

45. A tax that is imposed upon a person who is directly bound to pay it
    a. Direct tax
    b. Indirect tax
    c. Excise tax
    d. Poll tax

Answer 45

A

Question 46

46. Forms part of the purchase price of the commodity or service and passed on to customers
    a. Direct tax
    b. Indirect tax
    c. Excise tax
    d. Poll tax

Answer 46

B

Question 47

47. Schedular system of income taxation means
    a. All types of income are added together to arrive at gross income
    b. Separate graduated rates are imposed on different types of income
    c. Capital gains are excluded in determining gross income
    d. Compensation income and business/professional income are added together in arriving at
    gross income

Answer 47

B

Question 48

48. In case of conflict between tax laws and generally accepted accounting principles (GAAP)
    a. Both tax laws and GAAP shall be enforced
    b. GAAP shall prevail over tax laws
    c. Tax laws shall prevail over GAAP
    d. The issue shall be resolved by the courts

Answer 48

C

Question 49

49. Tax as distinguished from license fee
    a. Non-payment does not necessarily render the business illegal
    b. A regulatory measure
    c. Imposed in the exercise of police power
    d. Limited to cover cost of regulation

Answer 49

A

Question 50

50. Tax imposed upon performance of an act, the enjoyment of privilege or the engaging in an occupation
    a. Personal, poll or capitation
    b. Property
    c. Excise
    d. Regressive

Answer 50

C

Question 51

51. Which of the following is not an example of excise tax?
    a. Transfer tax
    b. Sales tax
    c. Real property tax
    d. Income tax

Answer 51

C

Question 52

52. An example of a property tax is
    a. Additional community tax on income of real properties
    b. Real estate tax on real properties
    c. Estate tax on inherited personal as well as real properties
    d. Donor’s tax on donation of property

Answer 52

B

Question 53

53. Tax which imposes a specific sum by the head or number or by some standards of weight or measurement and which requires no assessment other than a listing or classification of the objects
    to be taxed
    a. Ad Valorem
    b. Specific
    c. Excise
    d. Revenue

Answer 53

B

Question 54

54. Tax of a fixed proportion of the value of the property with respect to which the tax is assessed and requires the intervention of assessors or appraisers to estimate the value of such property before
    the amount due from each taxpayer can be determined is known as
    a. Specific
    b. Ad Valorem
    c. Special or regulatory
    d. Answer not given

Answer 54

B

Question 55

55. The following are kinds of taxes as to graduation. Which one is not?
    a. Digressive
    b. Uniform
    c. Regressive
    d. Progressive

Answer 55

B

Question 56

56. Tax based on a fix percentage of the amount of property, income or other basis to be taxed
    a. Progressive
    b. Proportional
    c. Regressive
    d. Indirect

Answer 56

B

Question 57

57. Tax where the rate decreases as the tax base increases
    a. Progressive
    b. Proportional
    c. Regressive
    d. Indirect

Answer 57

C

Question 58

58. Tax where the rate increases as the tax base increases
    a. Progressive
    b. Proportional
    c. Regressive
    d. Indirect

Answer 58

A

Question 59

59. Value-added tax is an example of
    a. Graduated tax
    b. Progressive tax
    c. Regressive tax
    d. Proportional tax

Answer 59

D

Question 60

60. Tax of a fix amount imposed among all persons residing within a specified territory without regard
    to their property or occupation they may be engage
    a. Personal, poll or capitation tax
    b. Property
    c. Excise tax
    d. Regressive

Answer 60

A

Question 61

61. Tax imposed on personal or real property in proportion to its value or some other reasonable method of apportionment
    a. Personal, poll or capitation tax
    b. Property
    c. Excise tax
    d. Regressive

Answer 61

B

Question 62

62. One of the following is not an inherent limitation on the exercise of the power of taxation
    a. International comity
    b. Double taxation
    c. Non-delegation of the legislative power to tax
    d. Territoriality

Answer 62

B

Question 63

63. The following constitute double taxation except one
    a. Both taxes are imposed in the same amount
    b. Both taxes are levied for the same purpose
    c. Both taxes are imposed by the same taxing authority
    d. Both taxes are imposed upon the same person

Answer 63

A

Question 64

64. Which of the following constitutes objectionable double taxation?
    a. A license fee and a tax imposed on the same business or occupation for selling the same articles
    b. A 20% final withholding tax on interest income on bank deposits and a 5% gross receipts tax on banks is a direct duplicate taxation
    c. Persons engaged in leasing or selling real property are subject to real estate dealers tax and their sales are also subject to 12% VAT
    d. A tax of 1% is imposed for bank reserve deficiency while a penalty of 1/10 of 1% is also imposed as a consequence of such reserve deficiency

Answer 64

D

Question 65

65. Which of the following statements is correct?
    a. Indirect double taxation violates the Constitutional provision of uniformity and equal protection
    b. There is direct double taxation in taxing the income of the corporation and again subject the portion of that income declared as dividend to final tax
    c. Indirect double taxation is legal as long as there is no violation of equal protection and uniformity clauses of the Constitution
    d. All of the above

Answer 65

C

Question 66

66. The usual mode(s) of avoiding occurrence of double taxation is/are
    a. Reciprocal exemption, either by law or treaty
    b. Tax credit of foreign taxes paid
    c. Deduction for foreign taxes paid
    d. All of the above

