TAXATWO

TEST BANK-VALUE ADDED TAX (VAT)

A.MULTIPLE CHOICE:

1. A TAX ON BUSINESS IS A

A. DIRECT TAX
B. INDIRECT TAX
C. PROPERTY TAX
D. NONE OF THE ABOVE

2. ONE OF THE FOLLOWING IS NOT A MAJOR BUSINESS INTERNAL

REVENUE TAXES IN THE TAX CODE

A) VALUE-ADDED TAX
B) EXCISE TAX
C) INCOME TAX
D) PERCENTAGE TAX

3. VALUE-ADDED TAX IS A(AN)

A) INDIRECT TAX
B) DIRECT TAX
C) PROGRESSIVE TAX
D) REGRESSIVE TAX

4. IN VAT TAXATION, THIS IS NOT A REQUIREMENT FOR TAXABILITY

OF SERVICE

A) IN THE COURSE OF BUSINESS

B) PERFORMED WITHIN OR OUTSIDE THE PHILIPPINES
C) CONSIDERATION RECEIVED ACTUALLY OR CONTRUCTIVELY
D) SUPPLY OF SERVICE IS NOT EXEMPT FROM VAT

5. CHARLIE IS AN OPERATOR OF PARKING LOTS. WHAT BUSINESS TAX

IS DUE ON HIS INCOME FROM THE BUSINESS?

A) BROKER’S TAX
B) CATERER’S TAX
C) COMMON CARRIER’S TAX
D) VAT
 6. MR. F IS A LESSOR OF REAL PROPERTY AND PERSONAL
PROPERTY(CARS). THE TAX THAT HE PAYS IS

A) EXCISE TAX
B) VAT
C) PERCENTAGE TAX
D) NONE OF THE ABOVE

7. MR. S. MAGLER IMPORTED CIGARETTES FROM THE U.S. FOR SALE IN

THE PHILIPPINES. WHAT BUSINESS TAXES IN THE PHILIIPINES ARE
DUE?

A) VAT, EXCISE TAX, OTHER PERCENTAGE TAX

B) VAT AND EXCISE TAX
C) OTHER PERCENTAGE TAX AND EXCISE TAX
D) VAT AND PERCENTAGE TAX

8. STATEMENT 1: FOR PURPOSES OF THE THRESHOLD OF P1,500,000,

THE HUSBAND AND WIFE ARE CONSIDERED AS SEPARATE
TAXPAYERS

STATEMENT 2: THE SELLER OF GOODS OR SERVICES IS THE ONE

STATUTORILY LIABLE FOR THE PAYMENT OF VAT BUT THE AMOUNT
OF THE TAX MAY BE SHIFTED OR PASSED TO THE BUYER, TRASFEREE
OR LESSEE OF THE GOODS, PROPERTIES OR SERVICES

A) TRUE, FALSE
B) FALSE, TRUE
C) FALSE, FALSE
D) TRUE, TRUE

9. THE FOLLOWING ARE DATA OF SPOUSES FIDEL AND AILEEN DURING

THE YEAR:

GROSS RECEIPTS FIDEL AILEEN

FROM BUSINESS:
RESTAURANT 1,350,000
SMALL DEPT. STORE 1,220,000
PRACTICE OF PROFESSION
AS A CPA 254,300

WHICH OF THE FOLLOWING STATEMENTS IS CORRECT?

A) FOR PURPOSES OF THE THRESHOLD OF P1.5 MILLION THE GROSS

RECEIPTS OF FIDEL AND AILEEN SHALL BE COMBINED
 B) AILEEN SHALL BE SUBJECT TO VAT EVEN IF SHE DOES NOT
REGISTER VOLUNTARILY UNDER THE VAT SYSTEM
C) FOR PURPOSES OF THE THRESHOLD OF P1.5 MILLION, THE
RESTAURANT AND THE PRACTICE OF PROFESSION ARE CONSIDERED
AS SEPARATE TAXPAYERS
D) FOR PURPOSES OF THE THRESHOLD OF P1.5 MILLION, THE
AGGREGATION RULE FOR EACH TAXPAYER SHALL APPLY. THUS,
THE GROSS RECEIPTS FROM THE RESTAURANT SHALL BE ADDED TO
THE RECEIPTS FROM THE PRACTICE OF PROFESSION

10. KAREN IS A PRACTICING CPA. SHE IS ALSO A FULL TIME PROFESSOR

OF ACCOUNTING IN ATENEO DE NAGA UNIVERSITY. IN THE
PRECEDING YEAR, HER GROSS RECEIPTS FROM THE PRACTICE OF
PUBLIC ACCOUNTING WAS P1,400,000 WHILE HER TOTAL
COMPENSATION INCOME AS COLLEGE PROFESSOR WAS P195,000.

WHICH OF THE FOLLOWING STATEMENTS IS CORRECT?

A) SHE IS SUBJECT TO VAT EFFECTIVE JANUARY 1 OF THE CURRENT

YEAR
B) SHE MAY BE SUBJECT TO VAT IF SHE VOLUNTARILY REGISTERS
UNDER THE VAT SYSTEM
C) SHE IS NOT REQUIRED TO PAY EITHER VAT OR ANY BUSINESS TAX
D) SHE IS REQUIRED TO PAY PRIVELEGE TAX RECEIPT BUT NOT
BUSINESS TAX

11. THREE OF THE FOLLOWING ARE VAT-EXEMPT. WHICH IS THE

EXCEPTION?

A) SALES OR IMPORTATION OF MEDICAL, DENTAL AND VETERINARY

MEDICINES
B) SERVICES RENDERED BY PERSONS SUBJECT TO PERCENTAGE TAX
C) RECEIPTS FROM LEASING OF REAL PROPERTIES
D) EXPORT SALES BY PERSONS WHO ARE NOT VAT-REGISTERED

12. WHICH OF THE FOLLOWING IS NOT VAT-EXEMPT?

A) IMPORTATION IN THEIR ORIGINAL STATE OF AGRICULTURAL AND

MARINE FOOD PRODUCTS
B) IMPORTATION OF PASSSENGER OR CARGO VESSEL OF MORE THAN
5,000 TONS TO BE USED BY THE IMPORTER HIMSELF AS OPERATOR
THEREOF
C) IMPORTATION OF PERSONAL AND HOUSEHOLD EFFECT BELONGING
TO PHIL. RESIDENTS RETURNING FROM ABROAD
D) IMPORTATION OF NON-FOOD AGRCULTURAL PRODUCTS IN THEIR
ORIGINAL STATE BY A PRIMARY PRODUCER
 13. ONE OF THE FOLLOWING TRANSACTIONS BY A VAT-REGISTERED
PERSON DOES NOT RESULT TO OUTPUT VAT

A) CASH SALES
B) SALES ON ACCOUNT
C) SALES AND LEASEBACK
D) EXPORT SALES

B. PROBLEM SOLVING

1. ABC COMPANY, A VAT –REGISTERED BUSINESS, HAD THE

FOLLOWING DATA DURING THE QUARTER:

