WorksheetsIncome Taxation - Final Exam
Total questions: 50
Worksheet time: 38mins
Maria, a Filipino citizen residing in Quezon City, earns professional income from clients in Japan and Singapore. Where is her income taxable?
Only in Japan and Singapore
Only in the Philippines
In the Philippines and also taxed abroad
Not taxable since clients are foreign
XYZ Corp., a foreign corporation not engaged in trade or business in the Philippines, earns interest income from a Philippine bank. What is the situs of the income?
Taxable in the Philippines
Not taxable in the Philippines
Taxable only in the country of incorporation
Taxable in both countries
Ana, a nonresident alien, works remotely from the United States for a Philippine-based company. She receives her salary credited to a Philippine bank. Where is the income sourced?
United States
Philippines
Both U.S. and Philippines
Not taxable
Miguel, a resident citizen, owns an apartment in Dubai which he rents out to OFWs. The rental income is paid through a Dubai bank. What is the situs of the rental income?
Philippines
Dubai
Both
Exempt worldwide
A domestic corporation manufactures furniture in Cebu but sells them in Australia. Where is the situs of the income from selling goods?
Philippines
Australia
Both
Exempt because of export
A foreign corporation engaged in business in the Philippines operates a branch in Manila. The branch earns consulting income from local clients and dividends from a corporation in its home country. Which income is taxable in the Philippines?
Neither
Both Philippine consulting income and foreign dividends
Only foreign dividends
Only Philippine consulting income
A Filipino seafarer works on a foreign vessel sailing in international waters. His employment contract was executed in Manila. Where is his income sourced?
Philippines
International waters
Country of vessel registry
Not taxable anywhere
ABC Partnership, a resident partnership in the Philippines, earns royalties from allowing a Vietnamese company to use its patented formula. Where is the royalty income sourced?
Not taxable
Philippines
Both
Vietnam
Carlos, a nonresident alien engaged in business in the Philippines, sells merchandise to Philippine customers. Delivery and payment are both made in Manila. Where is the income sourced?
Both countries
Country of incorporation of Carlos
Country of origin of merchandise
Philippines
A domestic corporation invests in shares of a U.S. corporation. It receives cash dividends from the U.S. company. Where is the dividend income sourced?
Not taxable
Philippines
United States
Both
Double taxation occurs when—
A taxpayer pays two taxes of the same kind to the same government
The same income is taxed twice by the same taxing authority in the same period
All taxes paid by a taxpayer exceed income
Taxpayer pays more than one type of tax
Which of the following BEST describes international double taxation?
A foreign company is exempt from local taxes
Two countries agree not to impose any tax
One taxpayer is taxed by two countries on the same income
Two citizens pay tax to the same country
Which situation illustrates direct duplicate taxation?
Both mayor’s permit and income tax imposed by LGU
Income derived in the Philippines is taxed by both the Philippines and another country
Taxpayer pays real property tax for two adjacent lots
Land and building taxed separately
Which taxpayer is MOST likely to experience double taxation?
A domestic corporation that incurs losses
A nonresident alien earning income solely abroad
A Filipino working abroad with income taxed both abroad and in the Philippines
A resident citizen earning only local income
Which of the following is NOT an essential element of double taxation?
Same subject or object
Same taxing period
Same or identical purpose
Same tax amount
A scenario shows indirect duplicate taxation when—
A business pays two franchise taxes to the same municipality
A foreigner is taxed twice on income earned abroad
A corporation pays income tax and stockholder pays dividend tax on the same profit
A taxpayer pays both VAT and income tax on the same sale
Which of the following is an accepted remedy against international double taxation?
Tax credit and tax exemptions
Personal exemptions
Late filing amnesty
Additional local business tax
Country A and Country B impose tax on the same international shipping income earned by a resident of Country B. This is an example of—
Regressive taxation
Exempt compensation
International double taxation
Local double taxation
A domestic corporation earns profits in Paniqui and Pampanga. Both LGUs impose different local taxes on the business. Is this double taxation?
Yes, because it is the same activity taxed twice
No, because the taxpayer can choose which LGU to pay
Yes, because two LGUs impose tax
No, because different taxing authorities apply taxes for different purposes
Which BEST explains why the Philippines avoids double taxation through treaties?
To increase tax revenue
To attract foreign investment and prevent unfair tax burden
To simplify domestic business registrations
To eliminate corporate income tax
Which taxpayer is taxed on income from sources within and outside the Philippines?
Nonresident alien not engaged in business
Resident citizen
Nonresident Filipino
Resident alien
A nonresident alien engaged in business in the Philippines is taxed based on—
Gross income from worldwide sources
Net income from worldwide sources
Gross income from sources within the Philippines only
Net income from Philippine sources only
Which of the following is considered taxable compensation income?
13th month pay above the ₱90,000 exemption cap
De minimis benefits
GSIS/SSS contributions
PhilHealth and Pag-IBIG contributions
A self-employed individual with gross sales of ₱2,800,000 may avail of which tax option under TRAIN Law?
8% income tax on gross sales
Graduated income tax rates only
Optional standard deduction only
8% rate or graduated rates (choice allowed)
Which individual is automatically exempt from income tax?
