No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

Preweek Lecture Batch 5

1. Your client is Mr. Paul Soon, an American residing in the Philippines, consulted you on how he
can transfer properties; composed of family home valued at Php11,000,000 and cash in bank
amounting to Php3,000,000, to his lone son with a minimum tax consequence . What will you
advise Mr.Soon?
a. Sell all his properties in favor of his son.
b. Incorporate and give all stockholdings to his son.
c. Liquidate, convert all his properties into cash.
d. Donate his property to his son, mortis causa.
2. Who are allowed to withhold VAT from its VAT suppliers?
a. Entities, organization, business or corporation duly registered with Philippine
Economic Zone Authority;
b. Non-resident individuals and corporation;
c. Government or any of its instrumentalities including government owned and controlled
corporation;
d. Resident Foreign Corporation doing business in the Philippines.
3. Who issues revenue regulations?
a. Secretary of Finance
b. Commissioner of Bureau of Internal Revenue
c. Board of Accountancy
d. Commissioner of Bureau of Customs
4. Which of the following may be a creditable withholding tax?
a. documentary stamps tax
b. Income tax
c. Excise tax
d. Percentage tax
5. The following are the nature of withholding tax, except:
a. Method or tool in the collection of taxes
b. Taxes are collected on behalf of government
c. Considered as trust funds until remitted to the government
d. Taxes withheld could be commingled with any other funds of the withholding agent.

6 The following are required to withhold taxes on their income payments, except:
a. Any juridical person, whether or not engaged in trade or business
b. An individual, with respect to payments made in connection with his/her trade or
business
c. All government offices including government-owned or controlled corporations, as
well as provincial, city and municipal governments and barangays
d. All individuals, juridical persons and political parties on campaign expenditures
and/or purchase of goods and services intended as campaign contributions
e. A person having NO control over the payment and who, at the same time, claims the expense
f. A person making purchases on behalf of the withholding agent
g. A payor/withholding agent, on payments made thru brokers/agents authorized by
payee to receive payments

7. The following are exempt from withholding taxes on income, except:

a. National government (NG) agencies and its instrumentalities, except government-
owned and controlled corporations (GOCCs)
b. General Professional Partnership
c. Joint ventures or consortium formed for the purpose of undertaking construction projects not
registered with the Philippine Contractors Accreditation Board (PCAB).
d. PEZA registered entities enjoying income tax holiday (ITH)

1P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

8. The Run Against Tax Evaders (RATE) program of the Bureau of Internal Revenue is to eradicate?
a. Underground economy;
b. Smugglers;
c. Evaders;
d. Unregistered taxpayers.
9. Refers to a local sale of service by VAT-registered person to a person or entity who was granted
indirect tax exemption under the special laws or international agreement?
a. Automatic zero-rated transactions;
b. Effectively zero-rated transactions;
c. VAT exempt transaction;
d. Zero-rated transactions.
10. Which of the following are zero-rated transactions.
a. Sale of services to Asian Development Bank
b. Sale of services to International Rice Research Institute;
c. Sale of gold to Bangko Sentral of Pilipinas;
d. Sale of serivces to duly registered and accredited enterprises with Philippines
Economic Zone Authority.
11. What input taxes may be credited?
a. Input taxes from non-vat suppliers;
b. Input taxes from puchase of direct labor;
c. Input taxes from importation of goods for sale;
d. Input taxes from importation of personal and household effects.
12. The input taxes on zero-rated sales of goods may, at the option of the VAT-registered person
be, except:
a. Refunded;
b. Converted into tax credit certificates;
c. Carried over to the next quarter;
d. Used as payment of other internal revenue tax, except, wtihholding tax.

13. A refund of input taxes must be made within:

a. 2 years
b. 3 years
c. 5 years
d. 10 years
14. The Comissioner is given how many days to decide a refund of input taxes?
a. 180 days
b. 160 days
c. 120 days
d. 90 days
15. When may VAT registered person claim input taxes as an allowable deductions from his
income tax return?
a. Input taxes from zero-rated sales;
b. Input taxes from exempt sales;
c. Input taxes from capital goods;
d. Input taxes from Export sale.
16. A documentary stamp tax is necessary in the following except:
a. Original issuance of shares of stocks;
b. Acceptance of a foreign bill of exchange;
c. Esatate tax payment;
d. transfer of shares of stocks of a domestic corporation.
17. Application for permission to change the method of accounting employed and the basis upon
which the return is made shall be filed within:
a. 90 days;
b. 60 days;
c. 30 days;
d. 15 days.

