Other Percentage Taxes (OPT)

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PART 11

Other Percentage Taxes (OPT)

KINDS OF PERCENTAGE TAXES: 1) Tax on person exempt from value-added tax (Sec. 116); 2) Percentage tax on domestic carriers and keepers of garages (Sec. 117); 3) Percentage tax on international carriers (Sec. 118); 4) Tax on franchises (Sec. 119); 5) Tax on overseas dispatch, message or conversation originating from Philippines (Sec. 120); 6) Tax on banks and non-bank financial intermediaries (Sec. 121); 7) Tax on other non-bank financial intermediaries (Sec. 122); 8) Tax on life insurance premiums (Sec. 123); 9) Tax on agents of foreign insurance companies (Sec. 124); 10) Amusement taxes (Sec. 125); 11) Tax on winnings (Sec. 126); 12) Tax on sale, barter or exchange of shares of stock listed and traded through the local stock exchange or through initial public offering (Sec. 127).

TAX ON PERSONS EXEMPT FROM VALUE-ADDED TAX (Sec. 116).

 Requisites: 1) Not a VAT registered person; and 2) The annual gross sales or receipts do not exceed P3,000,000 (P1,919,500 prior to 2018).  Exempt Person – 1) Cooperatives 2) Beginning Jan 1, 2018, Self-employed individuals and professionals availing of the 8% tax on gross sales and/or receipts and other non-operating income under the TRAIN Law.  Formula: Tax Base

PXXX

Rate

3%

Percentage Tax

PXXX

Tax Base 1)Seller of Goods - Gross Sales 2) Seller of Services - Gross Receipts SUMMARY RULES Annual Gross Sales/Receipts More than P3M (P1919,500 prior to 2018) P3M and below (P1,919,500 and below prior to 2018)

Business Tax Applicable VAT

VAT or OPT If the taxpayer opts to pay VAT, it will be irrevocable for 3 consecutive years

PERCENTAGE TAX ON DOMESTIC CARRIERS AND KEEPERS OF GARAGES (Sec. 117).  Common Carriers - refers to the persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods, or both by land for compensation, offering their services to the public, and shall include transportation contractors.  Persons Liable: 1) Cars for rent or hire driven by the lessee (rent-a-car); 2) Transportation contractors, including persons who passengers for hire;

3) Other domestic carriers by land for transport of passengers; 4) Keepers of garages.  Exempt Persons: 1) Owners of bancas 2) Owners of animal-drawn two-wheeled vehicles

 Formula: Tax Base PXXX Rate 3% Common Carriers Tax PXXX  Tax Base 1) Actual Gross Receipts 2) Minimum Gross Receipts

Whichever is Higher

SUMMARY RULES Transporting

Type of Domestic Common Carrier

By Land

Persons Cargo/Goods Persons, Goods or Cargoes Persons, Goods or Cargoes

By Air

By Sea

Business Tax Applicable OPT VAT VAT VAT

PERCENTAGE TAX ON INTERNATIONAL CARRIERS (Sec. 118).  Persons Liable: 1) International Air Carriers 2) International Shipping Carriers  Formula: Gross Receipts

PXXX

Rate

3%

Common Carriers Tax

PXXX

 Gross Receipts - shall include, but shall not be limited to, the total amount of money or its equivalent representing the contract, freight/cargo fees, mail fees, deposits applied as payments, advance payments and other service charges and fees actually or constructively

received during the taxable quarter from cargo and/or mail, originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the passage documents. (RA No. 10378, RR NO. 15-2013) SUMMARY RULES Airline/Shopping Co. Domestic Corp.

Resident Foreign Corp.

Business Tax Applicable Vat Opt

TAX ON FRANCHISES (Sec. 119).  Persons Liable: 1) Franchises on Gas and Water Utilities 2) Franchises on Radio and/ or Television Broadcasting Companies  Requisites for franchises on Radio and/ or Television Broadcasting Companies: 1) Not a VAT registered person; and 2) Annual gross receipts of the preceding year do not exceed P10,000,000.

SUMMARY RULES APPLICABLE TO RADIO AND/OR TELEVISION BROADCASTING COMPANIES Annual Gross Receipts More than P10,000,000 P.Y. P10,000,000 and below P.Y

 Formula: Gross Receipts Rate Franchise Tax

Business Tax Applicable Vat VAT or OPT If the taxpayer opts to pay VAT, it will be irrevocable.

PXXX X% PXXX

 Rate: 1) Gas and Water -- 2% 2) Radio and/or Television Broadcasting Companies - 3% TAX ON OVERSEAS DISPATCHMESSAGE OR CONVERSATION ORIGINATING FROM THE PHILIPPINES (Sec. 120).

 Requisites: 1) There is an overseas dispatch, message or conversation: 2)It originated from the Philippines, 3) It was made through a telephone, telegraph, telewriter exchange,wireless and other communication equipment.  Person Liable - the user of the facility  Formula: Payments for Services Rate Overseas Communications Tax  Exempt Persons: 1) Diplomatic Services 2) International Organizations 3) News Agencies or Services 4) Government

PXXX 10% PXXX

TAX ON BANKS AND NON-BANK FINANCIAL INTERMEDIARIES PERFORMING QUASI-BANKING FUNCTIONS (Sec. 121).  Banks or Banking institutions - refer to those entities as defined under Section 3 of Republic Act No. 8791, otherwise known as the General Banking Law of 2000, or more specifically, to entities engaged in the lending of funds obtained in the form of deposits. The term "banks" or "banking institutions" are synonymous and interchangeable and specifically include universal banks, commercial banks, thrift banks (savings and mortgage banks, stock savings and loan associations, and private development banks), cooperative banks, rural banks, Islamic banks and other classifications of banks as may be determined by the Monetary Board of the BSP. (RR NO. 8-08)  Non-bank Financial Intermediaries - refer to persons or entities whose principal function include the lending, investing or placement of funds or evidences of indebtedness or equity deposited with them, acquired by them or otherwise coursed through them, either for their own account or for the account of others. This includes all entities regularly engaged in the lending of funds or purchasing of receivables or other obligations with funds obtained from the public through the issuance, endorsement or acceptance of debt instruments of any kind for their own account, or through the issuance of certificates, or of repurchase agreements, whether any of these means of obtaining funds from the public is done on a regular basis or only occasionally. (RR NO. 8-08)   Quasi-banking Functions - shall refer to the borrowing of funds from twenty (20) or more personal or corporate lenders at any one time, through the issuance, endorsement or acceptance of debt instruments of any kind other than deposits, for the borrower's own

account or through the issuance of certificates of assignment or similar instruments, with recourse, or of repurchase agreements for purposes of relending or purchasing receivables or other similar obligations. Provided, however, that commercial, industrial and other nonfinancial companies, which borrows funds through any of these means for the limited purpose of financing their own needs or the needs if their agents or dealers, shall not be considered as performing quasi banking functions.

GRT OF BANKS & NON-BANK FINANCIAL INSTITUTIONS PERFORMING QUASI-BANKING OPERATIONS Gross receipts or income derived from Tax Rate  Interest, commissions and discounts from Lending activities and Financial leasing: (a) Remaining maturity period in 5 years or 5% less (b) Remaining maturity period is more 1% than 5 years  Dividends and equity shares in net income of subsidiaries 0%  Royalties, rentals of property, real or personal, profits from exchange and all other items treated as gross income under 7% the Tax Code  Net trading gains within the taxable year on foreign currency, debts securities, 7% derivative and other similar financial instruments

GRT ON OTHER NON-BANK FINANCIAL INSTITUTIONS NOT PERFORMING QUASI-BANKING OPERATIONS Gross receipts or income derived from Tax Rate  Interest, commissions, discounts, and all 5% other items treated as gross income under the tax code  Interest, commissions and discounts from Lending activities and Financial leasing: (a) Remaining maturity period in 5 years or 5% less (b) Remaining maturity period is more 1% than 5 years

TAX ON LIFE INSURANCE PREMIUMS (Sec. 123)  Formula: Premiums Collected Rate Premiums Tax

PXXX 2% PXXX

The following premiums are exempt from tax: 1) Premiums refund within six (6) months after payment on account of rejection of risk or returned for other reason to a person paid the tax.

2) Premiums paid upon re-issuance by a company that has already paid the tax 3) Premiums collected or received by any branch of a domestic corporation, firm, or association doing business outside the Philippines on account of any life insurance of the insured who is a non-resident, if any tax on such premium is imposed by the foreign country where the branch is established.

4) Premiums collected are received on account of any reinsurance, if the insured, in case of personal insurance, resides outside the Philippines if any tax on such premiums is imposed by the foreign country where the original insurance has been issued or perfected: 5) portion of the premiums collected or received by the insurance companies or variable contracts in excess of the amounts necessary to insure the lives of the variable contract workers (as defined in Sec. 232(2) of Presidential Decree No. 612).

6) Premium collected by a purely cooperative company or association.

TAX ON AGENTS OF FOREIGN INSURANCE COMPANIES (Sec. 124).  Persons Liable: 1) Fire, Marine or Miscellaneous Agents of Non-resident Foreign Corporations engaged in insurance business; and 2) Owners of property directly obtaining insurance from Non-resident Foreign Corporations engaged in insurance business.  Agents of Non-resident Foreign Corporations engaged in insurance business  Formula: Premiums Collected

PXXX

Rate

2%

Premiums Tax

PXXX

 Owners of property directly obtaining insurance to Non-resident Foreign Corporation engaged in insurance business

 Formula: Premium Payments

PXXX

Rate

5%

Premiums Tax

PXXX

AMUSEMENT TAXES (Sec. 125).  Persons Liable - Proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-Alai and racetracks.  Formula: Gross Receipts

PXXX

Rate

X%

Amusement Tax PXXX  Gross receipts - embraces all the receipts (such as from television, radio and motion picture rights, if any) of the proprietor, lessee or operator of the amusement places. 