EXPORT SALES P1,815,000

DOMESTIC SALES(TAX INCLUDED) 1,232,000
PURCHASES OF GOODS FOR EXPORT 672,000
PURCHASES OF GOODS FOR DOMESTIC SALES 323,120
PURCHASES OF SUPPLIES ON DOMESTIC SALES,
EXCLUSIVE OF TAX 124,850

ASSUMING THAT THE INPUT TAXES PAID ON PURCHASES OF GOODS FOR

EXPORT ARE CLAIMED AS TAX CREDIT, THE VAT PAYABLE BY ABC
COMPANY IS

A) 12,895
B) 10,398
C) 177,895
D) 84,895

2. IN RELATION TO NO. 1 ABOVE, ASSUMING THAT THE INPUT TAXES

ATRIBUTABLE TO EXPORT SALES ARE BEING CLAIMED AS REFUND,
THE AMOUNT REFUNDABLE IS

A) 72,000
B) 12,895
C) 84,895
D) ZERO

3. JOEY, A NON-VAT TAXPAYER, PURCHASED MERCHANDISE WORTH

P11,200, VAT INCLUSIVE. FROM WILLIE, A VAT-REGISTERED SELLER.
THE PASSED ON VAST OF P1,200 ON THE PURCHASES IS

A) AN EXPENSE
B) PART OF THE COST OF PURCHASES
C) A TAX CREDIT
 D) IGNORED

4. ALTURA SOLD GOODS AT AN INVOICE PRICE OF P123,200 TO

BELTRAN ON ACCOUNT. BELTRAN SOLD THE SAME GOODS TO
CANTORIA FOR P143,000 (EXCLUSIVE OF TAX) CASH. ALL OF THEM
ARE VAT-REGISTERED TAXPAYERS. THE ACCOUNTING ENTRY TO
RECORD THE SALES IN THE BOOKS OF BELTRAN IS

A) CASH 160,160
SALES 143,000
OUTPUT TAX(143,000 X 12%) 17,160

B) CASH 143,000
SALES 143,000

C) CASH 160,160
SALES 160,160

D) CASH 143,000
SALES 125,840
OUTPUT TAX 17,160

5. THE JOURNAL ENTRY IN THE PURCHASE BOOKS OF BELTRAN IN NO.,

4 ABOVE IS

A) PURCHASES 110,000
INPUT TAX 13,200
ACCOUNTS PAYABLE 123,200

B) PURCHASES 96,800
ACCOUNTS PAYABLE 96,800

C) PURCHASES 83,600
INPUT TAX 13,200
ACCOUNTS PAYABLE 96,800

D) PURCHASED 110,000
ACCOUNTS PAYABLE 110,000

6. IN QUESTION NO. 4 ABOVE, ASSUMING THAT CANTORIA IS NOT

SUBJECT TO VAT. IN THE SALE OF THE GOODS BY BELTRAN TO
CANTORIA

A) BELTRAN SHOULD RECORD DEBIT CASH OF P125,840

B) BELTRAN SHOULD RECORD DEBIT CASH OF P143,000 IN HIS BOOKS
 C) CANTORIA SHOULD DEBIT PURCHASES OF P125,840 AND A DEBIT
INPUT TAX OF P17,160
D) CANTORIA SHOULD DEBIT PURCHASES OF P143,000

7. 1ST STATEMENT: IN CASE TAX EXEMPT PRODUCTS ARE SOLD

DOMESTICALLY TO A VAT REGISTERED PERSON, THE VAT
OTHERWISE DUE ON SUCH PRODUCT SHALL BE CONSIDERED AS
INPUT TAX CREDITABLE AGAINST HIS OUTPUT TAX PAYABLE

2ND STATEMENT: EXPORT SALES BY A VAT-REGISTERED PERSON ARE

SUBJECT TO ZERO-RATING AND SO HE CAN CLAIM AND ENJOY A CREDIT
FOR THE TAX INVOICED TO HIM ON HIS PURCHASES. IF HE IS NOT VAT-
REGISTERED, HIS EXPORT SALES ARE EXEMPT, BUT HE IS NOT ENTITLED
TO TAX CREDIT FOR INPUTS

A) TRUE, TRUE
B) FALSE, TRUE
C) FALSE, FALSE
D) TRUE, FALSE

NUMBER 8 THROUGH 10 ARE BASED ON THE FOLLOWING

INFORMATION:

TRANSACTION 1-AN AGRICULTURAL FOOD PRODUCER SELLS HIS

PRODUCTS IN THEIR ORIGINAL STATE TO A FOOD PROCESSOR WHO ALSO
BUYS PACKAGING MATERIALS AND CONTAINERS FROM A
MANUFACTURER/SUPPLIER

TRANSACTION 2-THE FOOD PROCESSOR TRANSFORMS THE FOOD

PRODUCTS INTO PROCESSED FOODS AND SELLS TO A
WHOLESALER/EXPORTER

TRANSACTION 3- THE EXPORTER SELLS THE GOODS TO FOREIGN BUYERS

TRANSACTION 4- THE WHOLESALER DELKIVERS THE MERCHANDISE TO

RETAILERS

TRANSACTION 5- THE RETIALERS SELL THE GOODS TO HOUSEHOLDS OR

ULTIMATE CONSUMERS

8. WHICH OF THE ABOVE TRANSACTIONS IS VAT-EXEMPT?

A) #1
B) #2
C) #3
D) #4
 9. WHICH IS ZERO-RATED?

A) #1
B) #2
C) #3
D) #4

10. BASED ON NO.9 ABOVE, THE VAT ARE ABSORBED BY

A) FOOD PROCESSOR
B) WHOLESALER/EXPORTER
C) RETAILER
D) HOUSEHOLDS/ULTIMATE CONSUMER

NUMBERS 11 AND 12 ARE BASED ON THE FOLLOWING INFORMATION

11. THE PASTRY SHOP SELLS CAKES AND PASTRY ITEMS TO WELL-
KNOWN HOTELS AROUND METRO MANILA AREA. THE HOTELS ARE
ALLOWED CREDIT BASED ON THE TRACK RECORD OF THE HOTELS.
THE TOTAL AMOUNTS RECEIVED OR RECEIVABLE FROM SALES BY
THE PASTRY SHOP IN THE 2ND QUARTER OF 2008 WERE P224,000,
INCLUDING THE VAT. SEVENTY FIVE PERCENT OF THE SALES ARE
NORMALLY ON ACCOUNT. HOW MUCH IS THE VAT ON THE SALES
FOR THE 2ND QUARTER OF 2008?

