nto Business Taxation Chapter 3= Introduction a ject to VAT? mere 5, Whoare ho optionally register as VAT taxpayers. IAT Those who are mandatorily required to register as VAT tapay,, 12 Ag -B those who are registrable to VAT. : Ce Pe anaes ; edt Vo : 6 Whoare not required to register to the VAT system? ee Bee shose who are below the VAT threshold 30 b. Those whose only'sales are exempt sales b., Pe Those who only derive receipts from services specifica .) 12 ee fe IY subj) é es @® Any of these og T9106} bt at 44, Amart 7. ‘Ahon-VAT registered seller of goods shall pay Adee a. 3% percentage tax on its gross receipts oe chs, 1206 percentage tax on its value added » 3% percentage tax on its sales ie hes 4. 12% VAT on its gross receipts ; - 3 Db. ex | 8 Cite es of goods shall be subjectto! 0 si © 12% output VA" a 4 | c. 3% percentage tax on sales 2 | 4. 3% percentage tax on gross receipts . ® « 9. Who is entitled to claim (deduct) input VAT agai b - AT against = : vat rested ee gainst output VAT? dst VAT Fxitrable persons only t 47. Anon & _Non.VAT registered persons s aE . vs g. 4 b E 10. an nev Percentage tax? b d F a 2 Those hoger ce yar {itveshold and optto be register as - — xceed the VAT threshold but are odes 8. AVA aoe ¢ &. Only those service providers speci specifically subj ta Thor provders-of services specitcally cuter gerne les OF receij : ee ceipts in any 12-month period are 11. When i s the receipts from services Specifically subject to percent exceeds the VAT threshold, futur: i F a._exemptfrom percentage tax. *\?*® from these services are ee 6. still subject to the same Percentage t; : a ¢. subject to VAT. ig ‘ Lo d. Subject to 3% percentage tax. 88Chapter 3- Introduction to Business Taxation , AVAT-registered person who did not exceed the VAT threshold will pay VAT c. Both A and B pb. Percentage tax d. Either A or B at his discretion ‘Once the vatable sales or receipts exceed the VAT threshold, future monthly sales from vatable sales or receipts shall be subject to a, 3% percentage tax. Percentage taxes of various rates. a. 3%percentagetax. —c.Either AorB b. 12% VAT. @ Neither A nor B ‘The export sales of VAT-registered taxpayers are subject to zero-rated VAT. ._ exempt from business tax. ¢ subject to 12% VAT. d. subject to 3% percentage tax. The export sales of non-VAT registered taxpayers are subject to zero-rated VAT. exempt from business tax. subject to 12% VAT. subject to 3% percentage tax. Anon-VAT person with exempt sales exceeding the VAT threshold is still a. Exempt from business tax on exempt sales _b. Exempt from VAT on all its sales Exempt from percentage tax on all sales AandB an registered person who exceeded the VAT threshold will pay i) Vi c. Both A and B Piditace tax d. Either A or B at his discretion Anon-VAT registered person who exceeds the VAT threshold shall pay VAT joth A and B ither A or B at his discretion b. Percentage tax : aa registered person who did not exceed the VAT threshold shall , ce See, c. Percentage tax at various rates ‘centage tax d. Either A or Bat his discretion 89ion to Business Taxation — Introduction to Chapter 3 Be chapter general VAT threshold? ona ‘,P3,000,000 - a0 919600 ae eon b. 1,919,501 of la? resi | 22, Whichisaspecal VAT ereshold? . i rat Geert | P10,000,000 Bb: b. P1,91' a, 3. The mandatory or voluntary registration as VAT taxpayers ‘Unde procee ‘ r Compen special threshold is a. revocable anytime. « b. revocable after the lapse of three years. emetic revocable within a year. Po perpetually irrevocable. , : Mr. Jun K | 24. Mandatory or voluntary registration as a VAT taxpayer under the # eon ’ threshold is a a revocable anytime. Tevocable after the lapse of three years. Sale of st Sale of bc Total © revocable within a year. d. perpetually irrevocable. 25. The VAT Tegistration upon commencement of 9; expectation of exceedit peration based Compute ing the VAT threshold shall be 4 tax. revocable anytime. Po eb ‘Tevocable after the lapse of three years, b.) P40 revocable within a year if sales do not actually exceed the Bssumin, "threshold. i i 4. perpetually irrevocable. 4 sing Multiple-Choice -~ Problems 1 x b P40 1 Mrs. Belle seltemployed, Senerated the following receipts during the Mr. Masiy i propitds ofhealth insurance P 300,008 4m Month, h Rascibts from business advisory services 250,000 eee “eipts of rentals from boarding house 100,000” Sale of cj i le of i Pea “Mount subject to business tax? pee? a B 250,009 cP 350,000 7 % st 4.P650,000 4 Compute 2. Aperso, i aed @ Po Person engaged in business sold the following properties: >. p 2.0 Sales of goods held fe aq Sale of personal residec® P 200,0007 € of personal car 2,000,000 © 500,000, 90ar 3 Introduction to Business Taxation rse of business subject to business tax. c. P.2,200,000 d. P 2,700,000 pute the sales in the cou a PO 5) P:200,000 Julio, employed, received the following from his employer: ds of property insurance P 200,000 is of bank loan 300,000 pmpensation income 500,000 mat is the amount subject to business tax? p) PO c. P 300,000 200,000 d. 500,000 Jun Kim, a security broker, effected the sales of several securities of Kim ng-un. The following relates to the sale: Note ‘The sales do not Sales Feriain +> the broke. ‘of stocks P. 120,000 Yr 7,200 becarve -the cecun Hes cof bonds 280,000 a 400000 © Po_49n9 | FhM imertoniew pute the amount of receipts or sales of Mr. Jun Kim subject to business c,P 400,000 d. P 404,000 uming Kim Jong-un is an investor in stocks, what is the amount subject \siness tax? @ M04 yeaulyect TO Ax: ¢,P.400,000 cadens + ae d. P 404,000 ee 42 but, tox. fr, Masipag had annual gross recei i ipts not exceeding P10 i onth, he made the following sales: pater wie P__ 2,000 3,000 —— 3.000 28,000 Bute the total amount subject to business tax. .P5,000 geomet 4.P-8,000i Business Taxation “chapter 3~ Introduction tO : 2 curity dealer, sold the following during the money, 7. Mr. Kim Jong, 45 - ities for own account P 400,000 Prowit Sale ofsecuriieyme on sale of securities of clients 36,009 het aml Sale of vacant lot held as investment 1,000,000 Pe. Pe PO What is the amount subject to business tax? 40.000. 4. Bu, ® ” 2 De a PO (ciP 436,000 a b, 36,000 d.P 1,436,000 sang rm eee for. PA, corrwn enti Patras Ci md fend the, : mis amount subject t fear BK Professior & P20) 000 4. P-900,000 = Credit ae 4 : Loan 1 JBC Corporation, a merchandiser, had the following sales during t SSS, P Sale of merchandise P ee 200,000 ~ bee income from consignors 50,000 _ fompute t stocks investm 180,000 ro Compute the amount subject to business tax, 7. Oe ©.P 380,000 + Effective a 0 _4.P430,.000 ep counting a sn was asa deadline fc sari-sarj store with P5 = * i 00,000 ose lowing sales during the month: mye sles Januar Sale of vari ated by reas Pp 30,000 ~ ae Pe is brother be ied o ast jis Proceeds of bank lo, Bt 72 an 300,000 may 20 ae the amount su “ee bject to business tax, & P3000 ©P 230,000 ‘t 4.P 530,000 oa. ecules Which he derived eseant aie ae "e month, he had only of 'ved the following rec 92— ae waveenee P 150,000 Less: Withholding tax 7500 Net amount received P_142,500 What is the amount subject to business tax? PO ¢,P 142,500 P7,500 & 150,000 Mang Pandong is a farmer. He sold his agricultural land costing P200,000 " for P1,000,000 to start a palay trading business, What is the amount subject to business tax? A) PO ¢.P.800,000 OF . P200,000 d. P1,000,000 Ms. Cumacaliua is concurrently employed at Cumanan Corporation and Paatras Company. She received the following during the month: —Cumanan_ __Paatras _ Professional fees P 50,000 P 40,000 Less: Creditable withholding tax 7,000 6,000 Loan repayment s 12,000 SSS, PhilHealth, HDMF 3,000 A Net pay P__40,000 ‘ompute the amount subject to business tax. PO c.P 77,000 P 62,000 d. P90,000. Effective 2019, Kanlaon Corporation, a VAT-taxpayer, changed its accounting period to a fiscal year ending every August 30. What is the deadline for the first quarter VAT return under the new accounting period? @ September 25, 2019 November 25,2019 b. January 25,2020 @roecsuiven 25,2019 jn the immediately preceding problem, the third quarterly VAT return shall _ befiled on or before & May 20, 2020. c.June 20, 2020, May 25, 2020. (@une 25, 2020. itiple-Choice - Problems 2 Jackpruit, a seller of goods, Cash sales h sales P 200,007 1-0 bea ae sales (40% collected) 300,000, ) (2qae 300K+#°4)~ allowances 40,000 ~ out charged to customers 20,000° / had the following transactions in January 2020: 93susiness Tax" ™ creer! yuction to ae 3 Introd! -_cmmbusiness tx? : a exer erin oe eo Fp 500,000 ‘ eo a * a pee gee avy. Sunday Domne? alias? ic Saturday a he the exercise of te oa on july eS T A ership starte 7 ey professional Pa -Domingo Law Ee ped the calendar year basis, e + yoy ar payer. The pareershiP : of tp poste hip shall le its first monthly VAT return on T aN The professions pare! @yaugust 20,2020 : 0, 202 020 jy 10,2020 oo” ie The f i what is the deadline of the, 3. In the immediately preceding problem, / Noles Mtl way 30,2020, i ¢. August 25, 2020. oe suena August 30,2020. (@octaber 25,2020, > He deadly lord, 4. Aservice provider had the following income during the month: a Fees, paid in cash and checks e 60,000 Fees, paid in notes ite ‘Advances by clients for future services 00 id Reimbursement for out-of-pocket expenses 40,000 7 Reimbursement for client expenses. ___20,000 ¢ Total E3000 Compute the amount subject to business tax, 0 ovo +98 04 | a P350,000 P 160,000 ie? me. ; b. P250,000 C&P 140,000 Go. odin 5” Ataxpayer had the following sales or Exempt sales etal P 1,500,000 Other agubleetto percentage tax 400,000 Total ——800,000 Which is Correct? & Teta enbe ovar Bree cc) ec is subject co eee piscnees ae 0 receipts in the past twelvChapter 3- Introduction to Business Taxation Exempt sales P 200,000 "Services subject to percentage tax 400,000 Other sales — 2,000,000 “Total B.2,600,000 “Which is correct? The taxpayer is subject to VAT on other sales. exempt sales. 