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BLT 4A > Midterms > Flashcards

Midterms Flashcards

1
Q

Which of the following statements is correct?

Statement 1: The Tax Code shall prevail over the Philippine Accounting Standards (PAS) in case of conflict between them.
Statement 2: Tax evasion is tantamount to tax shield
Statement 3: Tax avoidance also means tax dodging
Statement 4: Tax laws are neither political nor penal in nature

a. 1 and 4 only
b. 2 and 3 only
c. 1, 2 and 3 only
d. 2, 3, and 4 only

A

1 and 4 only

Statement 1: The Tax Code shall prevail over the Philippine Accounting Standards (PAS) in case of conflict between them.
Statement 4: Tax laws are neither political nor penal in nature

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2
Q

Which of the following assets sold is subject to both business tax and income tax?

a. Capital asset
b. Personal asset
c. All of these
d. Ordinary asset

A

Ordinary asset

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3
Q

Which of the following input taxes can be refunded, converted into tax credit certificates or carried over to the next quarter at the option of the VAT-registered taxpayer?

a. Input tax on purchases of a PEZA-registered entity from a VAT-registered provider of legal and accounting services.
b. Input tax on purchases of services made by a VAT-registered person from VAT-registered supplier.
c. Input tax on purchases of goods made by a VAT-exempt person from VAT-registered supplier.
d. Input tax on purchases of goods by a PEZA-registered entity from a VAT-registered supplier.

A

Input tax on purchases of goods by a PEZA-registered entity from a VAT-registered supplier.

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4
Q

Deadline for filing/payment of BIR Form No. 2550Q

a. 25th day after the close of each taxable quarter
b. 20th day after the end of each month
c. 20th day after the close of each taxable quarter
d. 25th day after the end of each month

A

25th day after the close of each taxable quarter

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5
Q

Which of the following is/are correct?

I. Persons whose transactions are exempt from value added tax under Section 109 because their gross sales/and or receipts do not exceed P3,000,000 may voluntarily apply for registration under the VAT system.
II. A VAT-registered person whose gross sales and/or receipts for three (3) consecutive years did not exceed P3,000,000 may apply for cancellation of VAT registration and revert back to being non-VAT under Section 109.
III. A non-VAT registered whose sales for the year exceeded P3,000,000 is subject to 12% VAT.

a. I only
b. I, II only
c. I, II, and III
d. None

A

I, II, and III

I. Persons whose transactions are exempt from value added tax under Section 109 because their gross sales/and or receipts do not exceed P3,000,000 may voluntarily apply for registration under the VAT system.
II. A VAT-registered person whose gross sales and/or receipts for three (3) consecutive years did not exceed P3,000,000 may apply for cancellation of VAT registration and revert back to being non-VAT under Section 109.
III. A non-VAT registered whose sales for the year exceeded P3,000,000 is subject to 12% VAT.

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6
Q

Which statement is correct?

a. Zero-rated sales are not subject to VAT.
b. A person who issues a VAT invoice on a VAT exempt transaction is subject to VAT on the said transaction.
c. Gross sales or receipts not exceeding P250,000 are exempt from VAT and OPT.
d. Income tax-exempt entities may be also be exempt from VAT.

A

VAT invoice on a VAT exempt transaction is subject to VAT on the said transaction.

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7
Q

These are subject to VAT except:

a. goods brought into the Philippines not in the course of trade or business by a person who is not vat registered
b. goods exempt from customs duties classified as personal and household effects belonging to residents of the Philippines returning from abroad
c. tax free goods imported by tax-exempt importer who transferred them to a person who does not enjoy exemption from vat on importation
d. goods brought into the Philippines in the course of trade or business by a VAT-registered person

A

goods exempt from customs duties classified as personal and household effects belonging to residents of the Philippines returning from abroad

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8
Q

All the following are exempt from DST, except:

a. Loan agreements or promissory notes, the aggregate of which does not exceed Php250,000
b. Interbranch or interdepartmental advances within the same legal entity.
c. Sale, barter or exchange of shares of stock not listed and traded through the local stock exchange
d. Transfer of property pursuant to Section 40(C)(20 of the National Internal Revenue Code, as amended

A

Sale, barter or exchange of shares of stock not listed and traded through the local stock exchange

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9
Q

Statement 1 - Excise taxes may be imposed to goods or services which are exempt from either VAT or OPT. Statement 2 - Excise tax shall be imposed on gross receipts on invasive cosmetic procedures and surgeries directly towards enhancing patient’s appearance.

a. Both Statements are correct.
b. Only Statement 2 is correct.
c. Only Statement 1 is correct.
d. Both Statements are incorrect.