A) P20,000
B) P24,000
C) P26,880
D) P15,000

12. THE ACCOUNT TITLE TO BEST REFLECT THE VAT IN #11 ABOVE

A) SALES TAX PAYABLE

B) VAT PAYABLE
C) INPUT TAX
D) OUTPUT TAX

NUMBERS 13 THROUGH 15 ARE BASED ON THE FOLLOWING

INFORMATION:

MONGOLIA COMPANY, A VAT-REGISTERED BUSINESS HAS THE

FOLLOWING DATA IN ITS BOOKS ON JULY, 2008:

DOMESTIC SALES P709,500

SALES RETURNS 26,400
GOODS SHIPPED ON CONSIGNMENT(NET OF TAX)
UNITS UNIT PRICE
JULY 5 25 22,000
JUNE 5 20 22,000
MAY 5 12 22,000

GOODS W/DRAWN FOR COMPANY USE 38,500

GOODS TAKEN AS PAYMENT FOR CREDITOR 26,950
FREIGHT AND INSURANCE OF GOODS 4,675
PURCHASES:
RAW MATERIALS 484,000
SUPPLIES 61,600
CAPITAL GOODS 60,500
SALARIES OF EMPLOYEES 235,000

DURING THE MONTH, ONE CONSIGNEE REMITTED CASH NET OF 20%

COMMISSION REPRESENTING PAYMENT FOR FIVE(5) UNITS DELIVERED ON
JUNE 5.

ANOTHER CONSIGNEE REMITTED CASH OF P220,000, GROSS OF 20%

COMMISSION, REPRESENTING PAYMENT FOR TEN(10) UNITS SOLD IN JULY.
OTHER THAN THE COMMISSION, MONGOLIA COMPANY GAVE 5%
DISCOUNT /REBATE TO THE CONSIGNEE FOR SELLING TEN(10) UNITS IN A
ONE MONTH PERIOD.

13. THE OUTPUT TAX IN JULY IS

A) P124,450
B) P121,050
C) P161,106
D) P134,255

14. THE INPUT TAX IS

A) 61,078
B) 73,923
C) 65,440
D) NONE OF THE ABOVE

15. THE AMOUNT OF VAT PAYABLE IS

A) 87,813
B) 69,350
C) 66,525
D) 78,404.46
 16. A CREDITABLE INPUT TAX ON ONE WHO BECOMES SUBJECT TO VAT
FOR THE FIRST TIME

A) PRESUMPTIVE INPUT TAX

B) TRANSITIONAL INPUT TAX
C) EXCESS INPUT TAX
D) TOTAL INPUT TAX

17.ISAAC COMPANY, A NEWLY VAT REGISTERED BUSINESS, HAS THE

FOLLOWING DATA IN JANUARY (ALL AMOUNTS ARE INCLUSIVE OF TAX)

MERCHANDISE INVENTORY 204,000

ACTUAL AMOUNT PAID ON THE INVTY 16,000
SALES, TOTAL INVOICE AMOUNT 469,000
PURCHASES 57,400

FIFTY PERCENT (50%) OF THE MDSE INVTY ON JANUARY 1 WERE

PURCHASED FROM NON-VAT RWGISTERED SELLERS

THE VAT PAYABLE BY ISAAC COMPANY IS

A) 30,100
B) 28,100
C) 3,960
D) 4,950

17. AN OWNER OF HEAVY EQUIPMENTS IS ENGAGED IN EQUIPMENT

RENTAL. IT USED TO BE VAT-EXEMPT BECAUSE ITS ANNUAL
RECEIPTS NEVER EXCEEDED P1,500,000. ON JANUARY 2, 2008, IT
DECIDED TO REGISTER UNDER THE VAT SYSTEM. THE FOLLOWING
DATA WERE FROM THE FIRST QUARTER ENDING MARCH 31, 2008:

RENTAL FROM HEAVY EQUIPMENTS OF 12% VAT 336,000

PURCHASES OF SUPPLIES(FEBRUARY) GROSS OF VAT 112,000
INVENTORY OF SUPPLIES:
SUBJECT TO VAT JAN. 1, 2008 50,400
NOT SUBJECT TO VAT 60,000
VAT PAID ON THE INVTY OF SUPPLIES, JAN. 1, 2008 5,400

THE VAT PAYABLE FOR THE QUARTER ENDING MARCH 2008 IS

A) 12,171
B) 33,792
C) 18,600
D) 22,992
 18. STATEMENT 1: TRANSPORT OF PASSENGERS AND CARGO BY
DOMESTIC AIR OR SEA VESSELS FROM THE PHIL. TO A FOREIGN
COUNTRY IS SUBJECT TO VAT AT A RATE OF 0%

STATEMENT 2: TRANSPORT OF PASSENGERS AND CARFO BY DOMESTIC

AIR OR SEA VESSELS FROM MINDANAO TO LUZON AND VISAYAS, VICE
VERSA, IS SUBJECT TO VAT AT A RATE OF 12%

A) TRUE, FALSE
B) FALSE, TRUE
C) FALSE, FALSE
D) TRUE, TRUE

19. BETH HAD THE FOLLOWING RECEIPTS DURING THE MONTH

(EXCLUSIVE OF TAX):

PASSENGER CARGO
JEEPNEY 1 20,000
JEEPNEY 2 30,000
BUS 15,000 8,500
SEA VESSEL 1,500,000 800,000
CESSNA PLANE FOR HIRE 800,000 560,000

THE OUTPUT TAX DURING THE PERIOD IS

A) 164,220
B) 441,000
C) 283,800
D) 440,220

20. INSIDE JOB SECURITY IS ENGAGED IN THE SELLING OF SECURITY

SERVICES TO VARIOUS CLIENTS. DURING THE MONTH OF
DECEMBER, IT BILLED ONE OF ITS CLIENTS OF THE FOLLOWING:

MONTHLY SALARY 6,000

13TH MONTH PAY 6,000
AGENCY FEE AT 15% 1,800
SSS AND PHILHEALTH 300
LEAVE WITH PAY 450
TOTAL 14,550
BASED ON THE ABOVE DATA, HOW MUCH IS THE OUTPUT TAX PAYABLE
OF INSIDE JOB SECURITY?

A) 1,746
B) 1,558.93
C) 1,440
D) 1,478.57

21. BONNEVIE IS A REAL ESTATE DEALER. DURING THE MONTH OF

NOVEMBER 2008, HE SOLD THREE(3) LOTS UNDER THE FOLLOWING
TERMS:
LOT1 LOT2 LOT3
SELLING PRICE 250,000 200,000 300,000
COST 150,000 130,000 175,000
GAIN/LOSS 100,000 70,000 125,000

TERMS:
DP, NOV 5 25,000 50,000 40,000
DUE:
DEC. 5 25,000 20,000 20,000
JAN TO DEC. 2009 200,000 130,000 240,000

ALL AMOUNTS INDICATED ABOVE DO NOT INCLUDE THE TAX.