'd._ The taxpayer is subject to percentage tax on all sales, enue (Sales) P 200,000 P 240,000 P ish collections 180,000 240,000 w e. 0 P 640,000 ) P180,000 P240,000 P. 220,000 r 0 F 0 P.670,000 March P 0 P 0 P 670,000 P200,000 P.240,000 P 230,000 February P 180,000 P 240,000 P640,000 i P 200,000 P 250,000 P 220,000 P 200,000 P.250,000 P670,000 @ P4170,000 P 240,000 . P 200,000 P 240,000 P 170,000 P 250,000 P 200,000 250,000 P 230,000 P 670,000 P640,000 P 230,000 va the following data pertain to a business taxpayer during a quarter: 230,000 220,000 fu Wy Which of these properly reflect the reporting of a VAT service provider? March Nee VAT taxpayers -4¢ tht 7270000, P240000 -—p640,000) Txt flu " Which of these properly reflect the reporting ofa VAT seller of goods? February ‘The taxpayer is subject to VAT on taxable sales other than exempt sales, ‘The taxpayer is subject to percentage tax on taxable sales other than ich of these properly reflect the reporting of a non-VAT service ic February March SEN eyiders Ore P 240,000. P.640,000\\.. Gubje ct to-tay on Cipts, NOn Vat fae pauers a RESO th qudv ich of these properly reflect the reporting of a non-VAT seller of goods? January February Vese! P 200,000 P-250,000 p220000 Soler P 170,000 P 240,000 640,000 Svinject t D |te compl 4 for 13, & p90! . p24 te compl a claim be ant offering local cuisine. Which is correct? a D248 er es the sale of =e f engaged of goods. pul 2 Ne sale of goods and service. om 12 ‘ ee is engengaged in business. a. 20 a No" ; : ‘; uty parlor. She is indebted to 7, DN non-V. +, ariynis a beauiian operating & eat on agreed to render Service 9. 56,000 ¢ 1 debt) Marilyn P6, indebtedness. Which is correct) ma P 3. for P30,000. Unable to pay her tee tedness is a gratuity subjeq Zeus. In return, cancelled Marilyn's i ‘a. The cancellation of the P30,000 indel donor's tax. ac b The cancellation of the P30,000 indebtedness is exempt from rou tax. 1 ‘The cancellation of the P30,000 indebtedness is a constructive rect of Marilyn subject to business tax. 4. The cancellation of the P30,000 indebtedness is a constructive recs of Zeus subject to business tax. b 14, Aisa VAT-registered seller with annual sales of P1M. During the months recorded only P10,000 in sales and sustained an operating loss of P4000 Which is correct? ‘The taxpayer is exempt from busi é £ a eX curing ee ‘The taxpayer shall pay VAT, a a c The aubaver shall pay percentage tax. ‘% L. ‘payer shall pay VAT if hi. pes if his/h P ng he ear Other eel ales excel ge ak. 1 = Paying 3% percentage 0 P40 respectively P 12,000 ang Meditely registered to thee he the business. litwas ited, Pay a P9000 be. P 24,000 Boek X19apter 3 — Introduction to Business Taxation {, compute the business tax payable in October, assuming Chemex e edit and was approved by the BIR. 3 4 "ex claimed (@P 27,000 100% TPO AB 24,000 d. P 36,000 PSA AT pute the business tax payable in October, assuming Chemrex filed a im for tax refund. P-9,000 P 27,000 ¢ P 24,000 (a. 36,000 - ypute the business tax payable in November. P 12,000 c, P-36,000 400k 12% = 1k -P.20,000 d.P 48,000 4ek 2g inp yt? 30 n-VAT taxpayer paying 3% percentage tax received P104,000 cash and 100 CWT from the sale of services. Compute the percentage tax. P3,000 c.P3,204 [oe rn P3,120 (iP 3,300 COHEFGH 3 'T-taxpayer received a P52,000 plus P4,000 creditable withholding tax ificate. What is the output VAT? P5571 P5820 (S2k+ 44) x (2 i P5,760 (4P 6,000 = uGp0o5, Whoisan agricultur: yrate those en Whatiis the tax treatm: c What is the invoicing req! Exercise Drills Faetere whether the sale ofthe following items is exempt or vatable: ternational carriers of “in original gna! ‘al contract grower? with indirect tax exemption. to entities with indirect tax uirement on exempt sales? 1 Vegetables 2._ Cooked rice 3,_ Sundried banana 4, Canned fish 5,_Fruit shake 6._Boiled eges 7._Fresh fruits 8.__Fresh sea foods 9. Lumber 10, Orchids and bonsai 11. Chicken manure 12. Bamboo 13. Bamboo shoots YSIS RPE LINE ss, 14. Cotton seeds Is 15. Cotton I< 16. Wheat 17. Cacao 18. Cocoa tile 19. Cheese 20. Charcoal 21, Furniture cles 22, Z00 animals 23. Tobacco 24, Tea nf 25. Aquarium fish 130Vv. a or Fasc processed agricultural products is vatable. Sie of fruits and vegetables is exempt from business tax. sale of fertilizers, seeds, and pesticides is exempt from VAT. ipt sales are exempt from both the VAT and percentage tax. meat is considered a processed agricultural food product. sh pond operator is subject to 3% percentage tax farmer is subject to business tax on farming occupation. ‘ sales of agricultural or marine food products are subject to business tax. e services provided by agricultural contract growers are vatable. e employment of chemical treatment to agricultural or marine food oducts is considered state altering. he sale of bread is exempt from business tax. e services of an agricultural contract grower are subject to VAT. estaurants are exempt from VAT. fruit vendor is exempt from business tax. manufacturer of canned sea foods is exempt from VAT. ‘ or False 2 f- The transport services of an international carrier is exempt from VAT. gricultural cooperatives are exempt from VAT. llectric cooperatives are subject to VAT. e sale of commercial lots where the selling prices do not exceed P1,919,500 a unit is exempt. Bookstores are totally exempt from VAT. Schools are subject to VAT. lospitals are subject to VAT. e export sales by VAT taxpayers are exempt from VAT. e export sales of non-VAT taxpayers are subject to zero-rated VAT. nsultants are exempt from VAT because their services are akin to ment leasing of residential units is exempt from VAT if the al Rot exceed P15,000 per unit. 7 yet ed Po airliners are exempt from VAT on their transport of passengers. ci. ¢ of a residential dwelling by a non-dealer is subject to VAT if the : et per unit does not exceed P3,199,200. Th 'e of an adjacent lot to the same buyer shall be treated