Rates:

Amusement Places Place for Boxing Exhibition Place for professional Basketball games  Cockpits, Cabarets, Night or Day Clubs  Jai-alai and Racetracks  

 *Requisites for Exemption of Boxing Exhibitions: 1) World or Oriental Championships is at stake; 2) One of the contenders is a citizen of the Philippines;and

Tax Rate 0% or 10% 155 18% 30%

3) Promoted by citizens of the Philippines or by a corporation or association at least sixty percent (60%) of the capital of which is owned by such citizen.

TAX ON WINNINGS (Sec. 126).  Persons Liable: 1) Owners of the winning horse; and 2) Bettor in a horse race or jai-alai  Owner of the winning horse Formula: Prize/Winnings

PXXX

Rate

10%

Tax on Winnings

PXXX

 Bettor in a horse race or jai-alai Gross Winnings

PXXX

Less: Cost of the Winning Ticket

(XXX)

Net Winnings

PXXX

Rate

X%

Tax on Winnings

PXXX

Rate: 1) Ordinary Winnings - 10% 2) Special Winnings (Double, Forecast, Quinella, Trifecta) -4% TAX ON STOCKS TRANSACTIONS (Sec. 127).  Kinds of Stock Transaction Tax: 1) Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock Exchange

2) Tax on Shares of Stock Sold or Exchanged through Initial Public Offering  Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock Exchange Requisites: 1) Seller is not a dealer in securities; and 2) Shares sold is listed and traded through the LSE. Formula: Gross Selling Price

PXXX

X Rate

.005 prior to TRAIN Law, .006 TRAIN Law

Stock Transaction Tax

PXXX

 Tax on Shares of Stock Sold or Exchanged through Initial Public Offering Requisites: 1) Sale is made through the LSE; and 2) It is an initial public offering of a "closely held corporation".

Formula: Gross Selling Price

PXXX

Rate

X%

Stock Transaction Tax PXXX Rate:

RATE WILL DEPEND ON THIS RATIO (SHARES SOLD/OUTSTANDING SHARES AFTER THE SALE) Ratio 25% and below More than 25% but not more than 33 1/3% More than 33 1/3%

Rate 4% 2% 1%

"Initial Public Offering (IPO)” refers to a public offering of shares of stock made for the first time in the Local Stock Exchange.

"Closely Heid Corporation" means any corporation at least 50% in value of the outstanding capital stock or at least 50% of the total combined voting power of all classes of stock entitled to vote is owned directly or indirectly by or for not more than 20 individuals.

Person Liable: 1) Primary Offering - Issuing Corporation 2) Secondary Offering - Seller "Primary Offering" refers to the original sale made to the investing public by the issuer corporation of its unissued Shares of Stock, "Secondary Offering" refers to an offer for sale to the investing public by the existing shareholders of their securities which is conducted during an IPO or a follow-on/follow-through offering, "Follow-on/Follow-through Offering of Shares" refers to an offering of shares to the investing public subsequent to an IPO.

RETURN AND PAYMENTS OF PERCENTAGE TAXES Section 116 117 118 119 120 121 122 123

PRIOR TO TRAIN LAW Monthly; 20 days end of the month Monthly; 20 days end of the month Monthly; 20 days end of the month Monthly; 20 days end of the month QUARTERLY; 20 days end of the quarter Monthly; 20 days end of the month Monthly; 20 days end of the month Monthly; 20 days end of the month

TRAIN LAW

QUARTERLY

25 Days end of

124 125 126 127 A

127 B

127 B

Monthly; 20 days end of the month QUARTERLY; 20 days end of the quarter 20 days from the date the tax was deducted 5 banking days from collection date of 5 banking days from date of collection Primary Offering - 30 days date of listing in the LSE Secondary Offering - 5 banking days from date of collection

the quarter

5 banking days from collection

Primary Offering - 30 days date of listing in the LSE from date of listing in the LSE Secondary Offering - 5 banking days from date of collection

QUIZZER Choose the letter of the correct answer.

Principles 1.Statement 1: Other percentage taxes are indirect taxes that can be passed on by person required to pay to another person who shall bear the burden of paying the tax.

Statement 2: Persons and transactions that are subject to the other percentage taxes are no longer subject to the value-added tax but may be subject to excise tax. a. Only statement 1 is correct b. Only statement 2 is correct C. Both statements are correct d. Both statements are incorrect  Answer: C 2. Statement 1: All VAT-exempt taxpayers shall be subject to other percentage taxes.

Statement 2: A taxpayer who is subject percentage tax on his gross receipt will also be subject to income tax on his net income. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect  Answer: B 3. Which of the following is not correct? The percentage tax: a. Is a tax on sale of services. b. May be imposed on sale of goods. c. May be imposed together with the value-added tax. d. May be imposed together with the excise tax.

 Answer: C 4. Which of the following statement is not correct about percentage tax? a. It is a business tax. b. It is a transfer tax. c. It is an ad valorem tax. d. It is not a progressive tax.  Answer: B  Transfer tax is applicable to gratuitous transfers (donation or inheritance) while percentage tax and vat are applicable to onerous taxes.

5. Which statement is wrong? a. Percentage taxes are basically on sales of services. b. Percentage taxes are paid quarterly. c. Percentage taxes are not allowed by law to be shifted to the customers or clients. d. An isolated transaction not in the course of business will not result in a liability for a percentage tax  Answer: C Section 116 - OPT on vat exempt sales and transactions 6. A seller of agricultural food products is vat-exempt. His annual gross sales in 2018 amounted to P3,000,000. To what business tax is he liable? a. 3% tax on vat-exempt persons b. 12% value-added tax c. 3% common carrier's tax d. none of the above  Answer: D 7. Which of the following is subject to 3% percentage tax under Section 116 of the Tax Code? a. Fruit dealer whose gross receipts for 2018 amounted to P2,800,000 only.

b. An individual taxpayer whose gross sales for the year amounted to P100,000. c. School bus operator whose gross receipts for 2018 amounted to P2,500,000 d. None of the above  Answer: D Section 116 shall apply if: 1. The transaction is vat exempt and the reason for vat-exemption is simply because the taxpayer's gross sales or receipts did not exceed the vat threshold of P3M (previously P1,919,500); and 2. The taxpayer is not vat registered.  

If the reason for vat exemption is not because of #s 1 and 2 above, the transaction is not subject to Section 116.

The taxpayer in item “B” is known as Marginal Income Earner (MIE), an individual whose gross sales or receipts during the year is not more than P100,000. MIE is not subject to business tax (Vat and OPT).

8. The taxpayer is a trader of poultry feeds. Determine his applicable business tax. a. Subject to 12% vat b. Vat exempt but subject to 3% OPT under Section 116 c.12% vat or 3% OPT, at his option d. Exempt from 12% vat and OPT  Answer: D  Refer to the explanation in the preceding number  Salle of Poultry Feeds is vat exempt, but the reason for vat exemption is sales did not exceed the vat threshold of P3,000,000 (previously P1,919,500) but because poultry feeds are intended for poultry animals.  SIMPLE GUIDE: If the transaction is in the list of vat exempt sales or transaction AND not in the of transactions subject to vat, such transaction is exempt both from Vat and OPT 9. One of the following is subject to three percent (3%) percentage tax a. Establishments whose annual gross sales or receipts exceed P3,000,000 and who are VAT registered.

b. Businesses whose annual gross sales or receipts exceed P3,000,000 and who are not VAT registered. c. VAT registered establishments whose annual gross sales or receipts do not exceed P3,000,000 d. Establishments whose annual gross sales or receipts do not exceed P3,000,000 and who are not VAT registered.  Answer: D 10. Floyd (self-employed) is a non-vat registered taxpayer who operates a convenience store. The following were provided for 2018: Sales of processed food items

P280,000

Sales of non-food items

P220,000

Purchases of processed food items

P100,000

Purchases of non-food items

P80,000

Salaries of helpers

P48,000

The percentage tax (tax due) is (above amounts are net of taxes) a. P15,000

b.32000

c. P50,000

d. P27,200

 Answer: A  The taxpayer is non-vat registered + his gross sales did not exceed the vat threshold + the transactions are not exempt from vat. Consequently, he is subject to 3% OPT under Section 116 of the Tax Code, as amended.  OPT = (P280,000 + 220,000) X 3% = P15,000 11. Assume Floyd opted to be taxed at 8% on his gross sales and receipts, his applicable business tax is: a. Subject to 12% vat b. Vat exempt but subject to 3% OPT under Section 116 c.. 12% vat or 3% OPT, at his option d. None of the above

 Answer: D  The 8% optional tax under TRAIN Law is in LIEU of Graduated income and Section 116 of the Tax Code. Obviously, if the taxpayer is subject to Section 116, he is no longer subject to vat.

12. Ana has the following data for 2018 the taxable year.

Gross sales

P2,850,000

Collections

1,420,000

IF Ms. Ana is a seller of goods, her business tax for the year should be a. P42,600 OPT

c. P170,400 vat

b. P85,500 OPT

d. P342,000 vat

 Answer: B  OPT = P2,850,000 X 3% = P85,500  The basis of business tax for sale of goods is gross sales, 13. If Ms. Ana is a seller of service her business tax for the year should be a. P42,600 OPT

c. P170 400 vat

b. P85,500 OPT

d. P342,000 vat

 Answer: A  OPT = P1,420,000 x 3% = P42,600  The basis of business tax for sale of service is gross receipts or collection.