THE VAT IN NOVEMBER IS

A) 26,500
B) 31,800
C) 34,800
D) 90,000

22. BASED ON NO. 21 ABOVE, THE VAT FOR THE MONTH OF DECEMBER
IS

A) 5,400
B) 4,500
C) 10,000
D) NONE
 23. DIMAGIBA CONSTRUCTION COMPANY ENTERED INTO A CONTRACT
WITH THE GOV’T TO CONSTRUCT AN EDIFICE FOR A TOTAL
CONTRACT PRICE OF P25,000,000. DURING THE MONTH, THE
GOVERNMENT PAID P10,000,000 OF WHICH IT WITHHELD 5% FINAL
VAT WITHHOLDING TAX. HOW MUCH IS THE VAT PAYABLE BY THE
COMPANY ON THE GOVERNMENT CONTRACT?

A) 150,000
B) 850,000
C) ZERO
D) 1,000,000

24. WHICH OF THE FOLLOWING STATEMENTS IS NOT CORRECT?

A) TRANSITIONAL INPUT TAX IS 2% OF THE VALUE OF THE INVENTORY

OR THE ACTUAL VAT PAID, WHICHEVER IS HIGHER
B) AMOUNTS RECEIVED FROM SERVICES PERFORMED BY AN
INDIVIDUAL PURSUANT TO AN EMPLOYER-EMPLOYEE
RELATIONSHIP ARE EXEMPT FROM VAT
C) EXPORT SALES BY VAT-REGISTERED PERSONS ARE NOT SUBJECT TO
VAT
D) EXPORT SALES BY PERSONS WHO ARE NOT VAT-REGISTERED ARE
VAT EXEMPT

25. TRANSACTION BY A VAT-REGISTERED TAXPAYER WHICH IS NOT

SUBJECT TO VAT:

A) FOREIGN CURRENCY DENOMINATED SALES

B) EXPORT SALE
C) TRANSACTION DEEMED SALE
D) SALE OF SERVICES RENDERED IN FOREIGN COUNTRIES

26. STATEMENT 1: THERE IS A VAT IN AN IMPORTATION BY AN

IMPORTER-MERCHANT EVEN IF HE DOES NOT INTEND TO SELL THE
IMPORTED ARTICLE

STATEMENT 2: A PERSON WHO IS EXEMPT FROM VAT MAY REGISTER

UNDER THE VAT SYSTEM

A) FALSE, FALSE
B) FALSE, TRUE
C) TRUE, FALSE
D) TRUE, TRUE
 27. STATEMENT 1: VAT IS IMPOSED ON GOODS BROUGHT INTO THE
PHILIPPINES, WHETHER FOR USE IN BUSINESS OR NOT

STATEMENT 2: IN THE CASE OF GOODS IMPORTED INTO THE PHILIPPINES

BY A VAT EXEMPT PERSON WHICH ARE SUBSEQUENTLY SOLD TO
TAXABLE PERSONS, THE LATTER SHALL BE CONSIDERED THE IMPORTER
THEREOF AND SHALL BE LIABLE FOR VAT DUE ON SUCH IMPORTATION

A) TRUE, TRUE
B) FALSE, FALSE
C) FALSE, TRUE
D) TRUE, FALSE

28. CELEBRADO, A VAT REGISTERED TAXPAYER, HAD THE FOLLOWING

DATA ON IMPORTATION IN 2008:
FOR SALE OWN USE
INVOICE COST($1:PHP46) $5,650 $850
CUSTOMS DUTIES 12% 10%
FREIGHT 20,000 4,000
INSURANCE 28,000 4,250
OTHER CHARGES BEFORE RELEASE
FROM CUSTOMS HOUSE 7,000 2,500
FACILITATION FEE 10,000 5,000
FREIGHT FROM CUSTOMS HOUSE
TO WAREHOUSE(NET OF VAT) 12,000 1,200

ASSUMING THE CUSTOMS DUTIES ARE DETERMINED ON THE BASIS OF THE

QUANTITY OR VOLUME OF THE GOODS, THE VAT ON THE IMPORTATION IS

A) 31,260
B) 37,285
C) 47,981.76
D) 44,742

29. IN RELATION TO NO. 28 ABOVE, HOW MUCH IS THE VAT PAYABLE IF

THE IMPORTED GOODS FOR SALE WERE SOLD FOR P665,000
(INCLUSIVE OF TAX) 10 DAYS AFTER ITS DELIVERY TO THE
WAREHOUSE

A) 28,279.44
B) 32,298
C) 17,540
D) 25,068
 30. ROBIN IMPORTED A CAR FROM THE U.S.A. FOR HIS PERSONAL USE.
TOTAL LANDED COST IS P250,000 (ABOUT $5,000) INCLUDING
CUSTOMS DUTIES OF P50,000. VAT PAYABLE IS

A) 25,000
B) 30,000
C) 10,000
D)ZERO, BECAUSE IMPORTATION IS FOR PERSONAL USE

31. RGF COMPANY IS A VAT REGISTERED GENERAL CONSTRUCTION

COMPANY. ITS DATA FOR THE QUARTER ARE REVEALED BELOW:

CONTRACT1-RESIDENTIAL HOUSE
CONTRACT PRICE=P1,200,000
COLLECTIONS DURING THE MONTH 616,000

CONTRACT2-WAREHOUSE
CONTRACT PRICE=P1,000,000
PERCENTAGE OF COMPLETION 70%
COLLECTIONS DURING THE MONTH 220,080

IMPORTATION OF CONSTRUCTION EQUIPMENT FROM JAPAN:

INVOICE COST, JAPAN($1:PHP44) $7,500
VALUE PER BOC P340,000
CUSTOMS DUTIES 35,000
FREIGHT AND INSURANCE 17,000

PURCHASES OF MATERIALS:
FROM VAT REGISTERED PERSONS 226,240
FROM NON-VAT REGISTERED PERSONS 126,500

REVENUE FROM RENT OF EQUIPMENT TO

ANOTHER CONTRACTOR 17,920

ASSUMING THE CUSTOMS DUTIES WERE BASED ON THE QUANTITY OF THE

GOODS IMPORTED, THE VAT DUE ON THE IMPORTATION IS

A) 46,860
B) 52,260
C) 45,840
D) 46,050
 32. THE VAT PAYABLE BY RGF COMPANY DURING THE QUARTER IS

A) 21,420
B) 19,200
C) 6,450
D) 20,400

33. BATA, A VAT REGISTERED PERSON HAD THE FOLLOWING DATA:

PRICE ACTUALLY PAID FOR THE GOODS

BOUGHT FROM JAPAN P600,000
RELATED INSURANCE AND FREIGHT FROM JAPAN 100,000
CUSTOMS DUTIES AMOUNT TO 40% OF DUTIABLE VALUE
OTHER IMPORT CHARGES AND EXPENSES AMOUNT
TO 120% OF CUSTOMS DUTIES

THE VAT ON IMPORTATION IS

A) 82,560
B) 145,920
C) 135,360
D) 157,920

34. PATOGROK COMPANY CONTRACTED WITH SAPOTIZE

CONSTRUCTION CORPORATION TO CONSTRUCT THE FORMER’S
BUILDING WHERE ONLY THE LABOR WILL BE SUPPLIED BY THE
LATTER. THE DATA ON THE CONSTRUCTION (INCLUSIVE OF TAX)
DURING THE MONTH ARE AS FOLLOWS:

PROGRESS BILLINGS BY SAPOTIZE COMPANY 600,000

PAYMENT TO SAPOTIZE COMPANY 504,000
PURCHASE OF MAT’LS BY PATOGROK COMPANY 442,400

WHICH OF THE FOLLOWING STATEMENTS IS FALSE?