A

Both Statements are correct:

Statement 1 - Excise taxes may be imposed to goods or services which are exempt from either VAT or OPT. Statement 2 - Excise tax shall be imposed on gross receipts on invasive cosmetic procedures and surgeries directly towards enhancing patient’s appearance.

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10
Q

Statement 1: The point on which a tax is originally imposed is impact of taxation.
Statement 2: Police power is superior to the non-impairment clause of the constitution.
Statement 3: As a rule, taxes are subject to set-off or compensation.
Statement 4: As a rule, provisions on the validity of tax exemptions are
resolved liberally in favor of the taxpayer

a. Two statements are true
b. Three statements are true
c. All statements are true
d. One statement is true

A

Three statments are true:

Statement 1: The point on which a tax is originally imposed is impact of taxation.
Statement 2: Police power is superior to the non-impairment clause of the constitution.
Statement 3: As a rule, taxes are subject to set-off or compensation.

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11
Q

The principal purpose of taxation is

a. To implement the police power of the state
b. The reduce excessive inequalities of wealth
c. To encourage the growth of home industries through the proper use of tax exemptions and tax incentives
d. To raise revenues for governmental needs

A

To raise revenues for governmental needs

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12
Q

Which of the following is not allowed for a tax refund or issuance of tax credit certificate?

a. Cancellation of VAT registration
b. Unused input VAT on purchases
c. Zero-rated sales
d. Effectively zero-rated VAT

A

Unused input VAT on purchases

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13
Q

Which of the following is not a source of creditable input VAT?

a. Transitional and presumptive input VAT
b. Purchases and payments of services to other VAT-registered businesses
c. Importation of goods (for business use or for sale locally)
d. Goods received through donation

A

Goods received through donation

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14
Q

Which of the following is a transfer deemed sale transaction?

a. Property transferred as inheritance
b. Property held in trust
c. Property for sale but transferred as a completed gift
d. Donated property

A

Property for sale but transferred as a completed gift

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15
Q

Which of the following transport services is not subject to VAT?

a. Additional payment of excess baggage in air transport
b. Transport of passengers by air and sea
c. Transport of goods and cargoes
d. Transport of passengers by land

A

Transport of passengers by land

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16
Q

Which of the following is not considered a deemed sale?

a. Distribution of inventory to creditors
b. Installment sale of real property
c. Consignment of goods if not sold within 60 days
d. Merchandise inventory left upon retirement

A

Installment sale of real property

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17
Q

Which of the following is subject to VAT?

a. Sale of lechon
b. Sale of shells and coral products by a dealer
c. Sale of smoked fish
d. Sale of newspaper

A

Sale of shells and coral products by a dealer

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18
Q

The input VAT paid by a VAT business is treated as:

a. Current liability
b. Operating expense
c. Current asset
d. Cost of purchases

A

Current asset

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19
Q

Statement I - Section 116 of the Tax Code, as amended, provides that any person whose sales or receipts under Section 109(1) (CC) of the Tax Code from the payment of VAT and who is not VAT-registered shall pay a tax equivalent to 3% of his quarterly sales or receipts. Provided, that cooperatives, shall be exempt from the 3% gross receipts tax herein imposed: Provided, further that effective July 1, 2020 until June 30, 2023, the rate shall be 1%.
Statement II - A Self-Employed/Professional (SEP) is subject both to income tax and business tax. An SEP earning only from purely being self-employed or being a professional, however, have an option of having 8% tax on gross sales/receipts and other operating income in excess of Php250,000.
Statement III - Persons not subject to VAT are likewise exempt from OPT.

a. Statements I and II only are correct.
b. All statements are correct.
c. All statements are incorrect.
d. Statements II and III are correct.

A

Statement II and III are correct.

Statement II - A Self-Employed/Professional (SEP) is subject both to income tax and business tax. An SEP earning only from purely being self-employed or being a professional, however, have an option of having 8% tax on gross sales/receipts and other operating income in excess of Php250,000.
Statement III - Persons not subject to VAT are likewise exempt from OPT.