2P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

18. A non-stock, non-profit organization made an importation of agricultural food product in its
original state from a chinese farmer amounting to Php2,240,000.00, such importation shall be:
a. Subject to 12% VAT;
b. Subject to zero rated VAT;
c. Exempt from VAT;
d. Subject to 3% other percentage tax.
19. Which of the following is VAT-able?
a. Sale or importation of fertilizer, ordinary feeds, seeds, seedlings and fingerlings;
b. Importation of professional instruments and implements wearing apparel, domestic
animals and personal household effects;
c. Services of agricultural contract growers and milling for others of palay into rice, corn
into grits and sugar cane to raw sugar;
d. Dental and Veterinary services paid to professional.
20. Which of the following is a zero-rated transaction?
a. Sales by non-agricultural, non-electrical and non-credit cooperatives duly registered
with cooperative development authority;
b. Sale of power or fuel generated through renewable sources of energy.
c. Export sale of non-vat registered individuals;
d. Sale by agricultural cooperatives duly registered with Cooperative Development
Authority;
21. Which of the following is an effectively zero-rated transaction?
a. Educational services rendered by private educational institutions duly accredited by
DEPED, CHED and TESDA;
b. Services rendered by regional or area headquarters established in the Philippines by
multinational corporations which act as supervisory, communication and coordinating
centers;
c. Sale of services to Asian Development Bank;
d. Service of banks, non-bank, financial intermediaries.
22. All of the following are VAT-exempt, which is the exception?
a. Sale , importation, printing of magazines devoted principally for paid advertisements;
b. Importation of fuel, goods, and supplies by person engaged in international shipping
or air transportation;
c. Sale or importation of passenger or cargo vessels and aircrafts for domestic or
international shipping or air transportation;
d. Gross receipts from lending cooperatives.
23. Mr. Santos sold his ancestral house and lot in the amount of Php5,000,000.00, such
transaction will be subject to:
a. 12% VAT
b. Zero rated VAT
c. Exempt from VAT
d. 3% other percentage tax
24. Employers who hire a Person with Disability (PWD) are allowed to claim as deduction from
gross income the following additional deduction as salaries and wages paid to the said PWD?
a. 25% of the total amount paid as salaries and wages to the PWD;
b. 15% of the total amount paid as salaries and wages to the PWD;
c. 50% of the total amount paid as salaries and wages to the PWD;
d. 30% of the total amount paid as salaries and wages to the PWD.

3P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

25. A non-resident foreign corporation receives royalty income from the Philippines, which of
the following is correct?
a. Subject to final withholding tax of 10%;
b. Subject to final withholding tax of 20%;
c. Subject to final withholding tax of 25%;
d. Subject to Profit Remittance tax of 15%.
26. Zeus a Domestic Corporation has incurred Rent Expense amounting to Php120,000.00. Zeus
paid the lessor a total Php120,000.00 without withholding 5% tax therefrom. How much rent
expense can Zeus claim as an allowable deductions?
a. 120,000
b. 60,000
c. zero
d. None of the above.
27. First Statement- Each local government unit shall exercise its power to create its own sources of
revenue and to levy taxes, fees, and charges subject to the provisions of the Local Government Code,
consistent with the basic policy of local autonomy.
Second Statement – The taxes, fees, and charges shall accrue and shared by the local government
units and the National Government. (LGC)
a. True, True
b. True, False
c. False, False
d. False, True
28. A corporation is asked where to file first its income tax return?
a. Securities and Exchange Commission;
b. Local City Treasurer of Corporation principal address or Municipality;
c. Bureau of Internal Revenue;
d. Authorized Accredited Agent Banks.
29. How many tax return copies are required by the Bureau of internal revenue?
a. Duplicate
b. Triplicate
c. quadruplicate
d. As many as required by revenue officer.
30. When will a self employed individual file its 1st quarter income tax return?
a. on or before April 15 of current year.
b. on or before May 15 of the current year.
c. on or before July 15 of the current year.
d. on or before August 15 of the current year.
31. Construction by XYZ Construction Co. of concrete barrier for the Asian Development Bank in
Ortigas Center to prevent car bombs from ramming the ADB gates along ADB Avenue in
Mandaluyong City. Is subject to what business tax?
a. 12% VAT
b. 0% VAT
c. Exempt from VAT
d. None of the above

32. Call Center operated by a domestic enterprise in Makati that handles exclusively the
reservations of a hotel chain which are all located in North America. The services are paid for in
US$ and duly accounted for with the Bangko Sentral ng Pilipinas. Is subject to:
a. 12% VAT
b. 0% VAT
c. Exempt from VAT
d. None of the above

4P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

33. Sale of orchids by a flower shop which raises its flower in Tagaytay. Is subject to:
a. 12% VAT
b. 0% VAT
c. Exempt from VAT
d. None of the above

34. In 2022, Kobe Juan, a resident Filipino citizen, received dividend income from U.S. –based
corporation which owns a chain of Filipino restaurant in the West Coast, U.S.A. The dividend
remitted to Kobe is subject to U.S withholding tax with respect to a non-resident alien like Kobe.
The dividend is subject to:
a. Final income tax
b. Basic income tax
c. Capital gains tax
d. Exempt from tax

35. Mirador, Inc., a domestic corporation, filed its Annual Income Tax Return for its taxable year
2011 on April 15, 2012. In the Return, it reflected an income tax overpayment of P1,000,000.00
and indicated its choice to carry-over the overpayment as an automatic tax credit against its
income tax liabilities in subsequent years.