as on © sale of adjacent dwelli i scare ne, ings to different buyers shall be aggregated asee aS, FIVpSr ise am Services j00ds, les of Gi pt Sal Chaper 4-96 chapter 4 ich whic 7 Part 1 . i. Wt Bee. is not subject to business tax? p es the following sale 7 1. ssa carb 2 a ‘anon-dealer : ras Casual sale of a cal en, a # wri Sal of er by a busi 2 a. Sale of ; a es? ch of these pay business tax¢ ‘old trader 4, The sa = 2 ogeabes dealer eet 3.7 w b frutedeater goicced p. Vit . ible with VAT? . j sg e Sale ofcoton in orgnal tate ; Bape = "Sale of mikfish in original state r Ss e Ri czas ey ta Yeti c. Sale of muscovat oe a. Sale of mustard seeds a : BF 16 30 zapivas , ptfrom business tax? OR ae paamiei 2 80 0 -ah:x0bnaagh _ Hamu Renaereciel RT 2 52 10 Teudomhing & Manufacturer of noodles fe Meat vendor 9 . toqenst . to ‘is19qoom emus 4 ee enher th A and B jou Shy b ‘Percentage tax @.Neither AnorB. bi 6. Allofthe following are exempt agricultural Produce, except a Palay ©. Garlic b tem bates ~ 7. Which ofthe following is Considered as notin its original Frozen fish © Marinated fish Dried fish BUNGE 8. Whi ich is exempt from business tax? @) Sale of boi Hed peanuts ¢, sale of coco lumber b. Sale of peanut brittle sale of flowers a iT ’ ie es eft following Sale is exempt from business tax? - 5 Palay © Sale of © Sale of furniture 4. Sale often 10. The sale OF this a 1 3 é Mackeret *8icultural oy Marine Product js exempt 5 sin ©. Leather 4. Pear} 132chapter 4~ Exempt Sales of Goods, Properties and Services 4, Which of the following establishments may ‘ 5s tax? “Te (Boarding house Inn d. Resort qualify for exemption from ch of the following is least likely subject to VAT? Banana cake © Chocolate Cassava chips C@Lorn grits sale of which of the following is exempt from business tax? Wine c.Fish sauce Vinegar (@Boiled eggs the sale of this agricultural supply is exempt from business tax Fertilizer c. Farm tools Farm machineries d. All of these ich is subject to VAT when sold? Seeds Feeds Fingerlings @None of these Which is not exempt from business tax? Miller of palay into rice Miller of corn into corn grits =) Miller of sugar cane into refined sugar Miller of sugar cane into raw sugar hich is exempt from business tax? a.) Agricultural contract growers Food processor Paper manufacturer All of these ich of the following transactions is not subject to business tax? Sale of game fowl Sale of specialty feeds Sale of genetic materials for poultry Sale of aquarium fish lich of the following animals is not consid Domestic animal c, Race horse ” Livestock d. Aquarium fish lered as a pet? Which of the follo a. Sale of pets wing sales is not exempt from business tax? bw s : J al ‘ale of unprocessed agricultural food products b 133ee ae sales of Goods, Properties and Services we S “ ieee ‘marine foods ‘al products non-food agricultur 4d. Sale of unprocessed whic : Part 2 a 5 Multiple Choice - Theory: Pal F BS is subject to business tax’ BE 1. Which Feoehoephal c, A government hospital D Aprivat Ee Apron hospital @None of these @ F wh siness tax? . P . Which is not subject to busi 2 2 ‘A purely employed professional. = .. Aprofessional practitioner c.Aself-employed individual . whic d. Allofthese oe i Pa. 3. All ofthese pay business tax, except , b 3 a Stock broker c. Consultant ; 2. whic b. Insurance agent @Employee _s ‘4. Which of the following pays business tax? : a. Regional operating headquarters i Regional administrative headquarters a3. eo © Both AandB . a= 4. Neither A nor B Bat 5. Which is exempt from business tax? c ; a. Receipts from rental of aircraft : b. Receipts from rental of vessels 7 © Sale of aircraft or vessels m4. png None of these x ' 6. Which isan exempt medical Service? pees bh. Setvices of surgical doctore wy, Services of dentists _ ee dp Bet¥ices of pediatrician : © Hospital services 5 as ; 7 The gross receipt © 1 Siemens om vad @) Medicines m business tax, ay Db. Medical Services © Dental services t 4. Veteri i 2 Sterinary services 1 8. Which of th 6. The « 2 Sale ofairera np *m business tay? as thn aitcrat for intense *=Msport cm Aand “mational transport Gy a Neither A nor a a, 134ter 4- Exempt Sales of Goods, Properties and Services chap “ch of these is subject to business tax? g aie or lease of sea vessels for domestic transport f, sale or lease of sea vessels for international transport ¢ BothAandB iG) Neither A nor B ich is exempt from business tax? a” Government school )All of these a, Private school p, Non-profit school 11, Which ofthese receipts by a school is more likely to be subject to business 2 tax! a. Tuition fee c. Computer fee i, Miscellaneousfee (d {2 Which of the following items is exempt from business tax? a. Sale of books (cSale of ballpen and notebooks b. Saleofnewspapers _. Sale of magazines . Which is not an accrediting agency for a school to be exempt from business tax? ‘a. Department of Education ‘(&.) Department of Health <. Technical Education and Skills Development Authority d. Commission on Higher Education L Which of the following activities related to books is exempt from business tax? a. Printing c. Publication |b. sale (GA of these . Which of the following statements is correct? a The sale of real property by any person is subject to business tax. b i sale of real property is vatable only when