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20
Q

Which of the following is subject to VAT?

a. Lending investors
b. Offshore destination/charges of freight forwarder
c. Overseas calls origination from the Philippines
d. Pawnshops

A

Lending investors

21
Q

Which of the following is not included in the taxable base of input VAT of imported products?

a. Landed cost plus excise tax
b. Value used by BOC in determining tariff and custom duties, plus custom duties and excise taxes
c. Incidental charges after the release of goods from the BOC
d. Other charges prior to the release of goods from the BOC

A

Incidental charges after the release of goods from the BOC

22
Q

The importation of alcohol products for sale in the Philippines is subject to:

a. Tax-exempt
b. Excise tax only
c. VAT only
d. VAT and excise tax

A

VAT and excise tax

23
Q

Deadline for filing/payment of BIR Form No. 2551Q

a. 20th day after the close of each taxable quarter
b. 20th day after the end of each month
c. 25th day after the end of each month
d. 25th day after the close of each taxable quarter

A

25th day after the close of each taxable quarter

24
Q

These are transactions deemed sale, except:

a. Retirement from or cessation of business, with respect to inventories of taxable goods on hand as of the date of such retirement or cessation
b. Transfer, use or consumption not in the ordinary course of business, of goods or properties originally intended for sale or for use in the course of business
c. Distribution or transfer to shareholders or investors of goods or properties as share in the profits of a VAT-registered person or to creditors in payment of debt
d. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned

A

Consignment of goods if actual sale is made within 60 days following the date such goods were consigned

25
Q

For installment reporting of VAT, the initial payment should be 25% of the

a. Gross selling price
b. Contract price
c. Installments received
d. Realized income

A

Gross selling price

26
Q

This is an inherent limitation on the power of taxation

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

A

Tax must be for public purpose

27
Q

Which of the following is an export sale?

I - Sale of goods to foreign country from the Philippines
II - Sale of goods to PEZA-registered export enterprise
III - Sale of locally manufactured goods to foreign country
IV - Sale of gold to BSP
V - Foreign currency denominated sales

a. I, II, and III
b. II, III, and V
c. IV and V
d. I and IV

A

The following are export sales:

I - Sale of goods to foreign country from the Philippines
II - Sale of goods to PEZA-registered export enterprise
III - Sale of locally manufactured goods to foreign country

28
Q

Which of the following is correct?
I. Sales of services made by a VAT-registered business to PEZA or SBMA-registered enterprises are zero-rated, provided the same are performed within the ecozones.
II. The services rendered by a VAT-registered contractor to an international organization granted with tax exemptions under special laws or treaty are subject to zero-rated or effectively zero-rated VAT.
III. Transport of passengers to destination outside the Philippines by a domestic corporation is subject to VAT zero rate.

a. I and III only
b. I, II and III
c. II and III only
d. I and II only

A

I, II and III are correct.

I. Sales of services made by a VAT-registered business to PEZA or SBMA-registered enterprises are zero-rated, provided the same are performed within the ecozones.
II. The services rendered by a VAT-registered contractor to an international organization granted with tax exemptions under special laws or treaty are subject to zero-rated or effectively zero-rated VAT.
III. Transport of passengers to destination outside the Philippines by a domestic corporation is subject to VAT zero rate.

29
Q

Which of the following statements is not correct?

a. The Bureau of Internal Revenue has the duty and the exclusive power of enacting, implementing and interpreting tax laws.
b. Tax exemptions, tax amnesty, tax condonations and their equivalent provisions are not presumed and when granted, are strictly construed against the taxpayer because such provisions are highly disfavored by the government
c. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able to justify his claim or right.
d. Tax burdens shall neither be imposed nor presumed to be imposed beyond what the statute expressly and clearly states because tax statutes should be construed strictly against the government

A

The Bureau of Internal Revenue has the duty and the exclusive power of enacting, implementing and interpreting tax laws.