14. If Ana is vat registered a. She is subject to 12% vat b. She is subject to OPT under Section 116 c. She is subject to 12% vat or 3% OPT, at her option d. She is exempt from OPT under Section 116 if she opted to be taxed at 8%  Answer: A  The 8% optional tax is not applicable to vat registered taxpayers.

15. If Ana is a taxi operator a. She is subject to 12% vat

b. She is subject to common carrier's tax under Section 117 c. She is subject to 12% vat or 3% common carrier's tax, at her option d. She is exempt from OPT ifis she opted to be taxed at 8%  Answer: B  The 8% optional tax is not applicable to taxpayers who are subject to OPT other than Section 116 of the Tax Code, as amended.

Section 117 Common Carriers Tax on Domestic Common Carriers 16.This refers to persons, corporations, firms or associations engaged in the business or carrying of transporting passengers or goods or both, by land water and air for compensation, offering their services to the public and shall include transportation contractors . a. Common carriers; b. Dealers in securities; c. Lending investors; d. Franchise grantees.  Answer: A 17. A person whose business is to keep automobiles for hire or keep them stored for use or order, a. Keepers of garage b. Common carrier c. Taxicab operator d. Tourist bus operator  Answer: A 18. A keeper of garage whose gross receipts for 2018 exceed P3,000,000 is subject to: a. Value-added tax b. Garage sales tax c. Common carriers tax d. Franchise tax.

 Answer: C  A keeper of garage is subject to common carrier's tax regardless of the amount of its gross receipts.

19. Which of the following is subject to the 3% common carrier's tax? a. Transportation contractors on their transport of goods or cargoes. b. Common carriers by air and sea relative to their transport of passengers c. Owners of animal-drawn two-wheeled vehicle. d. Domestic carriers by land for the transport of passengers.  Answer: D 20. Statement 1: The gross receipts of common carriers derived from their incoming and outgoing freight shall be subject to the local taxes imposed under the Local Government Tax Code.

Statement 2: The 3% common carrier's tax is based on the actual quarterly gross receipts or minimum quarterly receipt whichever is lower. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect  Answer: D 21. A non-vat registered transportation contractor is engaged in the transport of passengers, goods and cargoes. What business taxes is he liable? a. 12% value-added tax; b.3% common carrier's tax; c.. 3% tax on VAT-exempt persons on gross receipts from transport of goods and cargoes and 3% common carrier's tax on gross receipts from transport of passengers; d. 12% VAT on gross receipts from transport of goods and cargoes and 3% common carrier's tax on gross receipts from transport of passengers.  Answer: C

22. Using the same information in the preceding number, except that he is a vat-registered.

What business taxes is he liable to? a. 12% value-added tax; b. 3% common carrier's tax; c. 3% tax on VAT-exempt persons on gross receipts from transport of goods and cargoes and 3% common carrier's tax on gross receipts from transport of passengers. d. 12% VAT on gross receipts from transport of goods and cargoes and 3% common carrier's tax on gross receipt from transport of passengers.  Answer: D 23. One of the following statements is wrong: Operators of transport facilities are a. Subject to the value-added tax on gross receipts from transporting passengers. b. Subject to the value-added tax on gross receipts from transporting goods and cargoes. c. Subject to percentage tax on gross receipts from transporting passengers. d. Subject to the value-added tax on gross receipts from renting out its transportation facilities.  Answer: A 24. A domestic carrier by land is engaged in the transport of goods. It is not VAT-registered and its annual gross receipts do not exceed P3,000,000 during 2018. To what business taxes is it liable? a. 12% value-added tax b. 3% OPT under Section 116 c.3% common carrier's tax under Section 117 d. Not subject to business tax  Answer: B 25.Assume the annual gross receipts in the preceding number exceeded vat threshold of P3,000,000during 2018.To what business taxes is liable? a. 12 %value-added tax b .3% OPT under Section 116

c. 3 %common carrier’s tax under Section 117 d. Not subject to business tax  ANSWER: A 26. A domestic carrier by sea is engaged in the transport of passengers, goods and cargoes. It is not VAT registered and its annual gross receipts do not exceed P3,000,000 during 2018.To what business taxes is liable? a. 12% value-added tax b. 3% OPT under Section 116 c. 3% common carrier’s tax due under Section 117 d .Not subject to business tax  ANSWER: B 27.Assume the annual gross receipts in the preceding number exceeded the revised vatthreshold of P3,000,000 during 218.To what business taxes is liable? a.12% value-added tax b.3%OPT under Section 116 c,3% common carrier’s tax under Section 117 d.Not subject to tax  ANSWER: A 28.A domestic carrier by land is engaged in thetransport of passengers.It is not VAT-registered and its annual gross receipts do not exceed P3,000,000during 2018.To what business taxes is liable? a. 12% value-added tax b. 3% OPT r Section 116 c. 3% common carriundeer’s tax due under Section 117 d .Not subject to business tax  ANSWER: C

29.Assume the annual gross receipts in the preceding number exceeded the revised vat threshold of P3,000,000 during 2018.To what business tax is it liable? a.12% value-added tax a. 12% value-added tax b.3%OPT under Section 116 c,3% common carrier’s tax under Section 117 d.Not subject to tax  ANSWER: C SIMPLE GUIDE 

If it involves transport of passengers by land by domestic, carriers, it is subject to Common Carrier’s Tax under Section 117 of the Tax Code regardless of the amount annual gross receipts. Otherwise, vat (in general, but it may also be subject to Section 116 if the taxpayer is non-vat registered + the annual gross receipts do not exceed the vat threshold)

30.Which of the following is subject to the 3% common carrier’s tax? a.Transportation contractors on their transport of goods or cargoes. b.Common carriers by air and sea relative to their transport of passengers. c.Owners of animal-drawn-two wheeled vehicles. d.Domestic carries by land for the transport of passengers.  ANSWER: D 31.Maharlika Airlines, a domestic corporation plying domestic routes, had the following gross receipts for the month ended April 2018:carriage of passengers,P4,500,000;carriage of cargo.P7,000,000.The correct amount of business tax for the month ended April 2017 is: a.P0

c.P345,000

b.P135,000

d.2

P1,380,000

 ANSWER: B  Business tax(vat)=(P4.5M+P7M)x12%=P1,380,000  Domestic airline companies are not subject to common carrier’s tax Use the following data for the next (2)two question:

32.Rianne is an operator of ten(10) buses with routes from Manila to Subic and is likewise a transportation contractor with three(3) freight trucks. For the taxable year 2018, he reported gross receipts from his bus operations of P3,000,000.His gross receipts, however, from his freight of goods or cargoes amounted only P800,000 or the year. a.P1,080,000

c.P1,176,000

b.P1,104,000

d.P4,416,000

 ANSWER: B Common carrier’s tax= P36Mx3% Section 116=P800,000x3% Total business tax

P1,080,000 24000 1104000

33.Assuming Rianne is non-vat registered, how much is his total business tax due? a.P1,080,000

c.P1.176,000

b.P1,104,000

d.P4,416,000

 ASWER: B Percentage Taxes Common carrier's tax = P36M X 3% VAT = P800,000 x 12% Total business taxes

P1,080,000 96,000 1,176,000

34. Pedro is a jeepney operator. He is also engaged in the business of leasing residental units. His gross receipts from his jeepney operation amounted to P5,000,000 for the year. The monthly rental of the residential units is P14,000 with a total annual gross receipts of P3,500,000 for 2018.

Which of the following is correct? a. Pedro is required to register under the vat system b. Pedro may apply for optional vat registration c. Pedro is exempt from business and income tax d. None of the above  Answer: D  He is not required to register under the vat system nor apply for optional vat registration because his business activities are not subject to vat.  He is not exempt from business tax. He is subject to common carrier's tax under Section 117 of the Tax Code.

35. All of the following, except one, are not subject to common carrier's tax a. owner of a parking lot/building b. rent-a-car companies c.. common carriers engaged in carriage of goods or cargo d. domestic airline companies  Answer: B; Choices “a, c and d" are subject to vat.

36. Isarog is a vat registered common carrier with passenger buses and cargo trucks. For the month of June 2018, it had the following data on revenues and receipts, taxes not included: o o

For transporting passengers, gross revenues and receipts of P330,000.

For transporting cargoes, gross revenues of P220,000, of which P200,000 was received o For renting out to the MMDA its towing trucks, gross receipts of P50.000, represenung P10,000 from gross revenue of the quarter ending March 31 and P40,000 for the month of June.

The percentage tax is: a. P1,500 c. P15,900 b. P9,900 d. P17,400  Answer: B  Common Carrier's Tax under Section 117 = P330,000 x 3% = 29.900  The basis of business tax if from sale or service is collections or receipts. regardless of when the it was earned.

37. The value added tax is: a. P24,000 c. P28,800 b. P30,000 d. P25,000  Answer: B  12% Vat = (P200,000 + 50,000) x 12% = P30,000 38. Milagros Lines, a VAT-registered person, has the following gross receipts in February Bus 1 (carriage of goods, 218,000) 100,000 100,000 Bus 2 (carriage of goods, P13,500) 165,000 Taxi 90,000 Jeepney 35,500 Cargo truck 45,000 Sea vessel 250,000 Additional Information:  Salaries of drivers and conductor 125,000  Cost of oil and gasoline 175,000

During the month, Bus 1 was bumped by another bus owned by Mandaon Lines and paid Milagros Lines R120,000 for the damage.