the seller is a realty lealer. (¢) The sale of property held for sale, lease or use in the course of business is subject tax. a Th casual sale of real property used in business is subject to business aX, 6. The sale of real property by a person not engaged in business is 2. subject to business tax. exempt from business tax. Partially subject to business tax. automatically subject to VAT.Chapter 4 Exempt Sales of Goods, Properties and Services al Be i ter Which of the following may not be subject to business tax when sole a a eee ripery bald for sale 1 it b. Property held for lease be Property held for use ; @ Property held as investment wn oxé ice limit for the exemption of residential lot? em ~ 18, Whatisthe price limitfor the exemption of i & pusoo.000 4d. P3,199,200 @! oe i 1 i i I dwellings? c ice limit for the exemption of residential dwellings. Ome 00 ¢.P1,919,500 4 b. 1,500,000 » @p3,199,200 4 20. The lease of residential units js exempt from business tax provi a! ith per unit is a morethan 12900." Gotmore than 1,800, Bb. less than P15,000. d. not less than P15,000. Multiple Choice - Theory: Part 3 a. 1. Realty dealers, developers or lessors are usually registered as b. a. Excise taxpayers IAT taxpayers E b. Percentage taxpayers d. Any of these a 2. Which of these is vatable? 11. Stat @ Properties classified as ordinary assets Stat ._ Properties classified as capital assets © BothAandB Wh d. Neither AnorB { a 3. Which is exempt under certain price conditions? a. Residential lot ¢. Low-cost housing unit é 22. Th b. Residential dwellings @ Al) of these ind 4.” The rental limit on residential dwellin, 18s does not apply to. @ anapartment, c.a dormitory, oe b. ahouse for rent, @nmotels, 5. Which marriet has an exemption from business tax? a Domestic carrier ©. Both Aand B (®) International carrier d. Neither A nor B 6. eat international Carrier is not involved in a) land transport, C air transport, Sea transport. d. Any of these 136Zz exempt Sales of Goods, Properties and Services Solgy ter ; Slap Ch2P cernational cartier is owned by a “ ‘Anint mesticcorporation. c. Either A or B . poreigh corporation. _ d. Neither Anor B sen ofthe following activities by any carrier is a foreign consumption . Bot from Philippine business tax for being rendered outside the exe ippines? a transport of passengers and baggages to the Philippines @ Outbound transport of passengers and baggage or cargoes for abroad ¢ AandB 4, None of these ‘The receipts from outgoing transport of domestic carriers is ® ,__ subject to zero percent tax. (b)) subject to zero percent VAT. exempt from business tax. d._ subject to excise tax. 40, Toan international carrier, the receipts from inbound flights is a. subject to percentage tax. b. subject to VAT. ‘subject to VAT for passenger and percentage tax for cargoes. exempt. 41. Statement 1: Cooperatives are generally subject to VAT. ‘Statement 2: Cooperatives are generally subject to percentage tax. Ef Which is correct? a. Statement 1 c. Both statements b. Statement 2 @Neither statement 12, The sale by non-VAT registered persons to entities in the Philippines with indirect tax exemption is considered a. Adomestic consumption subject to VAT. Ob A domestic consumption subject to percentage tax. (© )A foreign consumption exempt from business tax. 4d. A foreign consumption subject to zero-rated VAT. 13. Asarule, all cooperatives are exempt from business tax, except agricultural cooperatives. \b.) electric cooperatives. credit cooperatives. d. None of these 14. Which of these entities do not have indirect tax exemption? Philippine Amusement and Gaming Corporation (PAGCOR) Bank of the Philippines (DBP) 137Chapter ee 4 - Exempt Sales of International Rice Research Institute (IRRI) e d. Embassies export sales of non-VAT taxpayers are exempt. subject to percentage tax. ¢. subject to 12% VAT, d._ subject to 0% VAT. jultiple-Choice - Problems: Part 1 a seller of goods had the following details of sales and collection ura month: ee Resch P.. 200,000 Gres nC 400,000 Less: Collection ——500,000 Receivables, end P_100,000 What is the amount subject to business tax? a. 500,000 c. P300,000 (b.) P400,000 d.P200,000 2. In the immediately preceding problem, determine the business tax ifthe taxpayer is aseller of services. a.) P500,000 c. P300,000 400,000 d. P200,000 amount subject | Afarm supply dealer made the following sal ‘during a month: Fertilizer " P ashit ‘Hbridcoyn and rice seeds Ae 000. f atey Pumps and hand tractors et al Tome 1 : 2 470,000 Compute the sales a P110,000 b. P 120,000 subject to businespert exempt Sales of Goods, Properties and Services rect? @lesin ich statement is cor (vtn oviginak hate) ‘Mang Manso shall not pay business tax, but Mang Andi pusiness tax ig Andrew shall pay Mang Manso pusiness tax. bush Mang Manso and Mang Andrew shall pay business tax. either Mang Manso nor Mang Andrew shall pay business tax shall pay business tax, but Mang Andrew shall not pay far 0 sacks rice Fon 400 sacks corn Total mer sold the following goods in March: P 45,000 9, cxemer J, a4, selling price subject to business tax. Determine the gross a.) PO c.P. 90,000 . P45,000 d.P 135,000 A restaurant reported the following revenues and receipt in May 2020: Rice and viands P 120,000 % Soft drinks 10,000 x Snacks 30,000 Total P_160,000 