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WorksheetsMiss A files income
Total questions: 60
Worksheet time: 50mins
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
Which kind of protest requires the submission of additional supporting documents?
Request for reconsideration
Request for reinvestigation
Request for reconveyance
Request for recognition
All of the following would necessitate the imposition of the 50% surcharge, except:
Willful neglect to file the return within the period prescribed
False return is willfully made
Fraudulent return is willfully made
Failure to file with the proper internal revenue officer
When will tax surcharge amounting to 50% of tax due be imposed?
In case of false or fraudulent return is willfully made
In case of failure to pay the full or part of the amount tax shown on any return required to be filled, or before the date prescribed for payment
Filing a return with an internal revenue officer other than those to whom the return is required to be filled
Failure to file any return and pay the tax due thereon
Which type of formal protest filed by a taxpayer before BIR Commissioner requires the taxpayer to submit documentary evidence to BIR Commissioner?
Request for reconsideration
Request for reinvestigation
Both A and B
Neither A nor B
Stephen is a sole proprietor engaged in the manufacturing of tailor-made leather products for white horses, the most famous of which being saddles. Stephen received a Final Assessment Notice from the Bureau of Internal Revenue on December 13, 2020. On January 5, 2021, Stephen filed a request for reinvestigation. On August 11, 2021, Stephen received a Final Decision on Disputed Assessment from the Commissioner of Internal Revenuw stating that his request for reinvestigation is denied. The FDDA is a two-sentenced letter stating that the request for reinvestigation is denied, and that Stephen should seek the appropriate judicial remedy. Stephen appealed before the division of the Court of Appeals on September 3, 2021. Was the request for reinvestigation timely filed?
No, the request for reinvestigation should have been filed on or before December 23, 2020
No, the request for reinvestigation should have been filed on or before December 28, 2020
Yes, the request for reinvestigation may be filed on or before January 12, 2021
Yes, the request for reinvestigation may be filed on or before February 11, 2021
Stephen is a sole proprietor engaged in the manufacturing of tailor-made leather products for white horses, the most famous of which being saddles. Stephen received a Final Assessment Notice from the Bureau of Internal Revenue on December 13, 2020. On January 5, 2021, Stephen filed a request for reinvestigation. On August 11, 2021, Stephen received a Final Decision on Disputed Assessment from the Commissioner of Internal Revenue stating that his request for reinvestigation is denied. The FDDA is a two-sentenced letter stating that the request for reinvestigation is denied, and that Stephen should seek the appropriate judicial remedy. Stephen appealed before the division of the Court of Appeals on September 3, 2021. Assuming the proper periods were observed, is the judicial remedy proper?
No. The appeal should be filed before the Court of Appeals en banc
No. The appeal should be filed before the division of Court of Tax Appeals
No. The appeal should be filed before the Supreme Court
Yes. The judicial remedy is proper
Stephen is a sole proprietor engaged in the manufacturing of tailor-made leather products for white horses, the most famous of which being saddles. Stephen received a Final Assessment Notice from the Bureau of Internal Revenue on December 13, 2020. On January 5, 2021, Stephen filed a request for reinvestigation. On August 11, 2021, Stephen received a Final Decision on Disputed Assessment from the Commissioner of Internal Revenue stating that his request for reinvestigation is denied. The FDDA is a two-sentenced letter stating that the request for reinvestigation is denied, and that Stephen should seek the appropriate judicial remedy. Stephen appealed before the division of the Court of Appeals on September 3, 2021. When is the last day for the BIR to decide on Stephen's request for reinvestigation assuming that Stephen submitted supporting documents on the last day allowed by the Tax Code?
September 2, 2021
July 4, 2021
May 5, 2021
December 31, 2021
Stephen is a sole proprietor engaged in the manufacturing of tailor-made leather products for white horses, the most famous of which being saddles. Stephen received a Final Assessment Notice from the Bureau of Internal Revenue on December 13, 2020. On January 5, 2021, Stephen filed a request for reinvestigation. On August 11, 2021, Stephen received a Final Decision on Disputed Assessment from the Commissioner of Internal Revenue stating that his request for reinvestigation is denied. The FDDA is a two-sentenced letter stating that the request for reinvestigation is denied, and that Stephen should seek the appropriate judicial remedy. Stephen appealed before the division of the Court of Appeals on September 3, 2021. Assuming that the choice of judicial remedy is proper, was Stephen's appeal timely filed?