The percentage tax due on Milagros Line in February is: a P10,770 c. P11,715 b. P14,370 d. nil  Answer: A Solution Bus 1 = P100,000 - 18,000 = P82,000 Bus 2 = P165,000 - 13,500 151,500 Taxi 90,000 Jeepney 35,500 Total P359.000 X 3% OPT;CCT P10770  Ignore income and expenses for business taxation purposes.

39. The total business taxes in the preceding number should be: a. P10,770 c. P49,950 b. P39,180 d.nil  Answer: C Solution OPT (refer to the preceding number) P10,770 VAT Carriage of goods (P18,000 + 13,500) 31,500 Cargo truck 45,000 Sea vessel 250,000 Total P326,500 X 12% 39,180 Total Business Taxes P49950 40. is a pool of land transportation vehicles whose accessibility to the riding public is facilitated through the use of common point of contact which may be in the form of text, telephone and/or cellular calls, email, mobile applications or by other means. a Domestic common carriers b. International carriers c. Transportation network vehicle services (TNVS) d. Partners  Answer: C 41. The owner(s) of the vehicles, other than the TNVS, used in transporting passengers and/or goods in TNVS, shall be referred herein as a Domestic common carriers b. International carriers c.Transportation network vehicle services (TNVS) d Partners

 Answer: D 42 Statement 1 Under RMC 70-2015, transport network vehicle services, such as but not limited to the likes of UBER, GRAB TAXI, their Partners/suppliers and similar arrangements, which are holders of a valid and current Certificate of Public Convenience for the transport of passengers by land, shall be subject to 3% common carriers tax under Sec. 117 Statement 2 Transport network vehicle services, such as but not limited to the likes of UBER, GRAB TAXI, their Partners/suppliers and similar arrangements, which are not holders of a valid and current Certificate of Public Convenience for the transport of passengers by land, shall also be subject to 3% common carriers tax under Sec. 117. a.Only statement 1 is correct b. Only statement 2 is correct c.Both statements are correct d.Both statements are incorrect  Answer A  Statement 2 - shall be subject to 12% vat.

Section 118 Common Carrier's Tax on International Camera 43. The 3% percentage tax on international carrier is imposed upon

International air carrier doing business in the Philippines Yes No Yes No

International shopping doing business in the Philippines Yes No No Yes

Statement 1 True True False False

Statement 2 True False False True

a b c d  Answer: A 44. Statement 1 Domestic common carriers are subject to 0% on its flight originating from abroad to the Philippines.

Statement 2: Resident international carriers are subject to the 0% VAT on its gross Philippine billings on flight orginating from the Philippines to a foreign destination

a b c d

 Answer: C GUIDE: Domestic Common Carriers  On their transport of passengers by land = Sec. 117 D  On their transport of goods or cargoes including mails, by land = 12% vat

On their domestic transport from and to the Philippines of passengers, goods/cargoes, and mails by air or by sea = 12% val.  On their international flights and shipments originating from the Philippines to a foreign country = 0% vat  On their international flights and shipments originating from abroad to the Philippines = exempt from business tax.

International Carrier  On their transport of passengers on their international flights and shipments originating from the Philippines to a foreign country * exempt from business tax International Carrier  On their transport of goods/cargoes and mails on their international flights and shipments originating from the Philippines to a foreign country Section 118; Common Carriers tax on international Carriers  On their international flights and shipments originating from abroad to the Philippines - exempt from business tax.

45.Determine the carrier that is subject to the Percentage Tax ; a.Resident foreign corporation operating as an international shipping carrier b. Non-resident foreign corporation operating as an international air carrier c.Domestic corporation with international flights d. Domestic corporation with international voyages  Answer: A  Nonresident foreign corporations operating as international carriers are not subject to CCT under Section 118 of the Tax Code because they are not operating in the Philippines  Domestic carriers on their international flights and shipments originating in in the Philippines are subject to 0% vat, not CCT. 46 .Statement 1:International air carriers and international shipping carriers shall not be subject to 12% value added tax but to 3% common carrier's tax based on gross receipts derived from their transport of passengers and goods from Philippines to other countries. Statement 2. In cases when the Gross Philippines Billings Tax of 2.5% for international carrier’s is not applicable (ie, tax exempt based on reciprocity or treaty), the common caarrier’sntax under Section 118 of the NIRC, as amended, shall still apply. 

Statement 1 Statement 2

A True True

B True False

C False True

D False False

 Answer: C  Statement 1. Gross receipts from transport operations shall be excluded.

47.Statement 1 Banks are subject to the VAT on its interest income.

Statement 2. Resident international carriers are subject to the 0% VAT on its gross Philippine billings on flight originating from the Philippines to a foreign destination.

a b c d

Statement 1 True True False False

Statement 2 True False False True

 Answer: C 48 .The Republic of Korea, as an act of goodwill, does not impose business taxes to Philippine carriers Korean Air is operating in the Philippines having two flights a week. If You were engaged by Korean air as its tax consultant and asked you whether it is liable to percentage tax which of the following will be your advice? a.Korean Air is liable to percentage tax based on gross receipts from passengers, goods, cargoes and mails b. Korean Air is liable to percentage tax based on gross receipts from passengers c. Korean Air is liable to percentage tax based on gross receipts from goods, cargoes and mails only. d.Korean air is not liable to percentage based on the principle of reciprocity.  Answer: C  Unlike in income taxation for International carriers, reciprocity is not applicable to Section 118 (common carrier's tax on international carriers) of the Tax Code.

Section 119 - Franchise Tax 49.

49.A right or privilege granted by the State to a person, individual or corporation, to operate a public utility such as radio broadcasting, television station, electric light system, telephone company, gas, and water utilities. a. Franchise c. Dealers in securities b. Common carriers d. Lending investors  Answer: A 50. Statement 1: A franchise is a privilege to serve the public acquired by special grants from private organizations.

Statement 2: There are franchise holders whose gross receipts are subject to 12% vat even if not vat registered. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct.  Answer: D 51. Which of the following franchise grantees is subject to the franchise tax? a Franchise on radio and/or television broadcasting companies the annual gross b.receipts in the preceding year exceed P10,000,000. b. Franchise on gas and water utilities. c. Franchise on toll road operations. d. PAGCOR and its licensees and franchisees.  Answer: B

Radio and/or television broadcasting whose gross receipts in the preceding year exceed P10,000,000 shall be subject to value added tax.  Although there are other franchises granted by the government such as but not limited to electric companies, cable companies and telecom companies, the term "Franchise Tax" shall pertain only to franchise tax levied under Section 119 of the Tax Code, as amended.

52. Statement 1: Radio and/or television broadcasting whose gross receipts in the preceding year did not exceed P10,000,000 shall have an option to be registered as value-added taxpayer Statement 2: Once a radio and/or television broadcasting franchise grantees registered as value-added taxpayer, the registration shall not be revoked. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct.  Answer: A 53. A franchisee, had the following data on revenues and receivables in 2017 

Quarter ended, March 31, 2017 Covered by the franchise Not covered by the franchise

Revenues

AR, beg

AR, end

P4,000,000

P600,000

P800,000

1,200,000

160,000

If the franchisee is generating and selling electricity, the correct amount of business tax is a. a.P200,800 c. P580,800 b. P456,000 d. P238,800  Answer: C Solution: Covered by the franchise: Revenues P4,000,000 Add: AR, beg.

600,000 Less: AR, end (800,000) = Collections P3,800,000 Not Covered by the franchise: Revenues P1,200,000 Add: AR, beg.

Less: AR, end (160,00) = Collections P1,040,000 Total collections P4,840,000 x Vat Rate 12% Value Added Tax P580,800

Sale of electricity is subject to vat instead of franchise tax under Section 119 of the Tax Code 54.If the franchisee is a gas and water utilities, the correct amount of business tax is: a. P200,800 c. P580,800 b. P456,000 d. P238,800  Answer: A Solution: Covered by the franchise Revenues P4,000,000 Add AR, beg 600,000 Less AR, end (800,000) = Collections P3,800,000 x Franchise Tax Rate 2% P76,000 Not Covered by the franchise Revenues P1,200,000 Add: AR, beg Less AR, end (160,000) = Collections P1,040,000 x Vat Rate 12% 124,800 Total Business Tax P200,800  The gross receipts from those covered by the franchise is subject to the applicable franchise tax rate, regardless of the amount of the gross receipts.  The gross receipts not covered by the franchise is subject to vat because the gross receipts for the taxable year will obviously exceed the vat threshold 55.If the franchisee is a radio television broadcasting company, the correct amount of business tax is: a. P200,800 c. P580,800 b. P456,000 d.P238,800 d. P238,800  Answer: D Covered by the franchise: Revenues P4,000,000 Add: AR, beg.

600,000 Less AR, end (800,000) = Collections P3,800,000 x Franchise Tax Rate 3% P114,000 Not Covered by the franchise Revenues P1,200,000 Add AR, beg.