On April 15, 2013, it filed its Annual Income Tax Return for its taxable year 2012 reflecting a
taxable loss and an income tax overpayment for the current year 2012 in the amount of
P500,000.00 and its income tax overpayment for the prior year 2011 of P1,000,000.00.

In its 2012 Return, the corporation indicated its option to claim for refund the total income tax
overpayment of P1,500,000.00

Choose which of the following statements is correct.

a. Mirador, Inc. may claim as refund the total income tax overpayment of P1,500,000.00
reflected in its income tax return for its taxable year 2012;
b. It may claim as refund the amount of P500,000.00 representing its income tax
overpayment for its taxable year 2012;
c. No amount may be claimed as refund.
d. None of the above.

36. First Statement – local government taxes and charges statute of limitation is five (5) years
from the date they become due.
Second Statement – In case of fraud, intent to evade the payment of local government taxes,
fees or charges, the statute of limitation is ten (10) years from the discovery of fraud or
intent to evade.
a. True, true
b. True, false
c. False, false
d. False, true

37.The following are the instances where the running of the prescriptive period of local government taxes
may be suspended, except
a. The treasurer is legally prevented from making the assessment or collection;
b. The taxpayer requests re-investigation and executes a waiver in writing before expiration
of the prescriptive period.
c. The taxpayer attempted to abscond.
d. The taxpayer cannot be located.

5P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

38. The Secretary of Finance is authorized to suspend the imposition of Minimum Corporate
Income Tax on any corporation which suffers losses on account of:

a. Economic Sabotage;
b. Insolvency;
c. Force Majeure;
d. Corporate Rehabilitation.

39. When may the Bureau of Internal Revenue terminate taxing period, EXCEPT?
a. When the taxpayer is retiring from business subject to tax;
b. When the taxpayer went abroad;
c. When the taxpayer removes his property from Philippines;
d. When the taxpayer hides or conceals his property;

40. Withholding tax rates of income payments made by top 20,000 private corporations to their
local/resident suppliers of goods?
a. 1%
b. 2%
c. 3%
d. 4%

41. First Statement: For a taxpayer using the accrual method, the recognition of income and
expenses will be determined using the all events test whereby the following requisites must
be met: (1) fixing of a right to income or liability to pay; and (2) the availability of the
reasonable accurate determination of such income or liability
Second Statement: To determine the 'reasonable needs' of the business in order to justify
an accumulation of earnings, the Courts of the United States have invented the so-called
'Immediacy Test' which construed the words 'reasonable needs of the business' to mean the
immediate needs of the business, and it was generally held that if the corporation did not
prove an immediate need for the accumulation of the earnings and profits, the accumulation
was not for the reasonable needs of the business, and the penalty tax would apply.
a.True,true;
b.False,False
c.True,False
d.False,True.

42. For the taxable year 2020, the income and expenses of corporations shall be deemed to
have been earned and spent equally for each month of the period/taxable year.

a. True
b. False

43. Statement 1: A one-person corporation is excluded from the definition of a corporation

under the CREATE Act.

Statement 2: A one-person corporation is instead regarded under the CREATE Act as an

individual taxpayer.

Statement Statement 2
1
a. True True
b. True False
c. False False
d. False True

6P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

44. Daft Punk Incorporated, a domestic corporation, had gross sales of P10 million, cost of sales
of P6 million and operating expenses of P3 million for its fiscal year ended 31 March 2021,
its 3rd year of operation. Its total assets amounted to P5 million, and does not own land and
building where its business operations are conducted. The income tax due against Daft Punk
Incorporated is:

a. P 300,000
b. P 250,000
c. P 225,000
d. P 200,000
e. None of the above

45. Script Corp. is a domestic corporation which is on its 2nd year of operation during the year
2021. Its net taxable income for calendar year 31 December 2021 amounts to P10 million.
Its total assets, net of the value of the land where its business is situated amounts to P50
million. The income tax due against Spirit Box Corp. is:

a. P3 million
b. P2.5 million
c. P2.25 million
d. P2 million
e. None of the above

46. For the taxable year 2021, HER Inc. incurred interest expense of P50,000 on its bank loan,
and at the same time earned P100,000 worth of interest income. For the year, its gross
assets is P100 million exclusive of the cost of the land of P7.5 million. It registered a taxable
income of P2.5 million. How much would be the allowable interest expense for the year
2021?