Yes, since Stephen has thirty (30) days from the receipt of the FDDA to file his appeal
Yes, since Stephen has thirty (30) days from the expiration of the period for the BIR to decide to file his appeal
No, since Stephen only has fifteen (15) days from the receipt of the FDDA to file his appeal
No, since thirty (30) days have already lapsed from the expiration of the period for the BIR to decide
The situs of service income is:
Where the payment for services is made
Where the service contract was perfected
Where the services are performed
Where the party availing of the services is located
The situs of income from sale of real property is determined by:
The place where the real property is located
The place where the registered owner of the real property resides
The place where the current possessor of the real property has citizenship
The place where the deed of sale of real property was notarized
Statement 1: If an income is already subjected to creditable withholding tax, it is no longer reported as part of gross income subject to regular income tax. Statement 2: If an income is already subjected to final withholding tax, it is reported as part of gross income at an amount net of the amount of tax withheld.
Only Statement 1 is true
Only Statement 2 is true
Both statements are true
Both statements are not true
Final withholding tax is:
An approximation of the income tax due
Deductible against gross income to compute for the taxable income
The full and final payment of income tax due
Creditable against income tax due to compute for the income tax payable
Lalisa, a resident citizen, purchased a parcel of land, measuring 1,000 square meters at a price of P2,000,000, on January 5, 2021. Due to the construction of a subway station a few hundred meters away from Lalisa’s parcel of land, the fair market value of the land increased to P15,000,000 by 2022. Lalisa procured an appraiser to determine the new value of the land, and the appraiser affirmed the increase to P15,000,000. The land was used as a collateral to secure a loan amounting to P10,000,000 by way of a real estate mortgage. The proceeds of the loan were used by Lalisa to construct buildings on the land for leasing. Is Lalisa subject to income tax?
Yes. The amount that will be subject to income tax is P15,000,000
Yes. The amount that will be subject to income tax is P13,000,000
No. the increase in value of the land is not subject to income tax
No. Loans are exempt from all internal revenue taxes
Lalisa, a resident citizen, purchased a parcel of land, measuring 1,000 square meters at a price of P2,000,000, on January 5, 2021. Due to the construction of a subway station a few hundred meters away from Lalisa’s parcel of land, the fair market value of the land increased to P15,000,000 by 2022. Lalisa procured an appraiser to determine the new value of the land, and the appraiser affirmed the increase to P15,000,000. The land was used as a collateral to secure a loan amounting to P10,000,000 by way of a real estate mortgage. The proceeds of the loan were used by Lalisa to construct buildings on the land for leasing. Under the realization test, under which of the following scenarios would Lalisa be subject to income tax?
Repayment of the loan
Foreclosure of the real estate mortgage
Payment of the documentary stamp taxes on the loan
Further appreciation of the value of the land to ten times the amount it was originally acquired
A contract of loan was entered into between Kai, a resident of Japan and a citizen of South Korea, and Sehun, a resident of Taiwan and a citizen of the Philippines. In the contract, Kai agreed to lend Sehun 2,000,000 United States dollars to be paid by depositing in Kai’s account opened at a branch in France. The contract of loan was signed by both parties in Germany and was used by Sehun to finance his business operations in Italy. The contract of loan provided that Sehun is bound to pay the entire principal amount in three (3) years plus interest at seven (7) percent per annum.
Statement 1: The situs of interest income is Japan Statement 2: The situs of interest income is Germany
Only Statement 1 is true
Only Statement 2 is true
Both statements are true
Both statement are not true
Vincenzo earned the following items of income for the calendar year ending 2021:
Interest income, debtor resides in Hong Kong, payment made in the Philippines
420,000
Interest income, debtor resides in the Philippines, payment made in China
330,000
Gain from sale of real property, real property situated in America
440,000
Gain from sale of personal property, sale made in UK, property is in the Philippines
290,000
Gain from sale of shares of stock of a domestic corporation, residence of buyer is Taiwan, sale made in Argentina
225,000
Total
1,705,000
If Vincenzo is a resident citizen, how much of his income is subject to Philippine income tax?