Compute the exempt sales. (2) PO c.P150,000 b. P120,000 d.P160,000 dines but sells raw excess fish | 888 Canning Company produces canned sar n-drying and sells them during peak fishing seasons or preserves them by su} to the local market. ‘The following were the sales in January 2020: P 850,0007 | Canned sardines Excess fresh sardines 130,000 7 sngwal sm Dried fish 5 Total sales P_1,020,000 06 What is the amount of taxable sales? a PO brie QRB2Oiepm= 10% ertoat b. P130,000 a sail 850,000 7 yor orl no Rodel Masipag is a vegetable trader. He buys raw vegetables from farmers and sells them’ Sbieroqn 0 3202 WF— erties and Ser F er chapter 4 Exempt'sales of Goods, Prop hese PY st is Which statement is correct? " na po Rodel shall pay business tax as he is engaged in business, E ®) po Rodel shall not pay business tax on the sale of vegetables. 6. ve e Rodel shall not pay business tax as he is not engaged in the fa inthe business. 4 ‘i 13: — P a. Rolle shall pay business taxsince heisa trader rather than a farm, *) pa if : al receipts of P80,000 on th 9, A-small “sari-sari” store has annut © average, Lo hada sales of P3,000 from sales of candies and P5000 from the sa 14 Mati cigarettes. a) N ) GY p! ‘What is the taxable amount of sales? be .) PO c. P5,000 , & zs P3,000 4, P8,000 a. 10. A“sari-sari” store registered as a VAT-taxpayer had the following sales, 45. A Bo mont Sales of newspapers P 20,000 Sales offish and meat 30,000 Sales of fruits and vegetables 10,000 Book: Sales from snacks and soft drinks 5, O00 d ‘Advert Sales from general merchandise ans Electi Total B155,000 Tarp Total The total vatable sales is fies ) a. PO .P115,000 Efe 95,000 4.P155000 <~ a P : - b. 11. Rovin Store made the following sales during the month: 30e ‘ Frege P 30,000 a So Mee Processed foods ou am Household appliances and furniture —“GanapS . aes ch P__520,000 11162) Profe Determine the vatable sales. ) aa Tota a PO (©)P470,000 ee =f 7 ¢ oT b. P220,000 a. P520,000 ’ We Z | 12. Mr. Kwon imports Beane b frlornnredens ne Bee ween . 4 _ operations duringthe period: Ps "* uowine data 7. ani iney Total landed cost: Com od Total sales ae P 800,000 Loa ! 1,200,000 Tots ax! OY 140: pt Sales of Goods, Properties and Services _ exer root i 4 VAT on importation? at is c.P.96,000 d.P 144,000 po y 000 eA mediately preceding problem, what is the VAT on sales? ys! ay c. P96,000 i 2) 24,000 d,P144,000 vy Louisville, an Australian foreign student, sold his cellphone for P50,000. hat is the Business tax payable? None. personal asset cell 1,500 percentage tax Igcenemg? <. P6,000 VAT {| Bxcise tax plus P6,000 VAT A printing press had the following revenues and collections during the month: _Revenue _Collection_ Books P 200,000 P 180,000 Advertising magazines 250,000 ‘150,000 Election campaign materials 700,000 400,000 Tarp 80.000 ____80.000 Total 4,230,000 P_810,000 Determine the vatable amount, : a. P-480,000 c.P780,000 b.) P630,000 d.P1030,000 . Mr. Panzer is both employed and self-employed. He had the following income receipts during the month: Gross compensation income he -P 120,000 Director's fees s v 80,000 Professional fees Total gross income P__400,000 The total amount subject to business tax is a P 120,000. c. P280,000. b. P-200,000. d. P400,000. An insurance agent had the following receipts during the month: Commission income P 90,000, Loan 120,000 Total P_210,000 141Goods, Properties and Services of * ig oa , isiness tax. pane poor ener S65 °C subjected tb 6 B f0Mepuctl tein ee oeTS 120000 yar come iline Deter .P210,000 7 paisa no # pan000 ne ot 73:0 P der sold the following properties: /i jch stat ae Area P 1,200,000 > _ whi ‘me $4 7 a usin tial lot 2,000,000 pusi Petal ‘dwelling 800,007 bop Commercial lot seasons aia b. fom! sale? ; rhe © Whats the vatable oii ame 4. P4,000,000 200 i f P300,000 fr nS has a pet shop. In April 2020, he made a sales o OE pe eletnapedcbTo00 for pet feeds, and P20,000 for pet toys. Mr. Dobbie ne also a practicing veterinarian. He derived additional P80,000 profession ee Deer r a a Compute the exempt sales. Ey the! PO ~~ ¢,P440,000 Be 80,000 d. 520,000 rs 20. Don Chicken is a food franchise with most food menus offering chicken aoe an ingredient, Don Chicken contracted Mr. Barako to produce the chi needs of its entire food franchise. To control quality, Don Chicken gives Superfer Barako the chicks. Mr. Barako raises the chicks for 40’ days, then delve Which them to Don Chicken. Don Chicken paid Mr. Barako P400,000 for the fe qc delivery of chickens. 2 @) The D. The Which is a correct ‘statement? a ae 2. Don Chicken is exempt from business tax on its sale to customers, but he Mr. Barako shall pay business tax, Mr. Barako is exempt from business tax. Both Mr. Barako and Don Chicken are exempt, 4. Both Mr. Barako and Don Chicken shall be taxable. Choice ~ Problems: Part 2 Multiple- 1. What is the amount subject to business tax? a_ None ¢. P30,000,000 (6. P5,000,000 4. P35,000,000 142g-exemot Sales of Goods, Properties and Services wr ainisa realty development company. It bo contin Realty Corporation for P1,000,000 Sette ‘a fro! struction Company to construct a residential house on the i i i i MF Aling P2,500,000- Camiguin sold the house and lot to a buyer zip 73,000,000: ch statement is correct? i Sale of the residential lot by Panay