a. P10,000
b. P25,000
c. P41,250
d. P50,000
e. None of the above

47. There shall be allowed an additional deduction of ½ of labor training expense for skills
development of enterprise-based trainees enrolled in public senior, high schools, public
higher educational institutions, or public technical and vocational institutions subject to the
following condition(s):

a. The enterprise should secure a certification from the Department of Education (DepEd),
Technical Education and Skills Development Authority (TESDA) or Commission on Higher
Education (CHED)
b. The deduction shall not exceed 10% of the direct labor wage
c. A and B
d. Neither A nor B

48. Interest paid or incurred within a taxable year on indebtedness in connection with the
taxpayer’s profession, trade or business shall be allowed as a deduction from gross income,
provided the same also satisfies certain conditions. Which of the following
conditions/criteria is incorrect?

a. The interest payment arrangement must not be between related taxpayers

b. The interest must not be incurred to finance petroleum operations
c. The interest was not treated as capital expenditure, if such interest was incurred in
acquiring property used in trade, business or exercise of profession
d. All of the above

7P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

e. None of the above

49. Foreign-sourced dividends received by domestic corporations shall be exempt from tax
subject to the following conditions:

I. Foreign-sourced dividends are reinvested in the business operations of a domestic

corporation within the next 2 taxable years from the time the foreign-sourced dividends
were received
II. Dividend fund shall be used to fund working capital, capital expenditures, infrastructure
projects, investment in domestic subsidiaries and dividend payments
III. Domestic corporation holds directly at least 20% in value of the outstanding shares of
the foreign corporation and held uninterruptedly the shareholdings for a minimum of 2
years from time of dividend distribution

Condition Condition 2 Condition

1 3
a. Correct Correct Correct
b. Correct Correct Incorrect
c. Correct Incorrect Incorrect
d. Incorrect Correct Correct
e. Incorrect Incorrect Incorrect

50. For calendar year 2021 financial statements, PAS 12 provides that components of tax
expense (income) may include “any adjustments recognized in the period for current tax of
prior periods” and “the amount of deferred tax expense (income) relating to changes in tax
rates or the imposition of new taxes”, among others (PAS 12.80.b and PAS 12.80.d)

a. True
b. False

51. Statement 1: For the calendar year 2021, deferred tax assets and liabilities as of 31
December 2021 need not be remeasured since the new tax rates are already in full effect.
Statement 2: The impact of remeasurement of deferred taxes is recognized in profit or loss
(i.e. provision for/benefit from deferred income tax), unless it can be recognized in other
comprehensive income or another equity account.

Statement Statement 2
1
a. True True
b. True False
c. False False
d. False True

52. EXO, an offshore banking unit, will be subject to the 10% preferential tax rate for the
taxable year ended 31 December 2021.

a. True
b. False

8P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

53. BTS, a regional operating headquarters, will be subject to the 10% preferential tax rate for
the taxable year ending 31 December 2022.

a. True
b. False

54. The Monkees Inc. maintains its office in the City of Manila, but owns a banana plantation in
Tagum City, Davao del Norte. For purposes of qualifying for the imposition of the reduced
20% corporate income tax rate, the value of the land being used as banana plantation
should not be excluded in the determination of the total assets of The Monkees Inc.?

a. Yes
b. No

55. For purposes of determining the applicability of the reduced 20% regular corporate income
tax rate on domestic corporations, the value of the land which shall be excluded in
determining the total assets of the corporation is limited to the particular land where the
business entity’s office, plant and equipment are located during the taxable year for which
the 20% income tax is imposed.

a. True
b. False

56. If the gross income of a private non-profit hospital from unrelated trade, business or activity
exceeds _______ of the total gross income derived by such institutions from all sources, the
tax prescribed for domestic corporations shall be imposed on _______ of such institution’s
taxable income.

a. 30% 50%
b. 30% 100%
c. 50% 50%
d. 50% 100%
e. None of the above

57. One of the conditions that must be satisfied in order for a domestic corporation will qualify
for the reduced corporate income tax rate of 20% is that the total assets should not be
more than Php100 million, exclusive of the land. For this purpose, are the total assets net of
any depreciation and allowance for bad debts?

a. Yes
b. No

58. Pursuant to Revenue Regulations No. 5-2021, what is the minimum corporate income tax
rate applicable for the calendar year 2020?

a. 0.5%
b. 1%
c. 1.5%
d. 2%
e. None of the above

59. Prior to the effectivity of the CREATE Act, regional operating headquarters are not subject
to minimum corporate income tax. From 01 January 2022 to 30 June 2023, the minimum
corporate income tax rate applicable to regional operating headquarters is 1%.

a. True
b. False

9P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

60. Effective 01 July 2023, regional operating headquarters will revert to its status prior to
CREATE of not being subject to minimum corporate income tax.