330,000
555,000
845,000
1,705,000
Vincenzo earned the following items of income for the calendar year ending 2021:
Interest income, debtor resides in Hong Kong, payment made in the Philippines
420,000
Interest income, debtor resides in the Philippines, payment made in China
330,000
Gain from sale of real property, real property situated in America
440,000
Gain from sale of personal property, sale made in UK, property is in the Philippines
290,000
Gain from sale of shares of stock of a domestic corporation, residence of buyer is Taiwan, sale made in Argentina
225,000
Total
1,705,000
If Vincenzo is a resident alien, how much of his income is subject to Philippine income tax?
330,000
555,000
845,000
1,705,000
Which of the following gains is subject to capital gains tax?
Gain on sale of shares of stocks of domestic corporation by dealer of securities
Gain on sale of unquoted shares of stocks of domestic corporation by nondealer of securities
Gain on sale of quoted shares of stocks of domestic corporation thru the facilities of Philippine Stock Exchange
Gain on sale of quoted shares of stocks of foreign corporation directly to buyer
Which fringe benefit may be subjected to fringe benefit tax?
De minimis fringe benefits given to rank and file employees
De minimis fringe benefits given to supervisory or managerial employees
Fringe benefits in excess of de minimis fringe benefits given to rank and file employees
Fringe benefits in excess of de minimis fringe benefits given to supervisory or managerial employees
What is the income tax rate on presumed capital gain on sale of real properties classified as capital assets which are located within Philippine territory?
15% on gain on sale
6% on gain on sale
15% on selling price or fair market value or zonal valuation, whichever is the highest
6% on selling price or fair market value or zonal valuation, whichever is the highest
Which individual taxpayer is taxable for his income from within and from without Philippine sources?
Resident citizen
Nonresident citizen
Resident alien
Nonresident alien
Industrious as he is known, Arthur, a non-VAT registered resident citizen, works as a government employee at daytime and accepts clients for accounting work after office hours. At the same time, Arthur maintains a t-shirt printing shop to earn more. For the taxable year ending December 31, 2021, Arthur earned the following amounts:
Taxable compensation income
P 850,000
Gross receipts from accounting work
1,500,000
T-shirt printing shop
Gross sales
P 1,400,000
Cost of sales
(800,000)
Gross income
P 600,000
Operating expenses
(400,000)
Net income
P 200,000
Upon filing his first quarter income tax return, Arthur availed of the 8% income tax option: Is his availment of the 8% income tax option correct?
No, because the 8% income tax option is available only for VAT-registered taxpayers
No, because Arthur is not a purely compensation income earner
No, because Arthur's gross receipts exceeded the threshold allowed to avail of the 8% income tax option
Yes
Industrious as he is known, Arthur, a non-VAT registered resident citizen, works as a government employee at daytime and accepts clients for accounting work after office hours. At the same time, Arthur maintains a t-shirt printing shop to earn more. For the taxable year ending December 31, 2021, Arthur earned the following amounts:
Taxable compensation income
P 850,000
Gross receipts from accounting work
1,500,000
T-shirt printing shop
Gross sales
P 1,400,000
Cost of sales
(800,000)
Gross income
P 600,000
Operating expenses
(400,000)
Net income
P 200,000
Upon filing his first quarter income tax return, Arthur availed of the 8% income tax option: Assuming that the availment of the 8% income tax option is proper, how much is Arthur's income tax due?
232,000
300,000
357,000
377,000
Industrious as he is known, Arthur, a non-VAT registered resident citizen, works as a government employee at daytime and accepts clients for accounting work after office hours. At the same time, Arthur maintains a t-shirt printing shop to earn more. For the taxable year ending December 31, 2021, Arthur earned the following amounts:
Taxable compensation income
P 850,000
Gross receipts from accounting work
1,500,000
T-shirt printing shop
Gross sales
P 1,400,000
Cost of sales
(800,000)
Gross income
P 600,000
Operating expenses
(400,000)
Net income
P 200,000
Upon filing his first quarter income tax return, Arthur availed of the 8% income tax option: How much is Arthur's percentage tax due?