Less AR, end (160,000) =Collections P1,040,000 x Vat Rate 12% 124,000 Total Business Tax P238,800 

56.Dulwagan ng katotohan Broadcasting Company, a non-vat holder of a franchise to operate a radio and television network provided the following data (net of any tax) Year 2016 2017 2018

Gross Receipts P9,000,000 12,000,000 10,000,000

The business tax liability is a b c d

2016 P270,000 1,080,000 270,000 1,080,000

2017 P360,000 1,440,000 360,000 350,000

2018 P1,200,000 1,440,000 300,000 360,000

 Answer: A  2016 P9,000,000 x 3% P270,000 D  2017 P12M X 3% = P360,000, Gross receipts preceding years P10M, apply 3% Franchise Tax  2018 = P10,000,000 x 12% P1,200,000 Gross receipts preceding year > P10M, subject to vat 57. Gallaxy Transport Corporation is a holder of franchise from the government to offer passenger and cargo transport operations by land. Its gross receipts from passenger operations amounted to P10,000,000 while its gross receipts from cargo operations amounted to P2,000,000 How much is the franchise tax due for the month? a P300,000 c. P1,440,000 b. P540,000 d. PO  Answer D  The gross receipts from passenger operations by land is subject to CCT under Section 117, not Franchise Tax under Section 119 of the Tax Code,  The gross receipts from cargo transit operations is subject to vat, instead of Franchise Tax under Section 119 of the Tax Code, 58 .Using the same data in the preceding paragraph, how much is the total business taxes due for the month? a P300,000 c. P1,440,000 b. P540,000 d.PO  Answer B Passenger operations (CCT) PIOM X 3% P300,000 Cargo operations (Val) P2M X 12% 240,000 Total Business Taxes P540,000

Section 120 - Overseas Communications Tax 59. A telephone company, VAT-registered, provides services for domestic and overseas

calls. What business taxes are due from the services offered?

I Value-added tax for domestic calls II. Overseas communications tax for overseas calls. a. I only c. Both I and II b. ll only d. Neither I nor ll  Answer: C GUIDE:  Local communications = 12% vat  Overseas originating in the Philippines = 10% OCT under Section 120  Overseas originating abroad = not subject to business tax 60. One of the following is subject to overseas communications tax: a.Long distance call by a son from Manila to his father in lloilo City. b. Monthly telephone bill from PLDT. c. Telephone bill on a call by a mother in the Philippines to her son in London. d. Telephone call by Magda in Hongkong to her friend in Manila.  Answer: C  a" and "b", subject to vat O "  "d’’ not subject to business tax 61. Smart-Globe Telecommunications has the following data for a particular month: Gross receipts, domestic calls Gross receipts, overseas calls (originating in the Philippines) Purchase of supplies used in connection with domestic calls net 300,000 of Vat Purchase of equip. used in connection with both domestic calls 300,000 and overseas calls, net of VAT Business expense

P5,000,000 3,000,000 300,000 800,000

1,000,000

How much is the overseas communications tax collected from persons who used the communications facilities? a. P300,000 c. P800,000 b. P500.000 d. nil  Answer: A  OCT = P3,000,000 x 10% = P300,000 62. Using the same data in the preceding number, how much is the vat payable? a. P420,000 c. P504,000 b. P470,000 d.nil  Answer: A Solution: Output vat (P5M X 12%) P600,000 Input vat Directly attributable = P300,000 x 12% (36,000)

Allocated = P800,000 x 12% (60,000) Vat Payable P504,000 63. Which of the following statements is false? a. BBC, an international news agency, is required to pay 10% percentage tax from messages originating from the Philippines by telephone or telegraph. b. Amounts paid for messages transmitted by an embassy and consular offices of a c.foreign government is not subject to 10% overseas communications tax.

The Overseas communications initiated by a resident citizen not engaged in trade or business is subject to overseas communication tax d. None of the above  Answer: A EXEMPT from ОСТ:  Diplomatic Services  International Organizations  News Agencies or services  Government 64. One of the following statements is incorrect a.Overseas communications tax is imposed on overseas communications originating from the Philippines, b. The person liable to overseas communications tax may or may not be engaged in any trade or business c.The overseas communications tax is imposed whether the overseas communications are made in the course of trade or business or not d.The overseas communications tax is imposed on the owner of the communication facilities used to make overseas communications.  Answer: D  "D" is wrong. It is imposed on the user of the facility 65. Moon Telecom Inc. has the following collections for the month of April 2018: Overseas call originating abroad P1,120,000 Overseas call originating in the Philippines 880,000 Local calls 2,240,000 How much is the overseas communications tax to be remitted by Moon for the month? a. P220,000 c. P200.000 b. P30,000 d.P80,000  ANSWER: D Solution: Collections P880,000 X 100/110 Revenues exclusive of OCT P800,000 X OCT % 10% OCT P80,000 Journal entry; Dr. Cr. Cash P880,000

OCT expense 80,000 Revenues P880,000 OCT Payable 80,000  NOTE; Percentage Taxes, except Stock Transaction Taxes under Section 127(B) of the Tax Code are classified as operating expenses for income taxation purposes.  The overseas calls originating abroad is not subject to business tax in the Philippines.

66. Based on the preceding number, how much is the output tax? a. P240,000 c. P360,000 b. P454,286 d. P268,800  Answer: A Solution Solution: Collections P2,240,000 X 100/112 Revenues exclusive of OCT 2,000,000 X OCT % 12% OCT P240,000 Journal Entry Dr. Cr. Cash P2,240,000 Revenues P2,000,000 Output vat P240,000  Unlike percentage taxes, vat on sale (output vat) is not classified as operating expenses. Itis a tax credit against output vat.

Section 121 and 122-Gross Receipts Tax 67. Which of the following is subject to Other Percentage Taxes?

I.Banks II.Financing/ credit Companies IIl. Pawnshops IV. Duly registered Credit Cooperatives a. I and II only c. 1, 11, III and IV b. l, ll and ill only d. None of the above  Answer: B 68. Banko Natin sold a repossessed car to JJ at P1,000,000. Banko Natin is I.Subject to value added tax II. Subject to gross receipts tax of 7% III. Subject to regular corporate income tax a. lll only c. ll and Ill only b. I and III only d. None of the above  Answer: C 69. Maharlika Bank purchased machineries from a VAT supplier. What is the treatment for

VAT purposes of the sale transaction considering that banks are subject to percentage taxes under Sec. 121 of the Tax Code? a. 0% vat c. exempt from vat b. 12% vat d. percentage tax  Answer: B  Although banks and other financial institutions are not subject to value added tax but to gross receipts tax under Section 121 of the Tax Code, it does not follow that sale of vatable goods to them is no longer subject to vat. Sale of machineries are subject to vat. Consequently, sale of such items to a banking institution is subject to vat.

70. Which of the following is subject to Gross Receipts Tax? I.Pawnshops/money changers II.Credit cooperatives III. Lending activities of multi-purpose cooperatives.

I II III

A Yes Yes Yes

B Yes No No

C Yes No Yes

D No No No

 Answer: B  Other non-bank financial intermediaries, such as money changers and pawnshops, are subject to percentage tax under Sections 121 and 122. respectively, of the Tax Code. (Sec. 4.109-1 (B)(w), RR 4-2007) 71.A pawnshop for business tax purposes a.is treated as a lending investor liable to 12% vat on its gross receipts from interest income and from gross selling price from sale of unclaimed properties b. Is not treated as a lending investor but liable to 5% gross receipts tax under Section 122 of the Tax Code on its gross receipts from interest income and from gross selling price from sale of unclaimed properties, c.Is exempt from 12% vat and OPT d.is subject to 12% vat and OPT  Answer: 8; (Sec. 4. 109-1 (B)(w), RR 4-2007] 72. Piggy Bank has the following data for the month of January 2018: Interest income, the remaining maturity of the instrument is 5 years Rentals (gross of 5% expanded withholding tax) Net trading loss

P100,000 50,000 (10,000)

How much is the gross receipts tax on the collections of Piggy for January 2018? a P5,000

c.P7,800

cP7,800 b. P3,500 d. P8,500  Answer: D Interest income - from short term loan = P100 000 x 5% P5,000 Rental income - P50,000 x 7% 3,500 Gross receipts tax P8,500 73. In addition to the information in the preceding number, Piggy Bank has the following information for the month of February 2018 Interest income, the remaining maturity of the instrument is 6 years P100 000 Rentals (gross of 5% expanded withholding tax) 50 000 Net trading gain 20.000 How much is the gross receipts tax on the collections of Piggy for February 2018? a P5,200 c.P9,200 b.P5,900 d P9,900  Answer: A interest income - from long term loan = P100,000 x 5% P1,000 Rental income - P50,000 x 7% 3,500 Net trading gain = (P20.000-10 000) x 7% 700 Gross receipts tax P5,200  Apply cumulative rule as to net trading gain 74, Pedro executed on January 1, 2014, a long term loan from PRTC Bank in the amount of 6,000,000 payable within ten (10) years, with an annual interest of 2% However, on January 31, 2018, the loan was pre-terminated. Assuming PRTC Bank declared correctly the interest from 2014 to 2017 and the applicable gross receipts taxes were paid, how much gross receipts tax should be paid for the year 2018? a. P100 c. P19,700 b. P24,500 d. P500  Answer: C GRT payment from Jan 1, 2014 to Dec 31, 2017 (4,800) (P6,000,000 x 2% x 4 years) x 1% Adjusted GRT (POM X 2% x 4 x 5%) 24,000 Adjustment (deficiency) 19,200 Add: GRT for January 2018 (P6M x 2% /12months) x 5% 500 Total Gross Receipts Tax, Jan 31, 2018 21,000 75. December 1, 2013, Rianne borrowed P1,000,000 from BDO payable within 10 years.