Answer 66

D

Question 67

67. Which is not a direct double taxation?
    a. A lessor of property pays a real estate tax and income tax on the same property
    b. Imposition of tax on the finished products and the raw materials used in the production of the said finished products
    c. Imposition of tax on corporate income and shareholder’s dividends from the same corporation
    d. All of the above

Answer 67

D

Question 68

68. Transfer of the tax burden by one on whom the tax is assessed to another
    a. Shifting
    b. Capitalization
    c. Transformation
    d. Tax exemption

Answer 68

A

Question 69

69. Which of the following is not a scheme of shifting the incidence of taxation?
    a. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the goods sold
    b. The purchaser asks for a discount or refuses to buy at regular prices unless it is reduced by the amount equal to the tax he will pay
    c. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad, so that the title passes abroad instead of in the Philippines
    d. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, in turn to the retailer and finally to the consumer

Answer 69

C

Question 70

70. The reduction in the selling price of income-producing property by an amount equal to the capitalized value of future taxes that may be paid by the purchaser
    a. Shifting
    b. Capitalization
    c. Transformation
    d. Tax exemption

Answer 70

B

Question 71

71. The method by which the manufacturer or producer upon whom the tax is imposed pays the tax
    and strives to recover such expense through lower production cost without sacrificing the quality of his product
    a. Shifting
    b. Capitalization
    c. Transformation
    d. Tax exemption

Answer 71

C

Question 72

72. The grant of immunity to particular persons or corporation or to persons or corporations of a particular class from a tax which persons and corporations generally within the same taxing district
    are obliged to pay
    a. Tax exemption
    b. Tax evasion
    c. Tax avoidance
    d. Tax amnesty

Answer 72

A

Question 73

73. In every case of doubt, tax statutes are construed
    a. Strictly against the government and the taxpayer
    b. Liberally in favor of the government and the taxpayer
    c. Strictly against the government and liberally in favor of the taxpayer
    d. Liberally in favor of the government and strictly against the taxpayer

Answer 73

C

Question 74

74. In every case of doubt, tax exemptions are construed
    a. Strictly against the government and the taxpayer
    b. Liberally in favor of the government and the taxpayer
    c. Strictly against the government and liberally in favor of the taxpayer
    d. Liberally in favor of the government and strictly against the taxpayer

Answer 74

D

Question 75

75. The exploitation by the taxpayer of legally permissible alternative tax rates or methods of assessing taxable property or income, in order to reduce tax liability. It is also known as tax minimization
    a. Tax exemption
    b. Tax evasion
    c. Tax avoidance
    d. Transformation

Answer 75

C

Question 76

76. The use of illegal or fraudulent means to avoid or defeat the payment of tax. It is also known as tax
    dodging
    a. Exemption
    b. Shifting
    c. Avoidance
    d. Evasion

Answer 76

D

Question 77

77. Which of the following statements constitutes tax avoidance?
    a. Deliberate failure of a taxpayer to pay the taxes due to the government
    b. Connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes
    c. Punishable by law
    d. Maybe contrary to the intent of the legislature but nevertheless does not violate the law

Answer 77

D

Question 78

78. The least source of tax laws
    a. Statutes
    b. Presidential decrees
    c. Revenue regulations
    d. Tax treaties or conventions

Answer 78

C

Question 79

79. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the
    a. Office of the President
    b. House of Representatives
    c. Senate
    d. Supreme Court

Answer 79

B

Question 80

80. Which statement is wrong? Tax laws
    a. Must originate from the House of Representatives and on which same bill the Senate may propose amendments
    b. May originate from the Senate and on which same bill the House of Representatives may propose amendments
    c. May have a House version and Senate version approved separately
    d. May be recommended by the President to Congress

Answer 80

B

Question 81

81. Which of the following is not considered as a step in making a revenue regulation effective?
    a. Recommendation by the Commissioner of Internal Revenue to the Secretary of Finance
    b. Approval by the Secretary of Finance
    c. Legislation by Congress
    d. Publication in a newspaper of general circulation

Answer 81

C

Question 82

82. The Commissioner of Internal Revenue is granted certain powers under the Tax Code. Which of
    the following is not a power granted to the Commissioner under the Code?
    a. Interpret tax laws and decide tax cases
    b. Issue summons and subpoena
    c. Enact tax laws and make amendments
    d. Make assessment and prescribe additional requirements

Answer 82

C

Question 83

83. Which of the following statements is incorrect with respect to the power of the President?
    a. Congress may authorize the President to fix within specified limits tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the government
    b. The President can veto any particular item in a revenue or tariff bill, but the veto shall not affect the items or items to which he does not object
    c. The power of taxation can be delegated to the President of the Philippines
    d. The President of the Philippines is empowered to grant tax exemption on certain class of
    taxpayers

Answer 83

D

Question 84

84. The place or authority that has the right to impose and collect taxes
    a. Territoriality
    b. International comity
    c. Situs of taxation
    d. Transformation

Answer 84

C

Question 85

85. A fundamental rule in taxation is that “the property of one country may not be taxed by another
    country.” This is known as
    a. International law
    b. International comity
    c. Reciprocity
    d. International inhibition

Answer 85

B