0
29,000
58,000
87,000
Travel Industries, a non-VAT registered sole proprietorship engaged in the transport of passengers, operates two liners: Philippine Cheetah Bus Lines is engaged in the domestic transport of passengers by land while Philippine Dolphin Ferries is engaged in the domestic transport of passengers by sea. During the taxable year 2021, the following revenues and expenses were presented to you: (See picture attached)
How much is income tax due?
31,500
55,000
125,000
460,000
Travel Industries, a non-VAT registered sole proprietorship engaged in the transport of passengers, operates two liners: Philippine Cheetah Bus Lines is engaged in the domestic transport of passengers by land while Philippine Dolphin Ferries is engaged in the domestic transport of passengers by sea. During the taxable year 2021, the following revenues and expenses were presented to you: [See picture attached]
How much is percentage tax due?
0
60,000
120,000
180,000
A lawyer, a civil engineer and a CPA established a partnership for the rendition of consultancy services. How shall the income of the partnership be taxed?
It will be taxed like a taxable corporation
It will be taxed like a self-employed individual
It will be taxed like a pure-compensation income earner
It will be exempted from payment of income tax
Before the passage of CREATE Act, which income of a domestic corporation is subject to ordinary corporate income tax of 30%?
Share in net income of its subsidiary-domestic corporation
Cash dividend from its subsidiary-domestic corporation
Royalty income from its licensee in Canada
Interest income on Philippine Peso Bank Deposit in BDO-Makati
Which of the following is a taxable corporation?
Government educational institutions
Civil league or organization not organized for profit but operate exclusively for the promotion of social welfare
Profit cemetery company
Nonstock nonprofit educational institutions
Which corporation is subject to the minimum corporate income tax?
Proprietary educational institution
Nonprofit hospital
Nonresident Foreign Corporation
Resident Foreign Corporation
If University of Saint Augustine Philippines is a non-stock, non-profit educational institution, how much is income tax due?
P 1,233,000
P 411,000
P 822,000
P -0-
If University of Saint Augustine Philippines is a proprietary educational institution and it did not opt to deduct the capital outlay as an expense, how much is income tax due?
P 1,233,000
P 411,000
P 511,000
P -0-
If University of Saint Augustine Philippines is a proprietary educational institution, and assuming the taxable year is 2021, and it did not opt to deduct the capital outlay as an expense, how much is income tax due?
P 511,000
P 411,000
P 41,100
P -0-
If Transit is a partnership constituted in the Philippines, which of the following statements is true?
P1,140,000 will be subject to regular income tax at the rate of 0 to 35%
P330,000 will be subject to regular income tax at the rate of 25%
All items will not be subject to regular income tax as they are all passive income and are therefore subject to final withholding tax
All items will not be subject to any income tax as Transit will be merely considered as pass-through entity
If Transit is a resident foreign corporation, how much is final withholding tax?
10,500
38,000
48,500
59,000
After the expiration of period of income tax holiday, an export enterprise:
Will be subject to regular corporate income tax
Will be subject to special corporate income tax
Can avail of enhanced deductions
Will be subject to special corporate income tax or can avail of enhanced deductions, at the export enterprise's option
After the expiration of period of income tax holiday, a domestic market enterprise:
Will be subject to regular corporate income tax
Will be subject to special corporate income tax
Can avail of enhanced deductions
Will be subject to special corporate income tax or can avail of enhanced deductions, at the domestic market enterprise's option
The Special Corporate Income Tax is:
Five percent based on gross income
Five percent based on taxable income
Ten percent based on gross income
Ten percent based on taxable income
Statement 1: If a registered business enterprise is enjoying the special corporate income tax, its sales from its registered activities shall not be subject to value-added tax. Statement 2: If a registered business enterprise is enjoying income tax holiday, its domestic sales from its registered activities shall not be subject to value-added tax.