The loan pays an annual interest of P100,000 payable every December 1 beginning December 1, 2014. On December 1, 2018, Riannne pre-terminated the loan by repaying the principal in full. The gross receipts tax still due from BDO due to the pre-termination in 2018 is: a. P5,000 c. P21,000 b. P16,000 d. P25,000  Answer: C GRT payment from Dec. 1, 2014 to Dec. 1, 2017 P4,000 (P100,000 x 4 years) x 1%

Adjusted GRT (P400,000 x 5%) Adjustment (deficiency) Add: GRT for 2018 = P100,000 x 5% Gross Receipts Tax Due, Dec 1, 2018

20,000 P16,000 5,000 P21,000

76. DU30 Bank extended loans to its debtors during the year, with real properties of the debtors being used as collateral to secure the loans. When the debtors failed to pay the unpaid principal and interest after several demand letters, the bank foreclosed the same and entered into contracts of lease with tenants. The bank is subject to business tax as follows: | | 12% vat II. 7% gross receipts tax a.l only c. Both I and II b. ll only d. Neither or nor  Answer: B Section 123 - Premiums Tax on Life Insurance Section 124 - Premiums Tax on Agents of Foreign insurance companies 77. Statement 1: The tax on insurance premiums applies to every person, company or corporation doing life insurance business of any sort in the Philippines, except purely cooperative companies and associations, Statement 2: A person engaged in non-life insurance business is subject to value-added tax a.Both statements are correct.

c.Only the first statement is correct.

b. Both statements are incorrect.

d. Only the second statement is correct

 ANSWER: A 78. Statement 1: The tax on life insurance premiums is 2% based upon the total premiums collected whether such premiums are paid in money, notes, credits, or any substitute for money.

Statement 2: The tax on agents of foreign insurance companies is 4% based upon the total premiums collected. a.Both statements are correct. b.Both statements are incorrect. c.Only the first statement is correct. d.Only the second statement is correct.  Answer: A 79. Statement 1: All insurance premium collected by life insurance company is subject to 2% gross receipt tax.

Statement 2: A life insurance premium refunded within six (6) months is not subject to a 2% percentage tax. a. Both statements are correct. b. Both statements are incorrect. c.

Only the first statement is correct. d. Only the second statement is correct.  Answer: A 80. Section 124 of the Tax Code, as amended, provides that every fire, marine or miscellaneous insurance agent authorized under the insurance Code to procure policies of insurance as he may have previously been legally authorized to transact on risks located in the Philippines for companies not authorized to transact business in the Philippines shall pay a tax equal to:  Answer: B  The tax rate, as provided in the Tax Code, is twice of Section 123.

81. A domestic insurance company gave the following information for the more Gross receipts from its insurance policies Premium on life insurance P2, 100, 000 Premium on non-life insurance 1, 500, 000 Gross receipts as agent of a non-resident foreign insurance co.

Premium on non-life insurance P4, 000, 000 Premium on property insurance 1, 000, 000 The percentage tax due for the month is a. P355,000 c. P242.000 b. P430,000 d. P605 000  Answer: C Solution: Gross receipts from its insurance policies Premium on life insurance P2, 100.000 x 2%) P42, 000 Gross receipts as agent of a non-resident foreign insurance company Premium on non-life insurance (P4 000 000 %414) 160, 000 Premium on property insurance ( P1, 000, 000 x 4% ) 40,000 Percentage Tax for the month P242, 000 82. Pro-Life Insurance is engaged in business. It also serves as an agent of a marine non-resident foreign insurance company. It has the following data for the current month.

Total premium collected as an agent of a foreign insurance company Total premiums collected from non-life insurance in the Philippines Purchase of supplies for use in non-life business in the Philippines

P2 000 000 500.000 300,000

How much is the tax for total premiums collected as an agent of a foreign insurance company? a. P80.000 c. P40.000 b. P100,000 d. P20,000  Answer: A  Tax on Agents of Foreign Insurance Co. = P2.000.000 x 49% = P80.000 83. Using the same data in the preceding problem how much is vat payable? a. P24, 000 c. 40, 000 b. P52, 800 d. P20, 000  Answer: A Output vat (P500 000x1200) Less Input vat (P300.000 * 129) Vat payable

P60,000 (36, 000) 24, 000

84. Mabuhay insurance Corporation furnished us its data shown below.  Insurance Premiums collectible is 23,750,000  The breakdown of the above premiums is as follows: Life Insurance Premiums 75% Non-life insurance premiums 25%  During the month, 70% of collectible life insurance premiums and 50% of collectible non-life insurance premiums were collected.

The Premiums Tax payable is: a. P39, 375 c. P94, 437.50 b. P78, 750 d. P196, 875  Answer: A Insurance premiums collectible X X Total premiums collected on life insurance X Premiums Tax Payable

P3,750,000 75% 70% P1,968,750 2% P39,375

85. Using the same data in the preceding number, the total business taxes should be: a. P39 375 c. P95, 625 b. P56, 250 d. P120, 000

 Answer: C Premiums Tax Payable (preceding number) Output Vat (P3,750,000 x 25% x 50% x 12% )

P39,375 56,250

Total business taxes for the month

P95,625

86. Pedro wants to procure fire insurance for his Mansion in Forbes Park, Makati from Gallaxy Insurance Company, a non-resident foreign corporation, through its agent in the Philippines. G.I. Joe. He paid premiums in 2018 amounting to R500,000. How much is the premiums tax payable on the transaction? a. P10,000 c. P25,000 b. P20,000 d. P50,000  Answer: B  Premiums Taxon Agents of Foreign Insurance Co. = 2500.000 X 4% = P20.000 87. Using the same information above, but assuming Pedro directly obtained the insurance policy from Gallaxy Insurance Company, how much is the premiums tax payable on the transaction? a. P10.000 c. P25,000 b. P20,000 d. P50,000  Answer: C  Premiums Tax = P500,000 x 5% = P25.000 88. A tax on the right or privilege to enter places of amusement a. value added tax c. amusement tax b. franchise tax d. income tax  Answer: C 89. The operator of one of the following places is not subject to amusement tax. a. Cockpits c. 56,250 b. Racetracks d. KTV Karaoke joints  Answer: C  Bowling alleys are subject to vat, not amusement tax.

90. One of the following is a correct amusement tax rate: a.30% on jai-alai and racetracks b.15% on cockpits, cabarets, night and day clubs c.18% on boxing exhibitions d.10% on professional basketball games  Answer: A

a. b. c.

cockpits, cabarets, night and day clubs shall be 18% boxing exhibitions shall be 10% o professional basketball games shall be 15%

91. One of the following is an incorrect amusement tax rate: a. Jai-alai and racetracks - 30% b. Cockpits, cabarets, night and day clubs - 18% c. Professional basketball games - 15% d. Boxing exhibitions - 12%  Answer: D 92. One of the following is subject to amusement tax on gross receipts a.

Owners of winning racehorses. b.

Proprietors of karaoke KTV houses. c.

Owners of winning cocks in the cockpits d.

Lessees of bowling alleys  Answer: B  Owners of winning racehorses are subject to percentage tax on winnings under Section 126 of the Tax Code, not amusement tax.  Owners of winning cocks in the cockpits are subject to income tax only  "D" is subject to vat 93. Gross receipts for amusement tax shall include all the following except one which one is it? a. Income from television, radio and motion picture rights b. Income from sale of tickets c. Income from sale of food and refreshments within the amusement place d. Income from sale of food and refreshments outside the amusement place  Answer: D 94. Statement 1: All boxing exhibitions held in the Philippines shall be subject to amusement tax.

Statement 2: Admission charges to amusement places are required for the imposition of amusement tax a.Both statements are correct. b.Both statements are incorrect. c.Only the first statement is correct. d.Only the second statement is correct.  Answer: B 95. Apol B., a Filipino citizen, promoted a world boxing championship bout in the Philippine Arena in Bocaue, Bulacan featuring Manny Pacquiao, a Filipino champion, and Lucas Matthysse, dubbed as "Fight of Champions”. Gate receipts amounted to P30, 000,

000 and additional receipts from television coverage was P20, 000,0 00. The amusement tax due is: a.P2, 000, 000 c. P5, 000, 000 b.P3, 000, 000 d. nil  Answer: D 96. Assuming the bout above will be held in Malaysia, how much is the amusement tax? a.P2, 000, 000 c. P5, 000, 000 b.P3, 000, 000 d. nil  Answer: D 97. Assuming the bout is in the Philippines but the promoter, Apol B., is a foreign national, how much is the amusement tax? a. P2,000,000 c. P5,000,000 b. P3,000,000 d. nil  Answer: C 

Amusement Tax = (P30M + P20M) 10% = P5M

98. Zirkon, a comedy bar, had the following data during the month of March 2018 Net income during the month P160,000 Collections during the month: From services rendered in January 200,000 From services rendered in February 1,200,000 From services to be performed in March 40,000 How much is the amusement tax for the month? a. P216,000 c. P259,200 b. P252,000 d. P288,000  Answer: C Solution: Collections during the month: From services rendered in January From services rendered in February From services to be performed in March

200.000 1,200,000 40,000

Total collections X

1,440,000 18%

Amusement Tax

P259,200

  

For business tax purposes, ignore income and expenses.

If it pertains to sale of services, the basis of business tax is gross receipts or collections, regardless of when the service was rendered.

A comedy bar, for business taxation purposes, is is subject to amusement tax "Night and Day Clubs" as provided in RMC 18-2010 are drinking, dancing and entertainment venues which oftentimes serve food and provide entertainment. *Cabarets", on the other hand, are restaurants or clubs where liquor and food are served, with a stage provided for performances by musicians, dancers or comedians, including a venue for dancing by patrons/customers, similar to that of nightclubs. With the advent of modern interactive entertainment, along with recorded music (and/or music video) using a microphone and public address system, the proprietors/lessees or operators of these amusement places have pursued a new form of lounge and club entertainment. Most of these establishments provide facilities to allow patrons to sing with the expectation that sufficient revenue will be made selling food and drinks to customers. The "terms' nigh and day clubs and cabarets have become passe', Amusement places which offer the same pleasurable diversion entertainment and function now include videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges. As such, the proprietors, lessees, or operators of the aforementioned establishments are deemed also subject to 18% amusement tax under Section 125 of the Tax Code, and not to the 12% value added tax.

