LOCAL TAXATION

Question 1

1. Which of the following has no power to impose taxes?
   a. Provinces
   b. Cities
   c. Municipalities
   d. Barrios

Answer 1

D

Question 2

2. Where does the local tax authority emanate from?
   a. Legislature
   b. Supreme Court
   c. Executive
   d. Sanggunian

Answer 2

D

Question 3

3. Which of the following is not a fundamental principle of local taxation?
   a. It must be uniform within the territorial jurisdiction of each local government unit
   b. Each local government unit shall, as far as practicable, evolve, a progressive system of
   taxation
   c. It must not be unjust, excessive, oppressive, or confiscatory
   d. Collection of local taxes can be delegated to any private person

Answer 3

D

Question 4

4. When may an LGU adjust local taxes?
   a. Every 2 years
   b. Every 3 years
   c. Every 4 years
   d. Every 5 years

Answer 4

D

Question 5

5. This doctrine is when the National government opts to tax a particular area, it impliedly withholds
   from the local government the delegated power to tax the same
   a. Separation of Departments of Government c. Exclusive prerogative doctrine
   b. Doctrine of Pre-emption
   d. Tax Jurisdiction

Answer 5

B

Question 6

6. At present, the law governing taxation of real property in the Philippines is
   a. Real Property Tax Code
   c. Local Tax Code
   b. Local Government Code of 1991
   d. National Internal Revenue Code

Answer 6

B

Question 7

7. Which of the following is not one of the guiding principles regarding appraisal, assessment, levy
   and collection of real property tax?
   a. Real property shall be appraised at its current and fair market value
   b. Real property shall be classified for assessment purposes on the basis of its actual use
   c. Real property shall be assessed on the basis of a uniform classification within each local
   political subdivision
   d. The appraisal and assessment of real property shall be based on audited financial
   statements of the owner

Answer 7

D

Question 8

8. Which real property is subject to the real property tax?
   a. Machineries actually, directly, and exclusively used by local water districts
   b. Real property owned by cooperatives
   c. Machineries for pollution control and environmental protection
   d. Real property used for cultural, scientific or medical purposes

Answer 8

D

Question 9

9. The real property tax rate to the imposed
   a. Must not exceed 1% in a province and 2% in a city, of the market value
   b. Must not exceed 1% in a province and 2% in a city, of zonal value
   c. Must not exceed 1% in a province and 2% in a city, of assessed value
   d. Is 1% in a province and 2% in a city, of assessed value

Note: Final answer should be letter C.
Basis: Sec. 233 of the Local Government Code.
“A province or city or a municipality within the Metro Manila Area shall fix a uniform rate of basic real
property tax applicable to their respective localities as follows:
(a) In the case of a province, at the rate not exceeding one percent (1%) of the assessed value of real
property; and
(b) In the case of a city or a municipality within the Metro Manila Area, at the rate not exceeding two
percent (2%) of the assessed value of real property.”

Answer 9

C

Question 10

10. Which of the following is not one of special levies on real property?
    a. Special assessment
    b. Ad valorem tax on idle land
    c. Special education fund tax
    d. Transfer tax on transfer of real property ownership

Answer 10

D

Question 11

11. Statement I: An idle land is an agricultural land with more than one hectare in area, half of which
    remains uncultivated except agricultural land with perennial crops with at least 50 trees and those
    used for grazing.
    Statement II: An idle land is a land in the city or municipality more than one thousand square
    meters in area, one half of which remains unutilized or unimproved by the owner.
    Statement III: The special levy on idle lands applies to any classification of land, be it residential,
    commercial, agricultural or industrial.
    a. Only one (1) of the above statements is true
    b. Two (2) of the above statements are true
    c. Three (3) of the above statements are true
    d. None of the above statements is true

Answer 11

C

Question 12

12. Mr. X bought a piece of land in Manila in 2021 whereby he discovered that it has unpaid real
    property tax for year 2020. Which of the following is correct?
    a. Mr. X is liable to real property tax because he assumed responsibility carried from previous
    owner
    b. Mr. X is liable to real property tax because he is the new owner
    c. Mr. X is not liable because but realty tax attaches upon the property. It is the property
    itself which is liable
    d. Mr. X is not liable because realty taxes attach to the property, and are chargeable against
    the person who had actual or beneficial use and possession of it regardless of whether or
    not he is the owner