a. True
b. False

61. Non-resident foreign corporations are not subject to minimum corporate income tax.

a. True
b. False

62. A domestic corporation with a taxable year ending on December 31 will be subject to 1%
MCIT for the year 2023.

a. True
b. False

63. Government-owned corporations, agencies and instrumentalities shall pay such rate of tax
upon their taxable income as are imposed upon corporations or associations engaged in a
similar business, industry or activity, except:

a. Social Security System (SSS)

b. Home Development Mutual Fund (HDMF)
c. Philippine Health Insurance Corporation (Philhealth)
d. All of the above
e. None of the above

64. Everglow Corporation, a domestic corporation, has unappropriated retained earnings in

excess of its paid-up capital stock amounting to P20 million as of its fiscal year ended 30
September 2020. Everglow Corporation is subject to the 10% improperly accumulated
earnings tax as of 30 September 2020.

a. True
b. False

65. Loona Inc., also a domestic corporation, has unappropriated earnings in excess of its paid-
up capital stock amounting to P50 million as of its fiscal year ended 31 March 2021. Loona
Inc., is subject to the 10% improperly accumulated earnings tax as of 31 March 2021.

a. True
b. False

66. For its fiscal year ended 30 June 2021, Red Velvet Corp. has unappropriated earnings in
excess of its capital stock amounting to Php100 million. The improperly accumulated
earnings tax imposable against Red Velvet Corp. is:

a. P10 million
b. P7.5 million
c. P5 million
d. Zero
e. None of the above

67. The final withholding tax on interest income derived by resident foreign corporations from
foreign currency deposits is 7.5%.

a. True
b. False

10 P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

68. The two-tiered rates of 5% and 10% tax on the gain derived by resident and nonresident
foreign corporations from the sale, transfer, or exchange of shares of stock not traded in
the stock exchange was replaced with a fixed rate of 15%.

a. True
b. False

69. Excess percentage tax payments as a result of the decrease of tax rate from 3% to 1%
starting 01 July 2020 may not be carried forward to the succeeding taxable quarter/s.

a. True
b. False

70. Percentage taxpayers who have overpaid taxes as a result of the decrease of tax rate from
3% to 1% starting 01 July 2020 until the effectivity of Revenue Regulations No. 4-2021 are
allowed for a tax refund in the event that:

a. The taxpayer shifted from non-VAT to VAT-registered status

b. The taxpayer has opted to avail the 8% income tax rate at the beginning of taxable year
2021
c. A and B
d. Neither A nor B

71. Sale of house and lot and other residential dwellings valued at P3,199,200 or less is exempt
from value-added tax.

a. True
b. False

72. Sale or importation of prescription drugs and medicines for cancer, mental illness and
kidney diseases is exempt from value-added tax beginning 01 January 2020.

a. True
b. False

73. Sale or importation of prescription drugs and medicines for diabetes, high cholesterol, and
hypertension is exempt from value-added tax beginning 01 January 2020.

a. True
b. False

74. Starting 01 January 2021 to 31 December 2023, the following items are exempted from
value-added tax:

I. Capital equipment, its spare parts, and raw materials necessary for the production of
personal protective equipment components such as coveralls, gown, surgical cap,
surgical mask, N95 mask, scrub suits, goggles, and face shield, double or surgical gloves,
dedicated shoes, and shoe covers, for COVID 19 prevention
II. All drugs, vaccines, and medical devices specifically prescribed and directly used for the
treatment of COVID 19
III. Drugs for the treatment of COVID 19 approved by the Food and Drug Administration for
use in clinical trials, including raw materials directly necessary for the production of
drugs

11 P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

Statement Statement Statement

1 2 3
a. Correct Correct Correct
b. Correct Correct Incorrect
c. Correct Incorrect Incorrect
d. Incorrect Correct Correct
e. Incorrect Incorrect Incorrect

75. _______________ refers to any individual, partnership, corporation, Philippine branch of a

foreign corporation, or other entity organized and existing under Philippine laws and
registered with an Investment Promotions Agency excluding service enterprises such as
those engaged in customs brokerage, trucking or forwarding services, janitorial services,
security services, insurance, banking, and other financial services, consumers’ cooperatives,
credit unions, consultancy services, retail enterprises, restaurants, or such other similar
services, as may be determined by the Fiscal Incentives Review Board.

a. Domestic market enterprise

b. Registered business enterprise
c. Service enterprise
d. Other registered entities
e. None of the above

76. Statement 1: Export enterprises may be granted an income tax holiday of 6 years to 8 years,
depending on the location and industry priorities.

Statement 2: After the income tax holiday, export enterprises may avail of the special
corporate income tax rate for 5 years, or of the enhanced deductions for 5 years.

Statement Statement 2
1
a. True True
b. True False
c. False False
d. False True

77. Facts: Oasis Corp. was registered with the Philippine Economic Zone Authority prior to the
effectivity of the CREATE Act. It was granted a 4-year income tax holiday and thereafter,
entitled to the 5% tax on gross income.

