Miss A files income

The principal purpose of taxation is:

• To encourage the growth of home industries through the proper use of tax incentives

• To implement the police power of the State

• To reduce excessive inequalities of wealth

• To raise revenue for governmental needs

After having been informed that most of the massage parlors in the city are being used as fronts for prostitution, the Sanguniang Panlungsod of Manila passed a tax ordinance subjecting massage parlors within its jurisdiction to such 'onerous taxes' that leave them no other alternative but to stop operating. The passage of the ordinance is a valid exercise of-

• Taxation

• Police power

• Eminent domain

• Police power and power of taxation

All of the following are legislative aspect of taxation except

• Selection of the object or subject of tax

• Valuation of property for taxation

• Fixing of tax rates

• Prescribing the general rules of taxation

The levying and imposition of tax and the collection of tax are processes which constitute the taxation system

• Basis of taxation

• Aspects of taxation

• Nature of taxation

• Theory of taxation

As an incentive for investors, a law was passed giving newly established companies in certain economic zone exemption from all taxes, duties, fees, imposts and other charges for a period of three years. ABC Corporation was organized and was granted such incentive. In the course of business, ABC purchased mechanical equipment from XYZ Incorporated. The latter, in its ordinary business dealings, is subject to vat. XYZ Inc. claims, however, that since it sold the equipment to ABC Corp. which is tax exempt, it should not be liable to pay the vat. Is this claim tenable?

• No. exemption from taxes is personal in nature and covers only taxes for which the taxpayer-grantee is directly liable. Vat is a tax on the seller who is not exempt from taxes. Since XYZ Inc. is directly liable for the vat and no tax exemption privilege is ever given to him, its claim that the sale is tax exempt is not tenable

• Yes, exemption from tax should not be discriminatory in nature. A seller of goods or service to tax exempt individuals or entities shall be accorded the same exemption provided by law to a buyer

• Yes, applying uniformity rule

• None of the above

Juan Dela Cruz Memorial Hospital is a 100-bed domestic hospital organized for charitable purposes. However, out of 100-bed capacity, 40-beds are allotted for paying patients, while the rest are intended for charity patients. The revenues generated from these paying patients, however are being used to improve the facilities of the hospital. Can said hospital claim exemption from income tax as well as real property tax?

• Both answers are correct

• Yes, the hospital can claim exemption from real property tax. As a general principle, a charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients, whether out-patient, or confined in the hospital, or receives subsidies from the government, so long as the money received is devoted or used altogether to the charitable object which it is intended to achieve; and no money inures to the private benefit of the persons managing or operating the institution.

• Only the first answer is correct

• Only the second answer is correct

• The hospital is subject to 10% tax on its net income, subject to compliance with the 'predominance test'

The basis or test of exemption of real properties owned by religious, or charitable entities from real property taxes is:

• Use of the real property

• Ownership of the real property

• Location of the real property

• Ownership or location real property at the option of the government

'Government agencies performing governmental functions are exempt from tax unless expressly taxed while those performing proprietary functions are subject to tax unless expressly exempted' refers to:

• The tax imposed should be for public purpose

• There should be no improper delegation of the taxing power

• The power to tax is limited to the territorial jurisdiction of the taxing government

• Exemption of government entities from taxation

Which of the following statements is correct?

• Revenue regulations have the force and effect of law and a memorandum order of the Commissioner of Internal Revenue, approved by the Secretary of Finance, has the same force and effect as revenue regulations

• The revenue regulations which conflict with law(s) are null and void

• The interpretations of the former Secretary of Finance do not necessarily bind their successors

• All the above

Mommy Divine Company received a Preliminary Assessment Notice on August 1, 2020. As Mommy Divine was preparing her reply, Mommy Divine already received a Final Assessment Notice on August 11, 2020. Rule on the validity of the Final Assessment Notice.

• The FAN is void. BIR should have waited for the reply to the PAN

• The FAN is void. The right to due process of Mommy Divine has been violated

• The FAN is valid. Mommy Divine's period to file her reply expired on August 6, 2020

• The FAN is valid. Reply of the PAN is not mandatory in nature