Answer 12

D

Question 13

13. A power generation company with principal office in Davao City acquired and operated a factory
    in Quezon City. The company also established an administrative office in Mandaluyong City. This
    administrative office does not generate sales orders, nor does it receive collections from sales.
    Which of the three offices shall be liable for the local business tax?
    a. Offices in Davao City, Quezon City and Mandaluyong City
    b. Offices in Davao City and in Mandaluyong City
    c. Offices in Davao City and in Quezon City
    d. None of the above

Answer 13

C

Question 14

14. A municipality may levy an annual ad valorem tax on real property such as land, building,
    machinery and other improvement only if
    a. The DILG authorizes it to do so
    b. The real property is located in the municipality
    c. The real property is within the Metropolitan Manila Area
    d. The power is delegated to it by the province

Answer 14

C

Question 15

15. ABC Colleges, Inc. a stock educational institution organized for profit, decided to lease for
    commercial use a 1,000 square meter portion of its school. The school actually, directly and
    exclusively used the rents for the maintenance of its school buildings, including payment of
    janitorial services. Is the leased portion subject to real property tax?
    a. No, since the school actually, directly and exclusively used the rents for educational
    purposes
    b. No, but it may be subject to income taxation on the rents it receives
    c. Yes, since the leased portion is not actually, directly and exclusively used for educational
    purposes
    d. Yes, since ABC is a stock and for-profit educational institution

Answer 15

C

Question 16

16. The assessment level of agricultural land in a city should be approved by the Sangguniang
    Panlungsod in an ordinance in which the rate
    a. Should not exceed 40% of the assessed value
    b. Should not exceed 40% of the market value
    c. Should not exceed 40% of the zonal value
    d. Should be fixed at 40%

Answer 16

B

Question 17

17. You are consulted by a seller of real property as to what documents/prerequisites are needed
    before a transfer tax is paid to the treasurer’s office of the city. Given the options below, which of
    them is not a prerequisite?
    a. Certificate Authorizing Registration (CAR) from the Bureau of Internal Revenue
    b. Realty tax clearance from the Treasurer’s Office
    c. Registration of the document in the Registry of Deeds
    d. Official receipt for payment of documentary stamp tax paid to the Bureau of Internal
    Revenue

Answer 17

C

Question 18

18. A parcel of land located in a residential area in Malabon City and classified in the tax declaration
    as industrial is leased and used as commercial. What will be the basis of the city government in
    assessing the property?
    a. Industrial
    c. Agricultural
    b. Residential
    d. Commercial

Answer 18

D

Question 19

19. Which of the following real property tax formulas is false?
    a. Fair market value = Assessed Value/Assessment Level
    b. Taxable value = Fair market value x Assessment level
    c. Real property tax = Assessed Value x Tax Rate
    d. Assessment level = Assessed Value x Market Value

Answer 19

D

Question 20

20. After the province has constructed a barangay road, the Sanguniang Panglalawigan may impose a
    special levy upon the lands specifically benefitted by the road up to an amount not to exceed
    a. 100% of the actual project cost, keeping 60% for the province and giving 40% to the
    barangay
    b. 100% of the actual project cost without giving any portion to the barangay
    c. 60% of the actual cost of the road without giving any portion to the barangay
    d. 60% of the actual cost, dividing the same between the province and the barangay

Answer 20

C

Question 21

21. Mr. X owns an agricultural land with an area of ten (10) hectares, suitable for cultivation, dairying,
    inland fishery and other agricultural uses remains uncultivated and unimproved by the owner to
    the extent of 70% of the land. Which real property tax cannot be imposed on the property of Mr.
    X?
    a. Basic real property tax
    b. Special education fund tax
    c. Idle land tax
    d. Special levy tax

Answer 21

D

Question 22

22. Which of the following rules is not applicable to collection of special levy taxes?
    a. It cannot be imposed without public improvement
    b. It does not apply to properties which are exempt from real property tax
    c. The total amount to be collected should not exceed 50% of the expenses of total project
    cost and cost of acquiring the land
    d. All of the above apply to collection of special levy taxes

Answer 22

C

Question 23

23. Mr. X’s Tax Declaration for the year contains the following information:
    Classification of property
    Residential
    Fair market value
    Land-P1,250,000
    Improvement-P2,400,000
    Assessment level
    Land-15%
    Improvement-20%

How much is the aggregate basic real property tax assessable on the properties if the basic tax rate
is 1%?
a. P13,350
c. P3,338
b. P6,675
d. P0