Statement 1: Oasis Corp. is about to commence the 3rd year of its 4-year income tax holiday
when the CREATE Act has been passed into law. Under the CREATE Act, Oasis Corp. is no
longer allowed to use the ITH for the remaining period specified in the terms and conditions
of its registration. Oasis Corp. will automatically be subject to the special corporate income
tax rate.

Statement 2: Oasis Corp. may avail of the 5% special corporate income tax rate for a period
of 10 years.

Statement Statement 2
1
a. True True
b. True False
c. False False
d. False True

12 P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

78. You are engaged to audit the financial statements for the year ending September 30, 2021
with taxable income exceeding P5 million. How will the deferred tax assets and liabilities be
measured in the statement of financial position?

a. The deferred tax assets and liabilities relating to temporary differences from prior years
will still be measured using the 30% tax rate while deferred tax assets and liabilities that
originated during the current year will be measured using the 25% tax rate.
b. The deferred tax assets and liabilities relating to temporary differences from prior years
will still be measured using the 30% tax rate while deferred tax assets and liabilities that
originated during the current year will be measured using the 28.75% tax rate.
c. The deferred tax assets and liabilities will be measured using the 25% tax rate that have
been enacted by the end of the reporting period.
d. The deferred tax assets and liabilities will be measured using the 28.75% tax rate that
have been enacted by the end of the reporting period.

79. If dividends are declared after the reporting period but before the financial statements are
authorized for issue,

a. Dividend shall be recognized as liability.

b. Dividend shall not be recognized as liability and without disclosure in the notes.
c. Dividend shall not be recognized as liability but with disclosure in the notes.
d. All of the given choices are possible options of the management.

80. If non-adjusting events after the reporting period are material, non-disclosure could influence
the economic decisions that users make on the basis of the financial statements. Accordingly,
an entity shall disclose the following for each material category of non-adjusting event after
the reporting period:

Statement 1: The nature of the event

Statement 2: An estimate of its financial effect, or a statement that such an estimate cannot
be made.

a. Statement 1 only
b. Statement 2 only
c. Both Statement 1 and Statement 2
d. Either Statement 1 or Statement 2

81. The following are the powers of the BIR, except:

a. The assessment and collection of all national internal revenue taxes.
b. The execution of all judgments in all cases decided in its favor by the CTA and the
ordinary courts.
c. The enforcement of all forfeitures, penalties and fines connected with national internal
revenue taxes.
d. The assessment and collection of some customs duties.

82. 1st Statement:: The Commissioner of Internal Revenue shall have the power to inquire into
a taxpayer’s bank deposit in relation to all internal revenue taxes.
2nd Statement: The Commissioner of Internal Revenue shall have the power to divide the
Philippines into zones for purposes of prescribing real property values:
a. True, True c. False, True
b. True, False d. False, False

83. The following powers of the Commissioner are not delegable except:
a. The power to recommend the promulgation of rules and regulations by the secretary of
finance.

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 No. 125 Brgy. San Sebastian
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Telephone : (043) 723 8412
Gmail : [email protected]

b. The power to issue ruling of first impression or to reverse, revoke or modify any existing
ruling of the bureau.
c. The power to compromise or abate internal revenue taxes save for a few.
d. The power of the commissioner to make assessments.

84. Statement No. 1: A party adversely affected by a resolution of a division of the CTA has no
other recourse but to appeal to the Court of Appeals.
Statement No. 2 a party adversely affected by a resolution of a division of the CTA on a
motion for reconsideration or new trial, may file a petition for review with the CTA en banc.
a. True, True c. False, True
b. True, False d. False, False

85. Statement No.1: The CTA may sit en banc or in three divisions each divisions consisting of 3
justices.
Statement No.2: The Court of Tax appeals, now treated as having the same level as the court
of Appeals, shall be composed of 1 presiding justice and 8 associate justices.
a. True, True c. False, True
b. True, False d. False, False

86. Statement No. 1: The fact that an individual’s name is signed to a filed return shall be
prima facie evidence for all purposes that the return was actually signed by him.

Statement No. 2: If a taxpayer is unable to make his return, the return may be made by his
guardian or representative, the latter assuming the responsibilities of making the return and
incurring penalties if the same was erroneous.
a. True, True c. False, True
b. True, False d. False, False

87. The following are agents and deputies for collection of National Internal Revenue taxes,
except:
a. The commissioner of Customs and his subordinates with respect to the collection of
national Internal Revenue Taxes on imported goods.
b. The head of the appropriate government office and his subordinates with respect to the
collection of energy tax.
c. Banks duly accredited by the commissioner with respect to receipts of payments of
internal revenue taxes authorized to be made thru banks.
d. City treasurer with regard to collection of real estate tax.