30
Q

A taxpayer has excess credit as a result of input taxes paid on purchase of
capital goods. He may:

a. have his excess tax credit refunded to a VAT-registered person
b. carry-over and apply his excess tax credit against output taxes in the subsequent period or periods
c. make his application for refund in the subsequent period following the period during which the purchases were made
d. use it in payment of any internal revenue tax of a VAT-registered person

A

carry-over and apply his excess tax credit against output taxes in the subsequent period or periods

31
Q

Which of the following business transactions is not subject to business
tax?

a. Jai-alai and horse race winnings
b. Sales of scrap materials and defective products by a business
c. Sale of residential house and lot classified as capital asset
d. Personal overseas communication

A

Sale of residential house and lot classified as capital asset

32
Q

In all cases, which of the following is not subject to business tax?

a. Rendering services for a fee
b. Services under employment relationship
c. Production of goods for a consideration
d. Selling of goods

A

Services under employment relationship

33
Q

Which of the following is not correct?

I. Any person who is not subject to mandatory registration because his actual or expected gross sales/receipts from non-exempt business for the past 12 months do not exceed P3,000,000, may opt to register under the VAT system, but shall not be allowed to cancel his VAT registration for the
next three years
II. Any person who is VAT-registered but enters into transactions which are exempt from VAT may opt that the VAT apply to his transactions which would have been exempt but shall not be allowed to cancel his VAT registration for the next three years.
III. Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do not exceed P10,000,000 may opt for VAT registration, but shall not be allowed to cancel his VAT registration indefinitely.

A

None of the above is correct:

I. Any person who is not subject to mandatory registration because his actual or expected gross sales/receipts from non-exempt business for the past 12 months do not exceed P3,000,000, may opt to register under the VAT system, but shall not be allowed to cancel his VAT registration for the
next three years
II. Any person who is VAT-registered but enters into transactions which are exempt from VAT may opt that the VAT apply to his transactions which would have been exempt but shall not be allowed to cancel his VAT registration for the next three years.
III. Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do not exceed P10,000,000 may opt for VAT registration, but shall not be allowed to cancel his VAT registration indefinitely.

34
Q

Deadline for filing/payment of BIR Form No. 1601-FQ

a. 25th day after the end of each month
b. on or before the last day of the month following the close of the calendar
quarter
c. 20th day after the end of each month
d. on or before the last day of each month

A

on or before the last day of the month following the close of the calendar
quarter

35
Q

Which of the following would not comprise the gross selling price subject to VAT?

a. Freight charges
b. Purchase price
c. Excise tax
d. Sales returns and allowances

A

Sales returns and allowances

36
Q

Value added tax is a/an:

a. Local tax
b. Indirect tax
c. Direct tax
d. Personal tax

A

Indirect tax

37
Q

In case of doubt, tax statutes are construed

a. Liberally in favor of the government and the taxpayer
b. Strictly against the government and liberally in favor of the taxpayer
c. Liberally in favor of the government and strictly against the taxpayer
d. Strictly against the government and the taxpayer

A

Strictly against the government and liberally in favor of the taxpayer

38
Q

Deadline for filing/payment of BIR Form No. 2550M

a. 20th day after the end of each month except for the last month of each taxable quarter
b. 25th day after the end of each month
c. 20th day after the end of each month
d. 25th day after the end of each month except for the last month of each taxable quarter

A

20th day after the end of each month except for the last month of each taxable quarter

39
Q

The BIR assessed the taxpayer for deficiency DST on a loan extended to it by its affiliates, which is not covered by any document but disclosed in Note 18 of its 2019 Audited Financial Statements (AFS).

The taxpayer argues that the Notes to AFS are neither documents nor debt instruments within the purview of Section 179 of the Tax Code. Thus, the advances extended to it by related parties as appearing in Note 18 of its 2019 AFS are not subject to DST.

a. The BIR is correct. The DST is an excise tax because it is imposed on the transaction rather than on the document.
b. The taxpayer is correct. The DST is not imposed on intercompany advances.
c. The taxpayer is correct. The DST is literally a tax on the document that embodies the transaction.
d. The BIR is correct. The Notes to AFS serves as taxable documents and can be used as debt instruments.

A

The BIR is correct. The DST is an excise tax because it is imposed on the transaction rather than on the document.

40
Q

Statement I: DST is paid by the person making, signing, issuing, accepting or transferring the documents. However, whenever one party to the taxable document enjoys exemption from the tax, the other party who is not exempt shall be liable for DST.
Statement II - Debt instrument are instruments representing borrowing and lending transactions including debentures, certificate of indebtedness, and bonds, including loan agreements signed abroad wherein the object of the contract is located or used in the Philippines.
Statement III - Remittances of all overseas Filipino workers (OFWs) are exempted from DST.

a. Only 1 statement is correct.
b. All statements are incorrect.
c. Only 2 statements are correct.
d. All statements are correct.