Answer 23

B

Question 24

24. A vacant commercial land located in a city measuring 1,500 square meters has a market value of
    P1,000 per sqm in the tax declaration and a zonal value of P900. If the city has maximized the
    assessment level and tax rate to that allowed by law.
    Question 1: How much is the total real property tax payable?
    a. P15,000
    b. P7,500
    c. P22,500
    d. P11,250
    Question 2: If the taxpayer paid in advance, what is the maximum amount of discount that will be
    allowed as deduction from his tax due?
    a. P4,500
    b. P2,250
    c. P9,000
    d. P0
    Question 3: How much is the total amount payable if the taxpayer pays his real property tax after
    six (6) months of delinquency?
    a. P23,850
    b. P27,900
    c. P25,200
    d. P0

Answer 24

C
A
C

Question 25

25. A parcel of land in Metro Manila was assessed as commercial with a fair market value of
    P7,500,000. How much would be the highest possible amount of annual basic real property tax
    that can be collected from the owner?
    Scenario 1: The property is located in a city
    a. P3,750,000
    b. P75,000
    c. P37,500
    d. P0
    Scenario 2: The property is located in a municipality
    a. P3,750,000
    b. P75,000
    c. P37,500
    d. P0
    Scenario 3: The property is located in a municipality and assessed as residential
    a. P1,500,000
    b. P15,000
    c. P30,000
    d. P0

Answer 25

B
B
C

Question 26

26. A local government unit is empowered to collect this tax
    a. Documentary stamp tax
    b. Income tax on income of local business establishments
    c. Value-added tax
    d. Taxes, fees and charges on jeepneys

Answer 26

B

Question 27

27. Which of the following statements is incorrect?
    a. A city can collect taxes that can also be collected by a province
    b. A city can collect taxes that can also be collected by municipality
    c. A city can collect taxes that can also be collected by a barangay
    d. A city can decide not to collect taxes that can be collected by a province

Answer 27

C

Question 28

28. ABC Corporation’s head office is located in Ortigas, Pasig City. However, its manufacturing plant is
    in Taytay, Rizal. Where should ABC Corp pay the 2% local business tax if its gross receipts totaled
    Php10 million
    a. Pay Php200,000 at Taytay, Rizal
    b. Pay Php200,000 at Ortigas, Pasig City
    c. Pay Php140,000 at Ortigas, Pasig City and Php60,000 at Taytay, Rizal
    d. Pay Php60,000 at Ortigas, Pasig City and Php140,000 at Taytay, Rizal

Answer 28

D

Question 29

29. What is the tax base for the imposition by the province of professional taxes?
    a. The pertinent provision of the local Government Code
    b. That which Congress determined
    c. The reasonable classification made by the provincial Sanggunian
    d. That which the Department of Interior and Local Government determined

Answer 29

C

Question 30

30. A province can impose the following taxes but not
    a. Community tax
    b. Amusement tax on admission
    c. Franchise tax
    d. Tax on quarry resources

Answer 30

A

Question 31

31. Which of the following cannot be collected by barangay?
    a. Community tax
    b. Real property tax
    c. Barangay clearance
    d. Business tax on condominium associations

Answer 31

D

Question 32

32. Which of the following statements is incorrect?
    a. Barangay clearances shall first be secured before Mayor’s permit is issued by a city or
    municipality
    b. A franchise tax shall be based on the gross receipts of the franchisee in the preceding
    calendar year
    c. A local government unit may collect toll fees or charges for the use of a public road
    d. A professional may pay Professional Tax anywhere in the Philippines

Answer 32

D

Question 33

33. ABC Trucking is engaged in business of delivering sand, gravel and other quarry resources to its
    customers. During the period, it has extracted 20,000 cubic meters of quarry resources at an
    average fair market value of P200 per cubic meter. The expenses for the operation of the business
    amounted to P2,000,000. How much sand and gravel tax is due on ABC Trucking if the tax rate is
    2%? To which local government unit is the sand and gravel tax payable?
    a. P40,000 payable to the municipality where the quarry resources have been extracted
    b. P80,000 payable to the provinces where the quarry resources have been extracted
    c. P40,000 payable to the barangay where the quarry resources have been extracted
    d. P80,000 payable to the provinces where the quarry resources have been extracted

Answer 33

B

Question 34

34. The presentation of a community tax certificate is necessary in the following situations, except
    a. To acknowledge execution of document before a notary public
    b. To take oath of office in the government
    c. To receive any license or permit or certificate from public authority
    d. To receive private funds

Answer 34

D

Question 35

35. Non-payment of the following is not a ground for imprisonment
    a. Income tax
    c. Community tax
    b. Value-added tax
    d. Donor’s tax