88. The chief officials of the BIR shall be composed of:

a. 1 Commissioner and 4 Deputy Commissioners
b. 1 Commissioner and 5 Deputy Commissioners
c. 1 Commissioner, 2 Assistant Commissioners and 2 Deputy Commissioners.
d. 1 Commissioner and 7 Deputy Commissioners.

89. The Commissioner or his authorized representative is hereby empowered to suspend the
business operations and temporarily close the business establishment of any person for:
a. Failure to issue receipts or invoices of a VAT- registered entity.
b. Failure to file a VAT-return for VAT-registered person as required by the tax code.
c. Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct
taxable sales or receipts for the taxable quarter
d. All of the above.

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 No. 125 Brgy. San Sebastian
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Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

90. First statement: Failure of any person to register as a VAT-entity shall result to his being
temporarily closed for the duration of not less than five (5) days and shall be lifted only upon
compliance with whatever requirements prescribed by the Commissioner in the closure
order.
Second statement: In the case of sale in the amount of Php1,000 or more where the sale or
transfer is made to a VAT-registered person, the name, business style, if any, address and
Taxpayer Identification Number (TIN) of the customer should be prominently shown in the SI
or OR..
a. True, False c. False; True
b. True, True d. False; False

91. First statement: Taxes imposed and based on weight or volume capacity or any other physical
unit of measurement shall be referred to as ad valorem tax.
Second statement: Taxes imposed and based on selling price or other specified value of the
good shall be referred to as specific tax:
a. True; False c. False; True
b. True; True d. False; False

92. One of the following is not considered taxes, fees and charges deemed to be national internal
revenue taxes:
a. Income taxes c. Business taxes
b. Estate and donor’s taxes d. Documentary stamp taxes

93. A merchant of stock or securities, whether an individual, partnership or corporation, with an

established place of business, regularly engaged in the purchase of securities and the resale
thereof to customers; and who, as a merchant, buys securities and resells them to customers
with a view to the gains and profits that may be derived therefrom.
a. Dealer in securities c. Underwriters
b. Stock brokers d. Stock merchants

94. The following are secondary purposes of the power of taxation, except:
a.Regulation; b. Reduction of social inequity; c. Encourage economic growth; d.
Protectionism; e. Raise revenue for the Government.

95. The following are the requisites of a validly imposed tax, except:
a.That the subject matter thereof be within the jurisdiction of the state;
b. That the assessment and collection thereof be subject to the due process guarantee of the
constitution:
c. That the tax must not impinge on the inherent and constitutional limitations on the exercise
of taxation power;
d. it should be generally payable in money.

96. The following are the requisites of a taxpayer’s suit, except:

A. That public money, earned from taxes, are being spent on any improper purpose;
B. That the petitioner should assume the personality of a taxpayer to gain personality to
file the suit;
C. That the petitioner must be a citizen of the Philippines;
D. That the petitioner seeks to restrain the respondent from wasting public funds.

97. 1st Statement –Ordinarily, Internal revenue taxes shall be assessed within three (3) years after
the last day of filing as prescribed by law or when the return is filed which ever is later.
2nd Statement – Internal revenue taxes shall be administratively collected within five (5) years
following the valid assessment of the tax.
a. True; False c. False; True
b. True; True d. False; False

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

98. The minimum compromise rate for cases other than financial incapacity of the taxpayer is
equivalent to:
a. Ten percent (10%) of the basic assessed tax.
b. Twenty percent (20%) of the basic assessed tax.
c. Thirty percent (30%) of the basic assessed tax.
d. Forty percent (40%) of the basic assessed tax.

99. st Statement – Criminal violation of NIRC may be compromised even those already filed in
court.
2nd Statement – Criminal violation of NIRC may be compromised except those involving fraud.
a. True; False c. False; True
b. True; True d. False; False

100. Remedies of the government for the collection of delinquent taxes shall be by:
a. Levy or/and distraint
b. Civil or criminal action
c. Either of these remedies or both simultaneously.
d. None of the above

101. The prescription of check or warrant refund or tax credit shall be within:
a. 4 years from the date of issue
b. 5 years from the date of issue
c. 10 years from the date of issue
d. 12 years from the date of issue

102. First statement – The BIR Commissioner upon the recommendation of the Secretary of
Finance, shall promulgate all needful rules and regulations for the effective enforcement of
the provisions of NIRC.
Second statement – The rules and regulations of the BIR shall contain the conditions to be
observed by revenue officer respecting the institution and conduct of legal actions and
proceedings.
a. True; False c. False; True
b. True; True d. False; False

103. First Statement: All violations of any provision of the NIRC shall prescribe after five (5) years.
Second statement: Prescription shall begin to run from the day of the commission of the
violation of the law, even if the offender is outside the Philippines.
a. True; False c. False; True
b. True; True d. False; False

104. Which of the following statement is wrong?

a. An assessment which is not protested and appealed to the CTA becomes final and
executory;
b. The proceedings on the protest in the BIR is administrative proceedings;
c. The proceedings in the CTA may be appealed to the CA;
d. The proceedings in the CTA are quasi-judicial proceedings.