A) CONSTRUCTION IN PROGRESS IS NOT DEPRECIATED UNTIL THE

ASSET IS PLACED IN SERVICE
B) FOR PURPOSES OF CLAIMING INPUT TAX, AS A PURCHASE OF
SERVICE, THE VALUE OF WHICH SHALL BE DETERMINED BASED ON
THE PROGRESS BILLINGS
C) THE INPUT TAX CREDIT ON THE LABOR CONTRACTED SHALL BE
RECOGNIZED ON THE MONTH THE PAYMENT WAS MADE BASED ON
THE PROGRESS BILLINGS
D) ONCE THE INPUT TAX HAS ALFREADY BEEN CLAIMED WHILE THE
CONSTRUCTION IS STILL IN PROGRESS, NO ADDITIONAL INPUT TAX
CAN BE CLAIMED UPON COMPLETION OF THE ASSET WHEN IT HAS
 BEEN RECLASSIFIED AS A DEPRECIABLE CAPITAL ASSET AND
DEPRECIATED

35. AILEEN, A JAPANESE RESIDING IN THE PHILIPPINES BOUGHT

GARMENTS FROM CUA CORPORATION, A DOMESTIC CORPORATION,
AND EXPORTED THE SAME TO JAPAN. TOTAL VALUE OF EXPORT IS
P100,000. VAT(OUTPUT TAX) DUE ON THE TRANSACTION IS

A) 10,000
B) 5,000
C) NONE, BECAUSE 0% APPLIES
D) NONE, BECAUSE THE SALE IS VAT-EXEMPT

36.OFFSPRING CORPORATION IS A VAT REGISTERED DEALER OF

APPLIANCES. THE FOLLOWING DATA ARE FOR THE MONTH OF OCTOBER:

SALES, TOTAL INVOICE VALUE 5,800,000

PURCHASES, NET OF INPUT TAXES 2,820,000
SALES RETURN 200,000
PURCHASES RETURN, NET OF INPUT TAX 300,000
DEFERRED INPUT TAXES, (CARRIED OVER FROM
THE THIRD QUARTER) 9,500

THE VAT PAYABLE FOR THE MONTH OF OCTOBER BY OFFSPRING

CORPORATION IS

A) 320,500
B) 285,500
C) 80,000
D) 288,100

36. THE FOLLOWING ARE THE DATA OF CITY APPLIANCES MARKETING

COMPANY FOR OCTOBER 2008:

SALES UP TO OCTOBER 15, TOTAL INVOICE VALUE 266,000

PURCHASES UP TO OCTOBER 15, NET OF INPUT TAXES 215,000

ADDITIONAL INFORMATION:

ON OCTOBER 16, 2008, THE CITY APPLIANCES MARKETING CO. RETIRED

FROM ITS BUSINESS AND THE INVENTORY VALUED AT P190,000, NET OF
INPUT TAXES, WAS TAKEN AND TRANSFERRED TO NEW CITY APPLIANCES
COMPANY. THERE IS A DEFERRED INPUT TAXES FROM THE THIRD
QUARTER OF P3,500.
HOW MUCH IS THE TOTAL VAT DUE AND PAYABLE BY CITY APPLIANCES
MARKETING CO. IN ITS OPERATIONS IN OCTOBER AND ITS RETIREMENT
FROM THE BUSINESS?

A) 22,500
B) 22,000
C) 6,350
D) 25,350

NUMBERS 37 AND 38 ARE BASED ON THE FOLLOWING INFORMATION:

GABRIEL PANGA AUTO REPAIR SHOP, VAT REGISTERED, HAD THE

FOLLOWING DATA IN ITS BOOKS DURING THE PERIOD:

RECEIPTS:
FROM AUTO REPAIR 85,620
FROM WASHING AND GREASING 45,425
REIMBURSEMENT BY CUSTOMER ON PAYMENTS
MADE TO VAT MACHINE SHOPS 4,350
PAYMENTS RECEIVED FOR LUBRICANTS, OILS
AND FLUID PROVIDED BY THE SHOP
TO CARS UNDERGOING REPAIR 5,780

DISBURSEMENTS:
ELECTRIC BILL 3,550
WATER BILL 2,380
SALARIES OF EMPLOYEES 15,000
PAYMENTS MADE TO MACHINE SHOPS, NON-VAT 4,350
PURCHASE OF LUBRICANTS, OILS AND FLUIDS 3,000
PURCHASE OF CAPITAL GOODS(LIFE=10YRS) 24,000

37. THE OUTPUT TAX AMOUNT TO

A) 16,419
B) 16,941
C) 14,660
D) 15,126

38. IN RELATION TO NO. 37 ABOVE, THE VAT PAYABLE IS

A) 9,404
B) 12,753
C) 9,459
D) 6,979
 39. TAXPAYERS WHO BECAME VAT REGISTERED PERSONS UPON
EXCEEDING THE MINIMUM TURN-OVER OF P1.5 MILLION IN ANY 12-
MONTH PERIOD, OR WHO VOLUNTARILY REGISTER EVEN IF THEIR
TURNOVER DOES NOT EXCEED P1.5 MILLION SHALL BE ENTITLED TO
TRANSITIONAL INPUT TAX ON THE INVENTORY ON HAND AS OF THE
EFFECTIVITY OF THEIR VAT REGISTRATION ON THE FOLLOWING,
EXCEPT:

A) SUPPLIES FOR USE IN THE COURSE OF TAXPAYER’S TRADE OR

BUSINESS
B) GOODS WHICH HAVE BEEN MANUFACTURED BY THE TAXPAYER
C) GOODS IN PROCESS FOR SALE
D) CAPITAL GOODS BEING USED IN THE OPERATION OF THE BUSINESS

NUMBERS 40 TO 43 ARE BASED ON THE FOLLOWING INFORMATION:

SUMILCO, A MANUFACTURER OF REFINED SUGAR, BECAME SUBJECT TO

VAT EFFECTIVE DECEMBER 1, 2008. DURING THE MONTH, THE FOLLOWING
ARE ITS DATA:

REFINED SUGAR WITHDRAWN FROM REFINERY,

INCLUSIVE OF VAT 924,000
PURCHASES OF:
SUPPLIES FROM VAT REGISTERED SUPPLIERS 38,500
PACKAGING MATERIALS, VAT INCLUSIVE 27,060
SUGAR CANE FROM PLANTERS 350,000
WATER BILL 12,000
SALARIES OF OFFICIALS AND EMPLOYEES 150,000
INVENTORY PER BALANCE SHEET, DECEMBER 1 ,2008
PACKAGING MATERIALS 17,875
SUPPLIES PURCHASED FROM
VAT REGISTERED PERSONS 14,850
SUPPLIES PURCHASEDFROM
NON-VAT REGISTERED SUPPLIERS 4,750