99. Based on the preceding number, if it is a racetrack, how much is the amusement tax payable for the month?

How much is the amusement tax for the month? a. P60.000 c. P432,000 b. P360.000 d. P480,000  Answer: C Solution: Collections during the month From services rendered in January From services rendered in February From services to be performed in March

200, 000 1, 200, 000 40, 000

Total collections X

1, 440, 000 30%

Amusement Tax

P432, 005 3,800,000

100. Philippine Basketball Association (PBA), a professional basketball league in the Philippines, opened its own coliseum during April of 2018 and held all its games for the month in the newly built state of the art facility in Bulacan, PBA provided the following data during the month Receipts from Entrance Fee P980, 000, 000 Gross Receipts from Restaurant operations: Sale of food and beverages 2,200,000 Sale of wines & liquor 750,000 Expenses How much is the amusement tax for the month? a. P1, 210, 000 c. P1, 764, 000 b. P1, 320, 000 d. P1, 912, 500  Answer: D Solution Gross receipts from entrance fee Sale of food and beverages Sale of wines and liquors Total gross receipts X Amusement Tax

P9, 800, 000 2,200,000 750,000 12,750,000 15% P1912,500

101. Based on the preceding number but suppose the restaurant is owned and operated by Bryan a vat-registered person, the amusement taxes of Bryan and the PBA is Bryan PBA a. P354,000 P1,320,000 b. P1 320,000 P 354,000 c. P354,000 P354,000 d. PP1, 470, 000  Answer: D Solution: Gross receipts PS4 = P8.0 x 15% P1,320,000 Gross receipts, restaurant = P2.850 000 x 12% 354,000 Total business taxes 1, 674, 000 a. Bryan is subject to vat; not to amusement tax, 102. Ana is the operation of Tanghalan Coliseum. During the month it had the following gross receipts from various activities: Concert by Lorna P2, 500, 000

Professional basketball game Boxing Exhibition

1, 240, 000 1, 780, 000

The boxing exhibition is a world championship fight between G.I Joe and Lucas Mathysse, both foreign nationals and the bout was promoted by Trillanes promotions. How much is the amusement tax payable? a. P178, 000 c. P364, 000 b. P186, 000 d. P664, 000  Answer: C Solution: Professional basketball (P4 240.000 x 15%) Boxing Exhibition (P1.780.000 % 10%) Total Amusement Taxes

P186, 000 178, 000 P364, 000

103. How much is total business taxes? a. P178, 000 c. P364, 000 b. P186, 000 d. P664, 000  Answer: C Solution: Concert (P1,240,000 x 15%) Professional basketball (P1,240,000 x 15%) Boxing Exhibition (P1,780,000 x 10%) Total Business Taxes 

P300,000 186, 000 178, 000 P664, 000

Persons liable to amusement taxes are the proprietors lessees or operators of amusement places.

104. Boxing exhibitions shall be exempt from amusement as when the blog conditions are present: a. Involves World or Oriental championships in any division b. One of the contenders is citizen of the Philippines c. Promoted by citizens of the Philippines or by a corporation or association at least 60% of the capital is owned by Filipino citizens. d. All of the conditions above must be satisfied.  Answer: D 105. The Percentage Tax on Winnings is imposed on the winnings of bettors in: a. Cockfighting b. Horse race c. Jai-ala

d. Boxing  Answer: B 106. The following shall always be subject to 10% percentage tax, except? a. Overseas call made by Mr. X, resident of Manila, to his mother in Libya b. Winnings from horse races by a bettor c. Oriental Championship match in the Philippines between a Filipino and Mexican promoted by Bob Arum. d. Winnings from horse races by a horse owner.  Answer: D 1. A bettor of horse races may be subject to 10% or. 4% tax based on net winnings 2. Basis: Net winnings = Gross winnings or dividends less cost of the winning ticket(s) 3. % of Tax 1. Ordinary winnings: 10% 2. Special winnings (forecast, double, trifecta, quinela): 4% 3. Horse owner(s) are subject to 10% tax based on gross winnings.

107. Statement 1: The 10% tax on winnings is based on actual amount paid to the winner, Statement 2: The rate of tax on winnings in case of double, forecast/quinella and trifecta shall be four percent (4%) a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct.  Answer:D 108. Mang Jose, a horse-owner received gross winnings of P120,000 during the current month. His tax on winnings should be: a. P6.000 c. P18,000 b. P12,000 d. P24,000  Answer: B 

Tax on winnings = P120,000 x 10% = P12,000

109. Leo purchased horse-racing tickets amounting to $6,000. Fifty percent (50%) of the tickets purchased won double, entitling him a prize of $60,000. How much cash will be given to Leo by the operator? a. P57,720 c. P54,300 b. P54,720 d. P51,300

 Answer: A Gross winnings P60,000 Less: Tax on winnings Gross winnings Cost of winning tickets (P6,000 x 50%) Net winnings X

P60,000 (3,000) P57,000 4%

Amount to be paid to Pedro 720 

(2,280) P57,

The cost of the winning tickets shall not be deducted from the amount to be paid to Pedro because the purchase of ticket and receipt of dividends or winnings are separate transactions.

110. Pedro, a horse bettor, had the following records of his horse races for the month of May of 2018: Horse

Type of winnings

Gross winnings

Ana Khan Lor Naden Fe licidad

Trifecta Ordinary Double

P100,000 250,000 325,000

Cost of winning tickets P40,000 50,000 75,000

How much is the business tax on winnings? a. P32, 400 c. P29, 000 b. P35, 750 d. P268, 000  Answer: A Horse Ana Khan Lor Naden Fe Licidad TOTAL

Winnings Trifecta Ordinary Double

Net Winnings P60, 000 200, 000 250, 000

%

Tax 4% 10% 4%

P2, 4000 20, 000 10, 000 32, 400

111. Mike Ong received P100,000 winnings from cockfighting. Determine his tax liability.

I. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code.

II. Subject to income tax III. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code and 20% final tax on passive income a. I only c. III only

b. ll only  Answer: B

d. I and III

112. Mannu Gal received P100 000 winnings from horseracing. Determine his tax liability.

I. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code II. Subject to basic income III. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code and 20% final tax on passive income a. I only c. lll only b. ll only d. I and III  Answer: A 113. A race track bettor won the following bets: On double, a bet of P200 and dividend of P200 per P20 ticket On winner take all, a bet of P500 and a dividend of P1,000 per P50 ticket On forecast, a bet of P1,000 and dividend of P100 per P20 ticket The total percentage tax due from the winnings is: a. P682 c. P1, 280 b. P1, 182 d. P1, 530  Answer: B Solution:  ON DOUBLE = P200 bet/P20 per bet = 10 tickets = Net winnings per ticket = P200-20 = P180 OPT= P180 x 10 tickets x 4% = P72  On Winner Take All (Ordinary winnings) = P500 bet/P50 per bet = 10 tickets = Net winnings per ticket = P1,000 -- 50 = P950 OPT = P950 x 10 tickets x 10% = P950  ON FORECAST = P1,000 bet/P20 per bet = 50 tickets = Net winnings per ticket = P100-20 = P80 OPT=P80 x 50 tickets x 4% = P160  TOTAL Tax oh Winnings = P72 + P950 + 160 = P1, 182 The next four (4) questions are based on the following data: Galaxy Corporation, a closely-held corporation, has an authorized capital stock of 20000 000 shares with par value of P5.00/share.

Of the 20,000,000 authorized shares, 5,000,000 thereof were subscribed and fully paid up be the following shareholders:

Pedro Ana Lorna Fe Juan

1, 000,000 1, 000, 000 1, 000, 000 1, 000, 000 1, 000, 000

Total Shares Outstanding

5, 000, 000

On February 2018, Gallaxy decided to conduct an initial public offering (IPO) and initially offers 5,000,000 of its unissued shares to the investing public for P7 50/share.

During the IPO period, one of its existing shareholders, Lorna, has likewise decided to sell her entire 1,000,000 shares to the public for P7.50/share.

114. How much is the percentage tax due on the primary offering? a. P375, 000 c. P750, 000 b. P1, 500, 000 d. nil  Answer: A Solution: Tax on "primary offering” refers to percentage tax due of the issuing corporation during its Initial Public Offering (IPO).

RATIO = shares issued @ IPO over outstanding shares after IPO =5/10=50% IPO Rate = 1% OPT on IPO = Proceeds x Tax % = 5M shares x P7.5 x 1% = P375, 000 115. How much is the percentage tax due on the secondary offering (Lorna)? a. 275,000 c. 2150,000 b. P300, 000 d. nil  Answer: B Solution: Tax on "secondary offering” refers to percentage tax due of the Shareholder who sold his/her share at the time the corporation is undergoing initial public offering (IPO) RATIO = shares issued @ IPO over outstanding shares after PO =1/10=10% IPO Rate = 4% OPT on IPO = Proceeds x Tax% = 1M shares x P7.5 x 4% = P300, 000 116.If in May 2018, Gallaxy again decides to increase capitalization by offering another 6,000,000 of unissued shares to the public at P10.00/share, how much is the percentage tax due? a. P600, 000 c. P2.400, 000 b. P1, 200, 000 d. nil

 Answer: D Issuance of shares by the issuing corporation after 1PO is known as "follow-onfollow through issuance. The issuing Corporation $ Subject only to one (1) type of Percentage Tax the Percentage Tax on IPO under Section 127(B) of the Tax Code, as amended.