Realty Corporation is subject to pusiness taX. p, The construction service rendered by Aliling Construction is exempt from business tax. <=) he sale of the house and lot by Camiguin is exempt from business tax {only realty contractors are subject to business tax. Quezon Review School, a non-VAT professional review school, provides preparatory courses to accountancy graduates ‘who will take the CPA Exam. During the month, it collected a total receipt of P300,000. Which statement is correct? a. The P300,000 is exempt from both percentage tax and VAT. e ‘The P300,000 is exempt from VAT, but is subject to percentage tax.” & ‘The P300,000 is exempt from percentage tax, but is subject to VAT. 4. The P300,0000 is subject to both percentage tax and VAT. Malakas Shipping Company leases two of its ferry boats to Mactan Superferries, a domestic transport company. Which is the correct statement? ‘The rental income of Malakas Shipping is exempt from business tax ‘transport of passengers is The gross receipt of Mactan Superferries on exempt from business tax. c. The gross receipt of Mactan Superferries on transport of cargoes is exempt from business tax. d Mactan Superferries are vatable. 4. Both Malakas Shipping Company an‘ ny in the immediately preceding orrect statement? is subject to final Assuming that Malakas Shipping Compa! problem is a non-resident lessor, which is a ¢ The rental income of Malakas Shipping Company 4 Mithholding VAT. The gross receipt of Mactan exempt. © The gross receipt of Mactan Superferties 0 Superferries on transport’ of passengers is mn transport of cargoes is exempt. 4. Both Malakas Shi and Mactan Superferries wil Pe Shipping Company "equired to pay VAT. i 00,000.54 — 143Chapter 4 - Exempt Sales of Goods, Properties and Services te" ni nom . p e tary School, a non-profit religious educational inst; rea 6S ctod P2,000,000 tution fes from stadents ts june 2020, Which a. 7,000. nt is correct? ) ere eco area ed Pees b, The tuition fee is subject to VAT. 2. Me Ale ent (©) The tuition fee is exempt from both percentage tax and VAT. * pays 4 The tuition fee is subject to both percentage tax and VAT, of th which ° lal 7. Theresita's High School (THS),a public school, collected a total of ai tal 3,000,000 tuition fees on October 2020. 6) Me aia Which statements correct? 4G Mr.All a. THSis subject to VAT. b. THSis subject to percentage tax. wr. Dauz is © THSis subject to both VAT and percentage tax. and sold his (.d.) THSis exempt from business tax, which state 8. Centermall leases commercial spaces to various businesses on its mal a) Only th Receipts for the month are as follows: ; b. only th peer th sa att Spaces with rental below P15,000/month — p 1,200,000 & ported 0 Spaces with rental above P15,000/month —1.800,000 $ . 2.3.000,000 D }. Gosten Deve What is the amount exempt from busi , @’Po0 oC Py ado Sie te Green resid b. P1,200,000 .P3,000,000 Blue resider 4 Pink resider 1g Company leases residential foreach unit per month; )),\,: ond Green resid exceeding, ege 10 units of Class A residence “al man 20 units of Class B residence 7 What is the 50 units of Class C residence 15000" #80 =n ew 10,000 Compute the exempt receipt of Mariz Leasing ¢ ae me 6 7 o ae & 200.000 8 Company in one month: Gold Real | P1,000,009 buyer. Th, The f 10. In the immediately precedi; eae Mariz Leasing Company? EPP. what, the busi fm a. Percentage tax ©. Percenta oe ahchisa : &) var Excise e°®* and vay i w el € pric i b. 11. Excel Realty made the following sates Of propery Both pr Residential lot «dure the any cuir Residential dwelling * 2.000009 se hv a ony th Bog a9¢ > teed) * Only th \ ry N a0 pt {4- exempt Sales of Goods, Properties and Services subject to VAT is t -gheamoun c. P3,000,000 7 ¢ F000, 000 d. P5,000,000 P 400-unit dormitory near a university. Each b _ Alabang owns 4 ity. Each boarder ; paysarentl cP Es Ong each mopih. | ag iad bkomy the following is a correct statement? Mr. Alabang is exempt from income tax &_iyr Alabang is exempt from business tax ~ © Mr. Alabang shall pay VAT §. Mr. Alaban shall pay percentage tax which of .Dauz isa dealer of cars. In June 2020, he sold two cars for P1,700,000 +} d his principal residence for P5,000,000. and sol _ Which statement is correct? (® only ‘the sale of the car is subject to business tax. b. Only the sale of the residence is subject to business tax. c, Both sales are subject to business tax, d. Neither sale is subject to business tax. 14. Gosten Developers sold three residential units: Green residence P 1,900,000 Blue residence 1,400,000 Pink residence 3,000,000 Green residence and Blue residence are adjacent and were sold to two unrelated buyers. bi units eold. belo What is the vatable sales? : Bo a PO . 3,000,000 9.94 ®. 1,900,000 . P3,300,000 15. Gold Realty Corporation sold two adjacent commercial lots to the same sa The first lot is worth P1,000,000 while the second lotis worth ,000. Which is a correct statement? 