Only Statement 1 is true
Only Statement 2 is true
Both statements are true
Both statements are not true
Jayzam Corporation is an export-oriented enterprise registered with the Subic Bay Metropolitan Authority. Based on its Certificate of Registration, its Start of Commercial Operations is on 1 January 2022. Jayzam Corporation’s registered activity involved production of a robotic spare part that is not locally produced in the Philippines but is critical to the development of the Philippines’ automation industry. During the year, Jayzam imported an assembly machine that will be directly used in the production of Jayzam’s robotic spare parts. The assembly machine had a cost of P55,000,000, a useful life of ten years, no salvage value, and is depreciated using the straight-line method of depreciation.
Jayzam had the following results of operations for calendar year 2022 as reflected in its audited income statement:
Sale of spare parts
124,000,000
Cost of sales
(82,300,000)
Gross profit
41,700,000
Administrative expenses
(12,000,000)
Selling expenses
(6,800,000)
Interest expense
(970,000)
Earnings before taxes
21,930,000
The cost of sales included the depreciation of the imported assembly machine, which was purchased on January 1, 2022.
On January 1, 2024, Jayzam Corporation sold the assembly machine to Camille Corporation, a domestic corporation which is not registered with any investment promotions agency.
How much is Jayzam Corporation’s income tax for the taxable year 2022?
0
1,096,500
2,085,000
5,482,500
Jayzam Corporation is an export-oriented enterprise registered with the Subic Bay Metropolitan Authority. Based on its Certificate of Registration, its Start of Commercial Operations is on 1 January 2022. Jayzam Corporation’s registered activity involved production of a robotic spare part that is not locally produced in the Philippines but is critical to the development of the Philippines’ automation industry. During the year, Jayzam imported an assembly machine that will be directly used in the production of Jayzam’s robotic spare parts. The assembly machine had a cost of P55,000,000, a useful life of ten years, no salvage value, and is depreciated using the straight-line method of depreciation.
Jayzam had the following results of operations for calendar year 2022 as reflected in its audited income statement:
Sale of spare parts
124,000,000
Cost of sales
(82,300,000)
Gross profit
41,700,000
Administrative expenses
(12,000,000)
Selling expenses
(6,800,000)
Interest expense
(970,000)
Earnings before taxes
21,930,000
The cost of sales included the depreciation of the imported assembly machine, which was purchased on January 1, 2022.
On January 1, 2024, Jayzam Corporation sold the assembly machine to Camille Corporation, a domestic corporation which is not registered with any investment promotions agency.
How long can Jayzam Corporation enjoy income tax holiday?
4 years
5 years
6 years
7 years
Jayzam Corporation is an export-oriented enterprise registered with the Subic Bay Metropolitan Authority. Based on its Certificate of Registration, its Start of Commercial Operations is on 1 January 2022. Jayzam Corporation’s registered activity involved production of a robotic spare part that is not locally produced in the Philippines but is critical to the development of the Philippines’ automation industry. During the year, Jayzam imported an assembly machine that will be directly used in the production of Jayzam’s robotic spare parts. The assembly machine had a cost of P55,000,000, a useful life of ten years, no salvage value, and is depreciated using the straight-line method of depreciation.
Jayzam had the following results of operations for calendar year 2022 as reflected in its audited income statement:
Sale of spare parts
124,000,000
Cost of sales
(82,300,000)
Gross profit
41,700,000
Administrative expenses
(12,000,000)
Selling expenses
(6,800,000)
Interest expense
(970,000)
Earnings before taxes
21,930,000
The cost of sales included the depreciation of the imported assembly machine, which was purchased on January 1, 2022.
On January 1, 2024, Jayzam Corporation sold the assembly machine to Camille Corporation, a domestic corporation which is not registered with any investment promotions agency.
Statement 1: After the expiration of Jayzam Corporation’s income tax holiday and upon availment of the special corporate income tax, the depreciation of the assembly machine cannot be claimed as a deduction for purposes of computing gross income.
Statement 2: After the expiration of Jayzam Corporation’s income tax holiday and upon availment of the special corporate income tax, Jayzam Corporation is entitled to claim enhanced deduction on the depreciation of the assembly machine.