Minimum wage earners receiving holiday pay
Part-time worker earning ₱25,000 per month
Freelancer earning ₱350,000 annually
Resident alien earning minimum wage
Which of the following is NOT considered taxable income?
Rental income from property
Gains from sale of property
Life insurance proceeds due to death of the insured
Compensation from employment
A Filipino resident receives the following:
• Salary from a local company
• Interest income from a U.S. bank
• Royalty income from a Philippine book publisher
Which income is taxable in the Philippines?
Salary only
Salary and royalties only
Salary and interest income only
All three items
A taxpayer earning ₱250,000 annually from employment is subject to—
8% income tax
5% income tax
No income tax under the TRAIN Law
20% income tax
Which is included in a self-employed individual’s taxable income?
Cost of goods sold
Business-related expenses
Gross sales minus allowable deductions
Initial capital investment
Which of the following BEST describes substituted filing?
Employees must file their own ITR regardless of withholding
Employer files the ITR for qualified employees whose income tax was correctly withheld
Only self-employed individuals can use substituted filing
Individuals automatically exempt from filing
Fringe Benefit Tax applies to benefits given to—
Rank-and-file employees
Both rank-and-file and managerial employees
Managerial and supervisory employees
Government employees only
Fringe Benefit Tax is imposed on which type of benefit?
Daily meal allowance
De minimis benefits
Benefits granted to managerial employees for their personal use
Mandatory government contributions
Under Philippine tax law, the FBT rate imposed on fringe benefits is—
10%
20%
25%
35%
The tax base for computing FBT is generally—
Total compensation income
Grossed-up monetary value (GMV) of the fringe benefit
Net taxable income
Cash value of benefit given
Which of the following is subject to FBT?
Clothing allowance within de minimis limits
Use of company vehicle for personal purposes by a manager
Rice subsidy within the P2,000 de minimis cap
Overtime pay
Which benefit is NOT subject to FBT?
Housing privilege for a manager
Expense account used for personal purchases
Benefits required by the nature of the business
Holiday bonus for a supervisory employee
Who is legally liable to pay the Fringe Benefit Tax?
Employee receiving the benefit
Employer granting the benefit
Both employer and employee
Government
Which of the following is considered tax-exempt from FBT?
Tuition assistance of a supervisor enrolled in an MBA for personal growth
Contributions to a private pension plan beyond allowable limits
Benefits given to rank-and-file employees
Company-provided vacation trips abroad
A company gives a managerial employee the use of a company-owned condominium for personal residence. This benefit is—
Not taxable because housing is exempt
Subject to 35% FBT
Considered de minimis
Taxable as compensation income
If the employer provides a fringe benefit with a value of ₱100,000, the grossed-up monetary value (GMV) using a 35% FBT rate is—
₱153,846
₱200,000
₱166,667
₱135,000
ABC Corp., a domestic corporation, earns income from its Manila operations and rental income from a property in Japan. How will ABC Corp. be taxed?
Only income from the Philippines is taxable
Worldwide income is taxable
Only foreign income is taxable
Both incomes are exempt
XYZ Ltd., a foreign corporation not engaged in business in the Philippines, receives royalty payments from a Philippine company for using its trademark. How is the royalty income taxed?
Not subject to Philippine tax
Taxed on gross income from Philippine sources
Taxed based on worldwide income
Taxed on net income from Philippine operations
A general professional partnership (GPP) earned ₱5,000,000 in professional fees. What tax does the GPP itself pay?
Percentage tax
Minimum corporate income tax
No income tax; partners are taxed individually
Corporate income tax on net income
Juan and Pedro formed a co-ownership after inheriting their parents’ apartment building. They simply divide the rental income monthly. How will the co-ownership be taxed?
Treated as a partnership subject to corporate income tax
Co-ownership is not a taxable entity; each reports his share
Entire income taxed as a corporation
Exempt from income tax
A domestic corporation incurred a net loss this year but earned interest income from a Philippine bank. How are the interest earnings taxed?
Exempt because the corporation incurred losses
Subject to regular corporate income tax
Subject to final withholding tax
Subject to minimum corporate income tax
A foreign corporation engaged in business in the Philippines earned ₱6M in sales locally and ₱2M from its headquarters abroad. How is it taxed?
Only on ₱6M local income
On worldwide income of ₱8M
Only on ₱2M foreign income
Not taxable because it is foreign
LMN Partnership (a business partnership) distributed its net income to partners after taxes. Which statement is correct?
Partners report their share subject to final tax
Partnership pays corporate income tax before distribution
Partnership is tax-exempt
Partners are taxed only if they receive compensation from the partnership
A domestic corporation received dividends from another domestic corporation. How are the dividends treated?
Taxable at regular corporate rate
Subject to final tax
Exempt from income tax
Taxable only if reinvested
A foreign corporation not engaged in business in the Philippines sold shares of a Philippine company. The shares are located and traded in the Philippines. How is the gain taxed?
Exempt because it is foreign
Subject to capital gains tax
Subject to regular corporate tax
Subject only if profits exceed ₱100,000
A limited partnership earned ₱2M in net income. One partner, who is a limited partner, receives a share in the profits. How is his share taxed?
Treated as passive income subject to final tax
Taxable as ordinary income of the partner
Exempt because he is a limited partner
Taxed to the partnership only