The issuing corporation is not subject to Percentage Tax before and after IPO. However, it is liable to documentary stamp tax (DST) on the issuance of stock certificate to shareholders .

117. If in August 2018, Juan decides to sell his entire stock ownership to the public at $10.00/share, how much is the percentage tax due? a. P50,000 c. 2400,000 b. P60,000 d. nil  Answer: B SALE of shares by a shareholder after IPO is known as follow-on-follow through sale under Section 127(A) of the Tax Code, as amended, subject to Percentage Tax as follows: Sale prior to 2018: 12 of 1% of Gross Selling Price Sale on or after Jan. 1, 2018: 6/10 of 1% of Gross Selling Price OPT = 1,000,000 shares x P10x.006 ADDITIONAL GUIDE: SUMMARY OF APPLICABLE TAXES IN THE ISSUANCE OR SALE OF SHARES OF STOCK TERM USED APPLICABLE TAX Issuance of shares Not subject to before IPO VAT,OPT % income tax but to DST ISSUING CORPORATION Issuance of shares Primary offering OPT: 4%, 2%, 1% during IPO Issuance of shares Follow on follow Not subject to after IPO through VAT,OPT % income tax but to DST Sale of shares Capital gains tax: before IPO 5%, 10% TRAIN Law = 15% SHAREHODER Sale of shares Primary Offering OPT: 4%, 2%, 1%

during IPO Sale of shares after IPO

Follow on follow through

OPT: ½% of 1% of GSP OPT: 6/10 of 1% of GSP (TL)

118. Issuance of shares by a closely held issuing corporation shall be subject to: a. Percentage tax – ½ of 1% based on gross selling price or gross value in money b. Capital gains tax - 5% on first P10, 000 capital gain, 10% on excess of P100, 000 c. Percentage on IPO - 4% 2% 1% based on gross selling price or gross value in d. No business tax but subject to documentary stamp tax (DST)  Answer: D 119. Primary caring of shares by the issuing corporation (issuance during initial public offering) shall be subject to: a. Percentage tax - 1 of 1% based on gross selling price or gross value in money b. Capital gains tax - 5% on first P10, 000 capital gain, 10% on excess of P100, 000 c. Percentage on IPO - 4%, 2%, 1% based on gross selling price or gross value in money d. No business tax but subject to documentary stamp tax (DST)  Answer: C 120. Follow on follow through issuance of shares by the issuing corporation (issuance after IPO) shall be subject to: a.

Percentage tax - of 1% based on gross selling price or gross value in money b.

Capital gains tax - 5% on first P10,000 capital gain, 10% on excess of P100, 000 c.

Percentage on IPO - 4%, 2%, 1% based on gross selling price or gross value in money d.

No business tax but subject to documentary stamp tax (DST)  Answer: D 121. Shares of stock held as investment when sold directly to a buyer prior to January 1, 2018 shall be subject to: a. Percentage tax - % of 1% based on gross selling price or gross value in money b. Value-added tax - 10% based on gross income c. Capital gains tax - 5% on first P10, 000 capital gain, 10% on excess of P100,000 d. Percentage on IPO - 4%, 2%, 1% based on gross selling price or gross value in money  Answer: C 

Also known as sale of shares of closely held corporation (DC).

122. Shares of stock held as investment when sold directly to a buyer on or after January 1, 2018 shall be subject to: a. Percentage tax - 6/10 of 1% based on gross selling price or gross value in money b. b. Value-added tax - 10% based on gross income c. Capital gains tax - 15% of capital gain d. Percentage on IPO - 4%, 2% 1% based on gross selling price or gross value in money  Answer: C 123. Secondary offering of stock held as investment when sold during IPO period shall be subject to a. Percentage tax of 1% based on gross selling price of gross value in money b. Value-added tax = 10% based on gross income c. Capital gains tax - 5% on first P10,000 capital gain, 10% on excess of P100, 000 d. Percentage on IPO - 4%, 2%, 1% based on gross selling price of gross value in money.  Answer: D 124. Shares of stock held as investment when sold through the local stock exchange prior to January 1, 2018 shall be subject to: a. Percentage tax - 72 of 1% based on gross selling price of gross value in money b. Value-added tax -10% based on gross income c. Capital gains tax - 5% on first P10, 000 capital gain, 10% on excess of P100 000 d. Percentage on IPO - 4%, 2%, 1% based on gross selling price of gross value in money.  Answer: A The sale is also known as "follow-on-follow-through sale".

Assume the shares held were from a domestic corporation.

125. Shares of stock held as investment when sold through the local stock exchange on or after January 1, 2018 shall be subject to: a.

Percentage tax - 6/10 of 1% based on gross selling price of gross value in money b.

Value-added tax - 10% based on gross income. c.

Capital gains tax -5% on first P10,000 capital gain; 10% on excess of P100,000 d.

Percentage on IPO - 4%, 2%; 1% based on gross selling price or gross value in money  Answer: A 126. In 2016. Trillanes invested P5, 000,000 in the shares of stock of Du30 Corporation. The corporation's shares are listed and are traded in the local stock exchange. Trillanes subsequently sold the shares in 2017 for P5, 500, 000 through the local stock exchange. The percentage tax on the sale is:

a. P15, 000 b. P25, 000

c. P30, 000 d. P50, 000

 Answer: B Stock Transaction Tax = P5M X.005 = P25, 000 127. Assume Trillanes sold the shares in 2018, the percentage tax on the sale is a. P15, 000 c. P30, 000 b. P25, 000 d. P50, 000  Answer: B Stock Transaction Tax = P5M X 2006 = P30, 000

128. Assuming the shares were not listed in me local stock exchange and that Trillanes sold the shares to Cavatano, the percentage tax on the sale is: a. P15,000 c. P30,000 b. P25,000 d. PO  Answer: B  Subject to CGT, not percentage tax 129. One of the following statements is incorrect. a The 1/2 of 1% tax shall be collected by the broker who made the sale and shall be remitted within 5 banking days from the date of collection b. The tax paid on sale of shares through local stock exchange and initial public offering (IPO) and secondary offering shall not be allowable deduction or income tax purposes c. The ½ of 1% stock transaction taxis a final withholding tax on income. d. The y of 1% stock transaction tax is collected whether there is an income or a loss and is a percentage tax.  Answer: C 130. 1st Statement: Sale by a stock dealer of shares of stocks through the local stock exchange is subject to the stock transactions tax.

2nd Statement: Sale by a stock dealer of shares of stocks directly to a buyer is subject to the capital gains tax. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second state statement is correct.  Answer: B  Sale of shares by a stock dealer is subject to basic income tax and vat 131. All of the following except one are liable to 12 of 1% stock transaction tax. Which one

is not? a. Individual taxpayers, whether citizens or alien b. Corporate taxpayers, whether domestic or foreign c. Estates and Trust d. Dealers in securities  Answer: D 132. Gallaxy Corporation issued 10,000 shares, with par value of R100 per share, to Mr. Apolinario Bobadilla for $150 per share. The transaction did not pass through the Philippine Stock Exchange. How much is the capital gains tax on the sale? a. P45,000 c. P50,000 b. P25,000 d. zero  Answer: D  

CGT is applicable only if the seller is a shareholder or investor, not issuer.

The transaction is not subject to any business tax except DST

133. Using the data in the preceding number, how much is the percentage tax assuming Mr. Bobadilla subsequently sold his shares for P200 per share? a. P45,000 c. P10,000 b. P25,000 d. zero  Answer: D  The sale will be subjected to capital gains tax (an income tax) but not subject to percentage tax 134. Statement 1: The buyer of shares under primary offering shall be the one liable for the payment of stock transaction tax to be withheld and remitted by the stock broker.

Statement 2: The seller shall be the one liable for the stock transaction tax of shares sold under secondary offering offering.

Statement 1 Statement 2

True True

A . B. True False

C. False True

D. False False

 Answer: C 135. Which of the following percentage taxes is paid on a quarterly basis prior to effectivity of the TRAIN Law? I. Tax on overseas dispatch, message, or conversation originating from the Philippines II. Amusement taxes III. Stock transactions tax

IV. Percentage tax on international carriers a. Iand II only c. 1, II and IV only b. lll and IV only d. 1, 11, III and IV  Answer: A 136. Assume the taxable year is 2018, which of the percentage taxes in the preceding number is paid on a quarterly basis? a. l and II only c. I, ll and I only b. lll and IV only d. I, II, III and IV  Answer: C 137. Statement 1: Prior in the effectivity of the TRAIN Law, payment of stock transaction tax of 1 of 1 is within five (5) banking days from the date withheld by the broker Statement 2. Payment of stock transaction tax of 4%, 2% and 1% on primary offering should be within thirty (30) days from the date or listing in the local stock exchange. a Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second state statement is correct.  Answer: A 138. Statement 1: Upon the effectivity of the TRAIN Law, payment of stock transaction tax of 6/10 of 1% is within five (5) banking days from the date withheld by the broker.

Statement 2: Payment of stock transaction tax of 4%, 2% and 1% on primary offering should be within thirty (30) days from the date of listing in the local stock exchange. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second state statement is correct.  Answer: A 139. Prior to 2018, the following percentage taxes are paid on a monthly basis, except?

I. Franchise tax ll. Tax on winnings III. Percentage tax on international carriers IV. Overseas communication's tax V. Percentage tax on banks and nonbank financial intermediaries a. I and II only c. l, ll and Ill only b. ll and I only d. All of the above  Answer: B

140. Assume the taxable year is 2018, which of the percentage taxes in the preceding number is paid on a quarterly basis? a. I and II only c. I, II and Ill only b. II and I only d. All of the above  Answer:D