40. THE PRESUMPTIVE INPUT TAX IS

A) 35,000
B) 5,250
C) 13,860
D) 14,000
 41. THE TRANSITIONAL INPUT TAX IS

A) 3,506.25
B) 2,975
C) 654.50
D) 2,998

42. THE TOTAL CREDITABLE INPUT TAX IS

A) 24,530.54
B) 13,828
C) 92,935
D) 22,935

43. THE VAT PAYABLE IS

A) 61,065
B) 70,172
C) 74,469.46
D) 69,815

44. AN IMPORTER WISHES TO WITHDRAW ITS IMPORTATION FROM BOC.

THE IMPORTED GOODS WERE SUBJECTED TO A 10% CUSTOMS DUTY
IN THE AMOUNT OF P12,500 AND TO OTHER CHARGES IN THE
AMOUNT OF P9,500. THE VAT DUE IS

A) 12,500
B) 17,640
C) 13,364
D) 14,700

45. KAKA IS NA CONTRACTOR. SHE ENTERED INTO A CONTRACT ON

MARCH 1, 2008 WHICH WAS COMPLETED ON MARCH 31, 2008. SHE
RECEIVED THE TOTAL VALUE OF THE CONTRACT AMOUNTING TO
P550,000 ON MARCH 31, 2008.

KAKA SPENT FOR THE MATERIALS USED IN THE CONTRACT WHICH SHE
ACQUIRED FROM VALUE-ADDED REGISTERED SUPPLIERS COSTING
P150,000. ALL AMOUNTS ARE EXCLUSIVE OF VAT.

THE VAT PAYABLE BY KAKA FOR THE MONTH OF MARCH IS

A) 15,000
B) 40,000
C) 48,000
D) 59,500
 46. ARCHIE LADO, A NEWLY VAT REGISTERED TAXPAYER IS A LESSOR
OF POLES TO TELEPHONE AND CABLE COMPANIES. DURING THE
MONTH OF JANUARY 2008, HE HAD THE FOLLOWING RECEIPTS FROM
CUSTOMERS:

SECURITY DEPOSIT FROM CUSTOMER C 110,000

RENT INCOME IN JANUARY FROM VARIOUS CUSTOMERS 88,000
PREPAID RENTALS RECEIVED FROM CUSTOMER C
(FEBRUARY TO JUNE) 132,000
LOAN TO ARCHIE LADO FROM CUSTOMER B 82,500

DURING THE MONTH, A PORTION OF THE SECURITY DEPOSIT FOR THE

FAITHFUL COMPLIANCE BY CUSTOMER C OF ITS OBLIGATIONS TO THE
LESSOR WAS APPLIED TO RENTAL FOR JANUARY IN THE AMOUNT OF
P11,000.

AT THE BEGINNING OF THE YEAR, ARCHIE HAD P252,000 WORTH OF

INVENTORY OF SUPPLIES AND MATERIALS FOR USE IN THE BUSINESS. VAT
PAID ON THE BEGINNING INVENTORY IS P3,500.

THE OUTPUT TAX OF ARCHIE IN JANUARY IS

A) 24,750
B) 21,000
C) 28,500
D) 39,500

47. IN QUESTION NO. 46 ABOVE, THE INPUT TAX ON ARCHIE IS

A) 5,040
B) ZERO
C) 21,000
D) 4,160

48. IN WHICH OF THE FOLLOWING CASES MAY REFUND OF INPUT TAX

BE ALLOWED?
1ST CASE:FOR INPUT TAX ON PURCHASES OF CAPITAL GOODS
2ND CASE: FOR INPUT TAX ON PURCHASES OF GOODS AND SERVICES BY AN
EXPORTER

A) IN BOTH CASES
B) ONLY IN THE 1ST CASE
C) NEITHER IN THE 1ST NOR IN THE 2ND CASE
D) ONLY IN THE 2ND CASE
 49. MARINDA IS A VAT REGISTERED GROCERY OWNER AND SUGAR
DEALER. SHE SUBMITTED LISTS OF INVENTORY AS OF DECEMBER
31, 2007 TO THE RDO AS FOLLOWS:

GROCERY ITEMS, TOTAL VALUE 325,000

RAW CANE SUGAR, TOTAL VALUE 255,000

IN JANUARY 2008, SHE HAD THE FOLLOWING SALES AND PURCHASES:

SALES PURCHASES
GROCERY(TOTAL INVOICE VALUE) 1,042,525 650,100
SUGAR(EXCLUDING VAT) 480,000 420,000

THE VAT DUE FOR JANUARY 2008 IS

A) 35,675
B) 42,054.54
C) 41,675.31
D) 6,675.26

NUMBERS 50 AND 51 ARE BASED ON THE FOLLOWING INFORMATION:

GOODBOOKS EDUCATIONAL SUPPLY, VAT REGISTERED, IS ENGAGED IN

THE BUSINESS OF SELLING BOOKS, SCHOOL SUPPLIES AND GIFT ITEMS.
THE FOLLOWING ARE THE RECORD OF ITS PURCHASES AND SALES
DURING THE MONTH OF OCTOBER(INCLUSIVE OF TAX):

SALE OF SCHOOL SUPPLIES 560,000

SALE OF BOOKS 200,000
SALE OF GIFT ITEMS 335,000
PURCHASES OF SCHOOL SUPPLIES/GIFT ITEMS 406,000
PURCHASES OF BOOKS 176,000
PURCHASE OF COMPUTER USED I N TAXABLE
AND EXEMPT TRANSACTIONS 21,112

50. THE CREDITABLE INPUT TAX ON THE PURCHASE OF COMPUTER IS

A) 2,400.20
B) 1,920.50
C) 26,400.65
D) 1,809.60
 51. IN RELATION TO NO. 50 ABOVE, THE VAT PAYABLE IS

A) 50,690.40
B) 34,100.50
C) 36,500
D) 43,280.25

52. TALA COMPANY HAD THE FOLLOWING DATA FOR THE 1ST QUARTER
OF 2008(VAT EXCLUSIVE):

TAXABLE SALES 600,000

EXEMPTED SALES 300,000
ZERO-RATED SALES 100,000
INPUT TAX WHICH CANNOT BE DIRECTLY
ATTRIBUTED TO ANY OF THE ABOVE
SALES 50,000

THE VAT PAYABLE FOR THE QUARTER IS

A) 42,000
B) 37,000
C) 32,000
D) 22,000

53. COMBINED COMPANY OPERATES A VAT BUSINESS AND A NON-VAT

BUSINESS. DURING THE MONTH, ITS BOOKS REVEALED THE
FOLLOWING RECORD OF SALES AND PURCHASES:

SALES(VAT BUSINESS) 600,000

SALES (NON-VAT BUSINESS) 200,000
PURCHASES(VAT BUSINESS) 401,500
PURCHASES(NON-VAT BUSINESS) 80,000
PURCHASES (VAT AND NON-VAT BUSINESSES) 64,000

THE VAT PAYABLE BY COMBINED COMPANY IS

A) 7,660
B) 6,060
C) 13,500
D) 18,060
 54. EXCEL COMPANY,OPERATES TWO LINES OF BUSINESS. BUSINESS A
IS SUBJECT TO VAT, WHILE BUSINESS B IS NOT. DATA FOR THE
MONTH ARE AS FOLLOWS:

SALES:
VAT BUSINESS, VAT INCLUDED 560,000
NON-VAT BUSINESS 100,000
PURCHASES:
MERCHANDISE, VAT BUSINESS, VAT INCLUDED 154,000
MERCHANDISE, NON-VAT BUSINESS, VAT INCLUDED 67,100
CAPITAL GOODS, VAT BUSINESS, VAT INCLUDED 34,776
CAPITAL GOODS, NON VAT BUSINESS, VAT INCLUDED 27,500
CAPITAL GOODS, FOR USE IN BOTH BUSINESSES,
VAT INCLUDED 56,000

RENT OF STORE SPACE, VAT BUSINESS, VAT INCLUDED 14,560

RENT OF WAREHOUSE, VAT AND NON-VAT BUSINESS,
VAT EXCLUDED 6,200
FREIGHT OF GOODS, VAT AND NON-VAT BUSINESS,
VAT INCLUDED 2,576
TELEPHONE BILLS, VAT AND NON-VAT, VAT INCLUDED 1,624

THE INPUT TAX ON BUSINESS A IS:

A) 27,781
B) 23,747
C) 23,267
D) 18,875

55. IN QUESTION NO. 54 ABOVE, THE VAT PAYABLE BY EXCEL

COMPANY IS

A) 19,035
B) 20,733
C) 20,253
D) 32,219

NUMBERS 56 THROUGH 58 ARE BASED ON THE FOLLOWING

INFORMATION:

MILDRED ENTERPRISES, A VAT REGISTERED TRADER HAD THE

FOLLOWING DATA DURING THE LAST QUARTER OF THE YEAR:
PURCHASES SALES
OCTOBER 627,200 392,000
NOVEMBER 599,200 862,400
DECEMBER 959,616 789,600
 56. THE AMOUNT OF VAT PAYABLE BY MILDRED FOR THE MONTH OF
OCTOBER IS

A) 25,200
B) 16,500
C) 2,000
D) ZERO

57. THE VAT PAYABLE FOR THE MONTH OF NOVEMBER IS

A) 203,500
B) 28,200
C) 3,000
D) ZERO

58. THE VAT PAYABLE/EXCESS FOR THE LAST QUARTER IS

A) (18,216)
B) 18,216
C) 60,900
D) ZERO

NUMBERS 59 THROUGH 61 ARE BASED ON THE FOLLOWING

INFORMATION:

THE BOOKS OF ACCOUNTS OF FRANKLIN CORPORATION, VAT

REGISTERED, REVEALED THE FOLLOWING DATA IN 2007:

DEFERRED INPUT TAXES, JUNE 2007 6,200

SALES:
JULY 620,000
AUGUST 430,000
SEPTEMBER 540,000
PURCHASES:
JULY 508,000
AUGUST 432,000
SEPTEMBER 314,500

59. THE VAT PAYABLE FOR JULY IS

A) 13,440
B) 7,240
C) 11,200
D) 5,000
 60. THE VAT PAYABLE FOR AUGUST IS

A) (6,440)
B) (240)
C) ZERO
D) 7,000

61. THE VAT PAYABLE FOR SEPTEMBER IS

A) 26,580
B) 27,060
C) 20,860
D) 34,090

62. FELICISIMA HAD THE FOLLOWING DATA:

CASE 1 CASE 2
SALES, NET OF VAT 1,900,000 1,800,000
PURCHASES OF GOODS FOR
SALE, EXCLUSIVE OF VAT 1,260,000 1,600,000
PURCHASES OF MACHINES(VAT
NOT INCLUDED) 1,440,000 900,000
MACHINE LIFE 6 YEARS 3 YEARS

THE AMOUNTS OF VAT PAYABLE/EXCESS TAX ARE AS FOLLOWS:

A) B) C) D)
CASE 1 54,000 73,920 73,920 ZERO
CASE 2 (84,000) (84,000) 20,000 ZERO

63. LAVINIA HAD THE FOLLOWING DATA IN JULY:

SALES OF GOODS(EXCLUDING VAT) 2,540,000

PURCHASES OF GOODS(NET OF VAT) 1,450,000
PURCHASES OF CAPITAL GOODS(INVOICE AMOUNT):
MACHINE 1 (USEFUL LIFE)=6 YEARS 974,400
MACHINE 2 (USEFUL LIFE)=3 YEARS 67,200

THE VAT PAYABLE IN JULY IS

A) 120,860
B) 19,200
C) 33,600
D) (40,800)
NUMBERS 64 AND 65 ARE BASED ON THE FOLLOWING INFORMATION:

THE FOLLOWING DATA (NET OF TAX) OF CHRISTINE COMPANY ARE AS

FOLLOWS:

1ST QUARTER:

SALES 700,000
PURCHASES 500,000
PURCHASE OF MACHINERY(FEBRUARY) 1,500,000
UNUTILIZED INPUT TAX AS END OF 1ST QTR 40,000

2ND QUARTER

SALES 1,500,000
PURCHASES 200,000

64. FOR THE FIRST QUARTER, CHRISTINE COMPANY WILL RESULT TO

A/AN

A) VAT PAYABLE OF 72,000

B) EXCESS TAX OF 22,000
C) EXCESS TAX OF 196,000
D) VAT PAYABLE OF 22,000

65. THE VAT PAYABLE FOR THE SECOND QUARTER IS

A) 156,000
B) 134,000
C) 125,000
D) ZERO

66. DATA DURING THE SECOND QUARTER:

OUTPUT TAX 35,000

INPUT TAX 19,000
VAT PAID:
APRIL 3,000
MAY 4,500
ST
EXCESS INPUT TAX, 1 QUARTER 2,400
THE VAT PAYABLE (OR EXCESS TAX TO BE CARRIED OVER) IS

A) 6,100
B) 16,000
C) 8,500
D) ZERO
 67. A NEW BUSINESSMAN CONSULTED YOU RELATIVE TO THE FILING
OF TAX RETURN AND PAYMENT OF HIS BUSINESS TAX. THE
BUSINESS IS VAT REGISTERED ALTHOUGH HE IS EXPECTING TO
EARN AN ADDITIONAL GROSS RECEIPTS RANGING FROM P900,000 TO
P1,200,000 ONLY. THESE ARE HIS QUESTIONS:

1. WHAT BUSINESS TAX SHOULD BE PAID BY HIM?

2. WHEN IS THE DEADLINE FOR FILING THE TAX RETURN FOR THE
MONTH OF MAY?
3. WHEN IS THE DEADLINE FOR THE PAYMENT OF THE BUSINESS TAX
FOR THE MONTH OF JUNE(OR SECOND QUARTER)?