2 The sale of both properties is exempt from VAT since they are below > the price ceiling. \2._ Both properties are subject to VAT without regard to whether they are above or below the price ceiling. © Only the sale of the first lot is exempt since it is P1M in price, Only the sale of the second lot is subject to VAT. 145sand services eer Chapter 4— Exempt Sales of ee Propertie cot ist Multiple-Choice - Problems: Part : Bo ies. During the 2. p 2,0! vation isa dealer of properties. DUrINg the year, Bea 2 aaa asdental ts on the same buyer. The first residential or, © D> for P1,000,000. The second lot was ‘sold for P900,000. h yat Which statement is correct? a aes cles ofboth lots are exempt whether oF not they exceed the, | porate 3 ceiling. Pe bern «of both lots are taxable whether or not they exceed the , ceiling. 7 wie o. Only the sale ofthe first lot is exempt while the second sale to the ar Be t ___ buyer is taxable. z ce (© Thesales of both lots are exempt because thelr aggregate selingy, F 1 “js below the price ceiling. 4 anon 2. Highland Credit Cooperative transacts business only wi ey ly with non- Dom had the following receipts during the month: BAP Exports Interest income from members P 210,00 e 000 tis: Rent income from properties 50,000 — e 0 pets the amount subject to business tax. eh . ©.P210,000 b.) P50,000 4. P 260,000 Bplathe 3. Abus operato i o PS aa 1 had the following receipts during the month: bo) P3, ers ane P_ 140,000 9. AVAT-t Total ——10,000 cane P_150.000~ pemest the : a PO | 2tal amount subject to business tax us ielonan ©.P140,000 , @P150,000 en 4. Adome as ue aitliner had the following receipts dsr b Py Passenger fares pts during the month: : 19, ‘argoes, mails and excess ese P 5,000,000 « In the j Whatis the total am, 000.0006 b a f Po unt subject to business tax? 4 . P 2,000,000 ©.P5,000,000 ry : @P 7,000,000 = . —— at Arinternational Sea carrier had the followi Hows Passenger fares ‘ne receipts during the month: ap # ; 7B08S, mails and excess baggage P 4,000,000 > © *ny\ bop 2,000,000 _- 146exempt Sales of Goods, Properties and Services he ytal amount subject to business tax? at isthe t cP 4,000,000 PO 90,000 d. P 6,000,000 ‘taxpayer made the following sales during the month: AvAT je sales P 2,100,000 Donets 1,000,000. isthe amount subject to business tax? a c.P 2,100,000 } 1,000,000 (&P3,100,000 non-VAT taxpayer made the following sales during the year; Domestic sales P 00.000 ort sales 20,000 . Ne kempd "What is the amount subject to business tax? ‘2. PO, : ©.P 120,000 & ? 100,000 ~“ d.P220,000 Inthe immediately preceding problem, compute the business tax? a PO c.P 6,600 100K x 2/2 () P3,000 4.P 12,000 | AVAT-taxpayer made the following sales during the year: Domestic sales P 100,000 | Export sales 120,000 3 rile bt D cote What is the amount subject to business tax? FE Po c.P 120,000 wok +120K » P100,000 G@&P 220,000 D Inthe immediately preceding problem, compute the output VAT. Ad A cP 14,400 Meee x tap. tino a> ®& P 12,000 4.P 26,400 ye le ae W- *x0n-VAT recreational center has a senior citizen member. The normal tt for non-senior citizen members is P2,000 per month. °w much shall be billed to the senior citizen? ep. i Pur9a @P 1,600 2000 J0/ P1786 4.P 1,429 4a7~ Chapter 4 Exempt Sales of Goods, Properties and Services icine with a total tax-inclusive pri 12. AVAT-registered drugstore sold medicine wit Ve pricey P1120 toa senior citizen. Compute the amount due from the senior cities (a) P 800 P1003 (20 //- lad *eop b. P896 d.P1,120 13. A private hospital admitted a senior citizen. Total amount due befoy, lischarge was P112,000. Compute the output VAT. @ Po c.P 12,000 P9,600 d.P 13,440 ce THESCOP | 16. Juan Cruz, a non-VAT registered senior citizen and owner of St. Peter | Drugstore, had the following sales during the first quarter of 2019. Sales to senior | Sal Medicine sold citizens ps Sale of medicines for diabetes P 40,000} pa Sale of medicine for hypertension 20,000 7 00 Sale of other medicines 90,009 | --——3.000 | Total sales —120,000 pWhop ays Compute the exempt sales. & yp a PO c.P 130,000 (Specie b. P120,000 (GP 220,000 Gener Pe an I ‘ No, n-) Whe AT iiaed Isat“a ee 5; SELF-TEST BXERCISES_ ions si A ability of the 3% general percentage tax, pxpla othe list of services subject to percentage tax. “numerate"r ercentage tax rates applicable to each type of services y subject to percentage tax, , The service providers that are exceptionally subject to quarterly tax? at are percentage Is [ d eae {ype (VAT or % Tax) that applies to each of the following if there is no applicable tax, indicate “Exempt.” For percentage tax, so the tax rate. ommon carrier by land - transport of passengers | Jo bere. t% mmon carrier by land - transport of cargoes VAT _/ 3. "Js. peee NAT. VAI exempt Belo pereuer 1 MAT: 21 percuder nk - short-term loans Cfo gore: tos - long-term loans sdotfeo dt Resim nchise grantees of electricity AT. hise grantees of water Dif Ree tee lanichise grantees of gas Difa _peter +x ranchise grantees of telephone - inbound calls Exempt shisee grantees of telephone - outbound calls 1D!) pece. x berators of cinemas VAT. perators of cockpits Apustde nr eR rators of jai-alai BO/th pers 7% of exhibitions of professional basketballs 1sif> rec ae &¢s of exhibitions of professional boxing Wi accused Wing alleys VAT) ] par. | zit or day clubs and cabarets itfso peeini False 1 / 7 aubiect to VAT, one has to be registered under the VAT system. F Sle, pitas = are subject to percentage tax. > his eso, Subject to percentage tax if he is non-VAT registered even if e 39, eiPt exceed the VAT threshold. 4 8eneral percentage tax applies to non-VAT registered taxpayers 181 |