Only Statement 1 is true
Only Statement 2 is true
Both statements are true
Both statements are not true
Jayzam Corporation is an export-oriented enterprise registered with the Subic Bay Metropolitan Authority. Based on its Certificate of Registration, its Start of Commercial Operations is on 1 January 2022. Jayzam Corporation’s registered activity involved production of a robotic spare part that is not locally produced in the Philippines but is critical to the development of the Philippines’ automation industry. During the year, Jayzam imported an assembly machine that will be directly used in the production of Jayzam’s robotic spare parts. The assembly machine had a cost of P55,000,000, a useful life of ten years, no salvage value, and is depreciated using the straight-line method of depreciation.
Jayzam had the following results of operations for calendar year 2022 as reflected in its audited income statement:
Sale of spare parts
124,000,000
Cost of sales
(82,300,000)
Gross profit
41,700,000
Administrative expenses
(12,000,000)
Selling expenses
(6,800,000)
Interest expense
(970,000)
Earnings before taxes
21,930,000
The cost of sales included the depreciation of the imported assembly machine, which was purchased on January 1, 2022.
On January 1, 2024, Jayzam Corporation sold the assembly machine to Camille Corporation, a domestic corporation which is not registered with any investment promotions agency.
Which of the following statements is true regarding Jayzam Corporation’s sale of the assembly machine to Camille Corporation?
Such sales requires prior approval from the Subic Bay Metropolitan Agency
The transfer is exempt from value-added tax
The transfer is exempt from customs duties
Such sale does not require prior approval from the Subic Bay Metropolitan Authority
Jayzam Corporation is an export-oriented enterprise registered with the Subic Bay Metropolitan Authority. Based on its Certificate of Registration, its Start of Commercial Operations is on 1 January 2022. Jayzam Corporation’s registered activity involved production of a robotic spare part that is not locally produced in the Philippines but is critical to the development of the Philippines’ automation industry. During the year, Jayzam imported an assembly machine that will be directly used in the production of Jayzam’s robotic spare parts. The assembly machine had a cost of P55,000,000, a useful life of ten years, no salvage value, and is depreciated using the straight-line method of depreciation.
Jayzam had the following results of operations for calendar year 2022 as reflected in its audited income statement:
Sale of spare parts
124,000,000
Cost of sales
(82,300,000)
Gross profit
41,700,000
Administrative expenses
(12,000,000)
Selling expenses
(6,800,000)
Interest expense
(970,000)
Earnings before taxes
21,930,000
The cost of sales included the depreciation of the imported assembly machine, which was purchased on January 1, 2022.
On January 1, 2024, Jayzam Corporation sold the assembly machine to Camille Corporation, a domestic corporation which is not registered with any investment promotions agency.
If Jayzam Corporation proceeds with the sale of the assembly machine to Camille Corporation without prior approval of the concerned investment promotion agency, then:
Jayzam Corporation would be liable for twice the amount of duty exemption that should have been paid
Camille Corporation would be liable for twice the amount of duty exemption that should have been paid
Jayzam and Camille Corporation would be solidarily liable for twice the amount of duty exemption that should have been paid
Jayzam and Camille Corporation would be jointly liable for twice the amount of duty exemption that should have been paid
Which of the following statements is/are true regarding the optional standard deduction (OSD)?
I. A taxpayer availing of OSD cannot simultaneously avail of itemized deductions
II. A taxpayer availing of OSD cannot simultaneously avail of net operating loss carryover
I only
II only
Both I and II
Neither I nor II
All the following are not entitled to any deduction for NOLCO, except:
Resident foreign corporations
PEZA-registered entities
SBMA-registered entities
International carriers
Under the CREATE Act, what is the limit for the additional deduction on labor training expenses?
20% of the research and development expense
30% of the direct cost of services
15% of net sales/receipts
10% of the direct labor wage
Which of the following tax is an allowable deduction from gross income of a VAT-Registered Taxpayer?
Stock transaction tax
Real property tax
Value added tax
Estate tax
Which type of income taxpayer may still claim cost of sales as allowable deduction aside from the 40% Optional Standard Deductions?
Individual income taxpayer
Corporate income taxpayer
Both a and b
Neither a nor b
How much is deductible entertainment, amusement, and recreational expense?
125,000
143,000
259,000
500,000