A

All statements are correct:

Statement I: DST is paid by the person making, signing, issuing, accepting or transferring the documents. However, whenever one party to the taxable document enjoys exemption from the tax, the other party who is not exempt shall be liable for DST.
Statement II - Debt instrument are instruments representing borrowing and lending transactions including debentures, certificate of indebtedness, and bonds, including loan agreements signed abroad wherein the object of the contract is located or used in the Philippines.
Statement III - Remittances of all overseas Filipino workers (OFWs) are exempted from DST.

41
Q

In case of doubt, tax refunds are construed

a. Liberally in favor of the government and the taxpayer
b. Liberally in favor of the government and strictly against the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Strictly against the government and the taxpayer

A

Liberally in favor of the government and strictly against the taxpayer

42
Q

The input VAT paid by a non-VAT business is treated as

a. Cost of purchases
b. Current liability
c. Operating income
d. Current asset

A

Cost of purchases

43
Q

Which is correct?

a. A VAT-exempt taxpayer may be subject to OPT
b. A taxpayer who is subject to OPT will also be subject to income tax
c. Both of these
d. None of these

A

Both of these are correct:

a. A VAT-exempt taxpayer may be subject to OPT
b. A taxpayer who is subject to OPT will also be subject to income tax

44
Q

Deadline for filing/payment of BIR Form No. 2000

a. 5th day after the close of the month when the taxable document was made, signed, issued, accepted or transferred
b. 15th day after the close of the month when the taxable document was made, signed, issued, accepted or transferred
c. 25th day after the close of the month when the taxable document was made, signed, issued, accepted or transferred
d. 5th day after the close of the quarter when the taxable document was made, signed, issued, accepted or transferred

A

5th day after the close of the month when the taxable document was made, signed, issued, accepted or transferred

45
Q

Which of the following statements is not correct?

a. The business tax on transaction subject to percentage tax forms a part of the cost to sale to the buyer
b. The transactions of VAT business, which is subject to VAT, are allowed with creditable input VAT
c. VAT element of the total payments for the purchases is forming part of the cost to sell to the buyer if claimed as credit against output VAT.
d. VAT is a business tax

A

VAT element of the total payments for the purchases is forming part of the cost to sell to the buyer if claimed as credit against output VAT.

46
Q

Which of the following statements is not correct?

a. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation.
b. Taxes may be imposed retroactively by law, but unless so expressed by such law, these taxes must only be imposed retroactively.
c. Tax is payable in money or in kind.
d. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our country.

A

Tax is payable in money or in kind.

47
Q

1st statement: Medical, dental, hospital and veterinary services, including laboratory services, except those rendered by professionals are exempt from VAT
2nd statement: If the hospital or clinic operates a pharmacy or drug store, the sale of drugs and medicine is subject to VAT

a. Only II is correct
b. Neither I nor II is correct
c. Both I and II are correct
d. Only I is correct

A

Both are correct:

1st statement: Medical, dental, hospital and veterinary services, including laboratory services, except those rendered by professionals are exempt from VAT
2nd statement: If the hospital or clinic operates a pharmacy or drug store, the sale of drugs and medicine is subject to VAT

48
Q

Which of the following statement is correct?

I - Services subject to percentage taxes shall no longer be subject to VAT.
II - Services by agricultural contract growers and milling for others of palay into rice, corn into grits and sugar cane into raw sugar are exempt from VAT.
III - Educational services rendered by government institutions, including those of private institutions duly accredited by DepEd, CHED, TESDA are exempt from VAT.
IV - Importation of books by a school, student, a bookstore is exempt from VAT.

a. None
b. III and IV only
c. I, II, III and IV
d. I and II only

A

All of the above are correct:

I - Services subject to percentage taxes shall no longer be subject to VAT.
II - Services by agricultural contract growers and milling for others of palay into rice, corn into grits and sugar cane into raw sugar are exempt from VAT.
III - Educational services rendered by government institutions, including those of private institutions duly accredited by DepEd, CHED, TESDA are exempt from VAT.
IV - Importation of books by a school, student, a bookstore is exempt from VAT.

BLT 4A (8 decks)

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