Answer 35

C

Question 36

36. Statement 1: For purpose of community tax, a general professional partnership is taxable as a
    corporation.
    Statement 2: Aliens who have stayed in the Philippines most of the time during the taxable year
    are required to pay community tax in the Philippines.
    a. Both are correct
    c. Only the first is correct
    b. Both are incorrect
    d. Only the second is correct

Answer 36

D

Question 37

37. Given the following statements
    I. A general professional partnership is required to pay community tax.
    II. A business partnership is not required to pay community tax.
    III. A domestic corporation is required to pay community tax.
    IV. A resident foreign corporation is required to pay community tax.
    Which of the following is the best option?
    a. Only one (1) of the above statements is true
    b. Two (2) of the above statements are true
    c. Three (3) of the above statements are true
    d. None of the above statements is true

Answer 37

B

Question 38

38. Maximum additional community tax payable by an individual and a corporation

Individual-Corporation
a. P5,000-P10,000
b. P5,005-P10,005
Individual-Corporation
c. P5,005-P10,200
d. P5,005-P10,500

Answer 38

A

Question 39

39. An exempt individual may secure community tax certificate by paying
    a. P1.00
    b. P5.00
    c. P10.00
    d. P0

Answer 39

A

Question 40

40. Given the following statements
    I. An applicant for a CPA Licensure Examination who is a resident of Cebu City may validly secure
    community tax certificate in Davao City.
    II. The community tax certificate for 2021 can still be validly used in filing the income tax return
    on March 10, 2020.
    III. An unemployed Filipino with seven (7) children whose only source of livelihood is to work in
    his own rice field measuring 1,000 square meters may be required to pay community tax.
    Which of the following statements is correct?
    a. Only one (1) of the above statements is true
    b. Two (2) of the above statements are true
    c. Three (3) of the above statements are true
    d. None of the above statements is true

Answer 40

B

Question 41

41. Statement I: Barangay treasurers can be deputized to collect the community tax in their respective
    jurisdictions.
    Statement II: The printing of the community tax certificates shall be caused by the Bureau of
    Internal Revenue.
    Statement II: The community tax shall be paid in the place where the principal office is located.
    a. Only one (1) of the above statements is true
    b. Two (2) of the above statements are true
    c. Three (3) of the above statements are true
    d. None of the above statements is true

Answer 41

C

Question 42

42. If the community tax is collected by a barangay of a municipality, the collection
    a. Shall accrue entirely to the municipality
    b. Shall accrue entirely to the barangay where the tax is collected
    c. Shall be apportioned equally between the province, the municipality and the barangay
    where the tax is collected
    d. Shall be apportioned equally between the municipality and the barangay where the tax is
    collected

Answer 42

D

Question 43

43. Mr. X, 25 years of age who has been regularly employed, had the following data during the year:
    Salary-P500,000
    Gross receipts:
    Dormitory-150,000
    Passenger jeepney-200,000
    Expenses:
    Dormitory-80,000
    Passenger jeepney-100,000
    The community tax payable by Mr. X is
    a. P775
    b. P675
    c. P850
    d. P855

Answer 43

D

Question 44

44. Mr. X, a resident of Katipunan, Quezon City, owns a restaurant in C.M. Recto Ave., Manila and in
    Cubao, Quezon City. In 2020, it had the following data:
    Gross receipts-Expenses
    Manila-P5,000,000-P2,500,000
    Quezon City-3,000,000-1,500,000

Question 1: For 2021, the total basic and additional community tax payable by Mr. X is
a. P5,000
b. P5,005
c. P8,000
d. P8,005
Question 2: The community tax for 2021 is payable on or before
a. January 31, 2021
b. February 28, 2021
c. December 31, 2021
d. April 15, 2022
Question 3: If the tax is paid on April 30, 2021, the amount payable is
a. P5,205
b. P5,205.2
c. P5,325
d. P5,325.2

Answer 44

B
B
B

Question 45

45. ABC Corporation, a domestic corporation had the following data in 2021:
    Cash sales-P4,500,000
    Sales on accounts-2,500,000
    Cost of sales-3,500,000
    Expenses-1,500,000
    Dividend from XYZ Corporation-150,000

Zonal value-Assessed value
Real properties
Land-P1,400,000-P1,000,000
Building-1,800,000-1,600,000

The total taxes to be paid by ABC Corporation in 2021 is
a. P3,400
b. P2,900
c. P1,860
d. P1,040

Answer 45

A