105. The following are the requisites to qualify and be registered as a Barangay Micro Business
Enterprise (BMBE)
a) With an asset of not more than Php3,000,000, excluding land;
b) Engaged in the production, processing or manufacturing of products or commodities,
including agro-processing, trading and services;

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 No. 125 Brgy. San Sebastian
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Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

c) Registered with the Department of Trade and Industry (DTI) for sole proprietorships; for
juridical persons: with the Securities and Exchange Commission (SEC), for corporations and
associations; and with the Cooperative Development Authority for cooperatives.
d) , entities rendering services in connection with the exercise of one’s profession by a person
duly licensed by the government after having passed a government licensure examination

106. A BMBE is subject to income tax on the following, except:

a. income arising from the operation of the enterprise
b. Interest, including those from any currency bank deposit and yield or any other monetary
benefit from deposit substitutes and from trust funds and similar arrangements;
c. Royalties;
d. Prizes and other winnings;

107. Failure to pay DST shall produce the following effects, except:

a. The contract cannot be notarized

b. The contract shall be invalidated
c. The contract shall be inadmissible in court
d. All of the above

108. Which is incorrect with respect to DST on original issue of shares of stock?

a. Par value stocks: P2.00 on every P200 or fractional part of the par value
b. No par value stocks: P2.00 on every P200 of the actual consideration
c. Stock dividends: Not subject to DST
d. None of the above

109. X Company and Y Company are affiliates. The former granted the latter intercompany
loan advances supported by cash vouchers and instructional letters. During the filing of tax
returns, the Tax Manager of Y Company averred that the said cash vouchers and instructional
letters are subject to DST since these partake the nature of a debt instrument. The chief
accountant argued otherwise. Which of the following is true?

a. The intercompany loan is not subject to DST since there was no formal loan agreement
b. The intercompany loan is subject to DST even if there was no formal loan agreement
since the same is akin to promissory notes, hence, subject to documentary stamp taxes
c. The intercompany loan is exempt from DST
d. The intercompany loan is subject to DST since the same will constitute conversion of
debt to equity which shall result to the original issuance of shares

110. Which of the following is subject to DST?

I. Donation of land
II. Lease of land
III. Mortgage of land
IV. Sale of Land

a. I only
b. II only
c. Both I and III
d. I, II, III, and IV
e. Both II and IV

111. SG Co., a resident of Singapore and a holder of 2,000,000 shares in TLC Co., a domestic
corp., sold its shares to French Co., a resident of France, on May 1, 2022. French Co., paid the
consideration on May 1, 2022. Pursuant to the Philippines – France Treaty, capital gains on

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 No. 125 Brgy. San Sebastian
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Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

sale of shares is exempt from income tax. Who should file the request for confirmation?
When is the deadline for filing?
a. SG Co. or its authorized representative should file the request for confirmation at
any time after the transaction but shall not be later than April 30, 2023.
b. French Co. or its authorized representative should file the request for confirmation
at any time after the transaction but shall not be later than April 30, 2023.
c. Either “SG Co” or “French Co” or their representative, at any time after the sale but
not later than April 30, 2023
d. Neither “SG Co” nor “French Co ”at any time after the sale but not later than April
30, 2023

112. On January 1, 2021, A Co., a domestic corporation, entered into a facility agreement with
S Co., a resident of Singapore, for the provision of a loan amounting to P10 million. The said
loan bears an interest of 5% per annum, which shall be paid by A Co. monthly in equal
payments. The principal shall be repaid after five (5) years from the execution date. Which of
the following statements is correct?
a. A single request for confirmation shall be filed at any time from January 1, 2022 until
April 30, 2022 provided there is no relevant and significant change in the facts or
circumstances for the entire duration of the loan.
b. A request for confirmation shall be obtained every year.
c. A request for confirmation shall be obtained only if there is no relevant and
significant change in the facts or circumstances upon which the previous ruling was
based.
d. None of the above.
113. If the treaty rate was not applied on an item of income, what is the remedy of the
nonresident?
a. File a TTRA and a claim for refund after the payment of the withholding tax.
b. Recover the overpayment from the payor.
c. Ask the payor to file a TTRA.
d. Lodge a Request for Confiration
114. A lawyer who is concurrently a Certified Public Accountant (CPA):
a. should pay only professional tax on either profession
b. should pay both the professional tax imposed on lawyers and on CPAs
c. is exempt from the payment of professional tax
d. is required to secure business permit in order to exercise his/her profession

115. In order to have a valid tax imposition levied by the local taxing authority, there must be:
a. a tax ordinance
b. a tax resolution
c. a tax manifesto
d. a tax law passed by Congress

That in all things God will be glorified

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