WHICH OF THE FOLLOWING CHOICES WOULD BE THE CORRECT ANSWER?

QUESTION #1 QUESTION #2 QUESTION #3

A) VAT JUNE 20 JULY 25
B) VAT JUNE 25 JULY 25
C) NON-VAT JUNE 20 JULY 25
D) NON-VAT JUNE 20 JULY 25

NUMBERS 68 AND 69 ARE BASED ON THE FOLLOWING INFORMATION:

THE CITY GOVERNMENT OF IRIGA HAS THE FOLLOWING PURCHASES FOR

THE MONTH OF AUGUST 2009 FROM VAT SUPPLIERS OF GOODS AND/OR
SERVICES:

PURCHASES OF GOODS FROM SINADIRI STORE

AND MERCHANDISE (INCLUSIVE OF VAT) 11,200
PURCHASE OF SERVICES FROM DAMAN SERVICES, INC. 56,000

68. THE AMOUNT PAYABLE TO SINADIRI STORE AND MERCHADISE

AFTER WITHHOLDING TAXES OF VAT AND INCOME TAX IS

A) 11,200
B) 10,600
C) 9,400
D) 10,500

69. THE AMOUNT PAYABLE TO DAMAN SERVICES, INC. AFTER

WITHHOLDING TAXES OF VAT AND INCOME TAX IS
A) 56,000
B) 50,000
C) 52,500
D) 53,500
C. TRUE OR FALSE

1 VAT REGISTERED PERSON WHO ISSUES A VAT INVOICE FOR A VAT

EXEMPT SALE BUT FAILS TO DISPLAY ON THE INVOICE THE TERM “VAT
EXEMPT” SHALL BE SUBJECT TO VAT ON THAT SALE

2. THE INPUT TAX OF A VAT PURCHASER IS THE OUTPUT TAX OF THE VAT
SELLER.

3.SERVICES RENDERED TO PERSONS ENGAGED IN INTERNATIONAL

SHIPPING OR AIR TRANSPORT OPERATIONS ARE SUBJECT TO 12% VAT.

4.THE EXCESS OF OUTPUT VAT OVER THE INPUT TAX IS A CURRENT ASSET
OF THE TAXPAYER

5.THE INPUT VAT ON PURCHASE OF CAPITAL GOODS VALUED AT P2,000,000

SHALL BE SPREAD OVER 60 MONTHS, OR THE LIFE OF THE ASSET,
WHICHEVER IS SHORTER, SUBJECT TO 70% VAT CAP

6. PERSONS ENGAGED IN SALE OF SERVICES MAY ALSO BE ALLOWED TO

CLAIM TAX CREDIT ON PRESUMPTIVE INPUT TAX

7. GROSS RECEIPTS ON SERVICES RENDERED BY ALL FRANCHISE

GRANTEES ARE SUBJECT TO FRANCHISE TAX

8. TRANSPORTATION CONTRAC TORS WHO TRANSPORT PASSENGERS FOR

HIRE BY LAND ARE NOT SUBJECT TO VAT EVEN IF THEIR GROSS RECEIPTS
IN A 12-MONTH PERIOD DO NOT EXCEED P1,500,000

9.A CPA IS SUBJECT TO VAT ON THE SALE OF PROFESIONAL SERVICES

UNLESS THE GROSS RECEIPTS IN A 12-MONTH PERIOD DO NOT EXCEED
P1,500,000

10. A PHYSICIAN IS NOT SUBJECT TO VAT BECAUSE IN EXERCISING HIS

PROFESSIONAL SERVICES HE IS NOT ENGAGING HIMSELF IN BUSINESS

11. THERE IS NO CREDITABLE INPUT TAX ON SALES TO GOVERNMENT OR

ANY OF ITS POLITICAL SUBDIVISIONS, INSTRUMENTALITIES OR AGENCIES,
INCLUDING GOCCs

12. IF THE INVOICE PRICE IS INCLUSIVE OF VAT, THE AMOUNT GIVEN IS

MULTIPLIED BY 12/112 TO GET THE VAT COMPONENT THEREON
13.A TAXPAYER WHO OPERATES A VAT AND A NON-VAT BUSINESS
CANNOT CLAIM INPUT TAX CREDIT ON PURCHASES OF GOODS TO BE USED
IN HIS NON-VAT BUSIN ESS

14.ANY INPUT TAX ATTRIBUTABLE TO ZERO-RATED SALES BY A VAT-

REGISTERED PERSON MAY AT HIS OPTION BE REFUNDED OR APPLIED FOR
A TAX CREDIT CERTIFICATE WHICH MAY BE USED IN THE PAYMENT OF
INTERNAL REVENUE TAXES

15.BANKS AND OTHER BANKING INSTITUTIONS ARE SUBJECT TO VAT

16.IMPORTATION OF GOODS ARE SUBJECT TO VAT EVEN IF THE INTENTION

OF THE IMPORTER IS TO USE THE IMPORTED GOODS FOR PERSONAL
PURPOSES

17.THE GROSS RECEIPTS DERIVED FROM EXECISE OF A PROFESSION AND

FROM OTHER LINES OF VATABLE BUSINESS SHALL BE COMBINED FOR
PURPOSES OF DETERMINING THE THRESHOLD OF P1,500,000

18.THE ACCOUNT OUTPUT TAX MUST APPEAR IN THE CURRENT LIABILITY

SECTION OF THE BALANCE SHEET.

19.A LEASE OF A COPYRIGHT ON TAXATION BOOKS ARE SUBJECT TO VAT

20. INPUT TAX, BEING A TAX, IS AN EXPENSE ON THE PART OF THE

PURCHASER AND IS DEDUCTIBLE FROM GROSS INCOME FOR PURPOSES OF
COMPUTING THE NET INCOME

21.VAT IS A REGRESSIVE TAX

22. SYSTEMS LOSS ON ELECTRICITY THAT ARE BEING CHARGED BY

ELECTRIC COOPERATIVES TO CONSUMERS ARE SUBJECT TO 12% VAT

23. PRINTING OF INVOICES AND RECEIPTS (INCLUDING DELIVERY

RECEIPTS) REQUIRES APPROVAL FROM BIR

24.PURCHASES AND SALES ARE RECORDED IN THE BOOKS OF A NON-VAT

TAXPAYER AT AN AMOUNT WHICH IS NET OF INPUT/OUTPUT TAXES

25. A SALE OF POWER OR FUEL WHICH IS G ENERATED FROM SOLID WASTE

IS SUBJECT TO 0% VAT