Question:

1. The following are major internal revenue business taxes in the NIRC of 1997 (as
amended), except one:
a. Income tax
b. Excise tax
c. Value-added tax
d. Percentage tax

Questions:
1. Which statement is considered correct?
a. An excise tax which imposes a tax based on weight or volume capacity or any
other physical unit of measurement is called specific tax.
b. An excise tax which imposes a tax based on selling price or other specified
value of the article is called ad valorem tax.
c. A percentage tax which is imposed whether the transaction resulted in a gain
or loss is called transaction tax.
d. All of the above

2. Alamid imported cigarettes from Taiwan for sale. At a later date, he sold the
cigarettes in the Philippines. He is subject to the value-added tax. He is also subject
to the business tax of:
a. Excise tax
b. Income tax
c. Percentage tax
d. None of these

3. Burgos is manufacturer of fermented liquors. In making sales, all taxes on the

products and transactions are passed on to the buyers. For purposes of the value-
added tax, which of the three taxes listed below that he pays forms part of the gross
selling price?
a. Excise tax
b. Value-added tax
c. Percentage Tax
d. None of these

4. Cantor is a VAT-registered dealer of liquors. On his sales in the Philippines, his tax
is:
a. Excise tax
b. Value-added tax
c. Percentage tax
d. None of these

5. Statement 1: A person subject to excise tax is also subject to value-added tax.

Statement 2: A person subject to percentage tax is also subject to value- added tax.
a. Both statements are correct
b. Statement 1 is correct while Statement 2 is wrong
c. Both statements are wrong
d. Statement 1 is wrong while Statement 2 is correct

6. Which of the following is an excisable article?

a. Shampoo
b. Soaps
c. Lotion
d. Perfumes

7. Which of the following is an excisable article?

a. Coffee
b. Energy drink
c. Milk
d. Distilled water

8. Which of the following is not an excisable article?

a. Trucks
b. Yachts
c. Limousines
d. Sedan

9. Which of the following is not an excisable article?

a. Narcotics
b. Cigars
c. Vape
d. Cigarettes

10. Who is liable to pay the excise tax on indigenous petroleum?

a. Taxpayer processing the petroleum
b. First buyer or purchaser of petroleum
c. End user of petroleum
d. Taxpayer extracting the petroleum

Questions:
1. Which statement is wrong? Transactions considered “in the course of trade or business”
and, therefore, subject to the business taxes include:
a. Regular conduct or pursuit of a commercial or an economic activity by a
stock private organization.
b. Regular conduct or pursuit of a commercial or an economic activity by a
non-stock, non-profit private organization.
c. Isolated services in the Philippines by non-resident foreign persons.
d. Isolated sale of goods or services for a gross selling price or receipts of
P500,000.
2. 1st statement: Non-stock and non-profit private organizations which sell exclusively to
their members in the regular conduct or pursuit of commercial or economic activity are
exempt from value-added tax.
2nd statement: Government entities engaged in commercial or economic activity are
generally exempt from value-added tax.
a. Both statements are correct.
b. Only the first statement is correct.
c. Both statements are incorrect.
d. Only the second statement is correct.

3. Value added tax is a/an:

a. Indirect tax c. Local tax
b. Direct tax D. Personal tax

4. Melona purchased machineries from a VAT supplier. What is the treatment for VAT
purposes of the sale transaction?
a. Vatable at 12%
b. Vatable at 0%
c. Vat exempt
d. None of the choices

Questions:
1. Which statement is wrong? Value-added tax on importation of goods:
a. Is imposed on an importation for sale or for use in business.
b. Is imposed on an importation for personal use.
c. Should be paid prior to removal from customs custody.
d. Is not available as input tax even if related to business

2. One of the following statements is incorrect.

a. Imported goods which are subject to excise tax are no longer subject to value-added
tax.
b. VAT on the importation is paid to the Bureau of Customs before the imported goods
are released from its custody.
c. Expenses incurred after the goods are released from customs custody are
disregarded in computing VAT on importation.
d. When a person who enjoys tax-exemption on his importation subsequently sells in
the Philippines such imported articles to non- exempt person, the purchaser-non-
exempt person shall pay the VAT on such importation

3. Which statement is correct? The value-added tax on an importation:

a. Should be paid by the tax-exempt importer, if he subsequently sells the goods to a
non-tax-exempt purchaser.
b. Should be paid by the non-tax-exempt purchaser to whom the tax- exempt importer
sells it.
c. Is a liability either of the tax-exempt importer or the non-tax-exempt purchaser.
d. Shall not pay the value-added tax because the transaction was exempt at the point of
importation.

4. Three of the following are exempt from the value-added tax. Which is the exception?
a. Importation of books and any newspapers, magazines, review or bulletin.
b. Importation of agricultural and marine food products in their original state.
c. Importation of breeding stock and genetic materials.
d. Importation of fish, prawn, livestock and poultry feeds.

Items 5 and 6 are based on the following information:

A perfume, classified as non-essential article (20% excise tax rate), was imported for
sale, the particulars of which are as follows:
Value of importation $10,000
Freight and insurance P10,000
Customs duties 20,000
Other expenses prior to the release of goods from customs
custody 5,000
Facilitation expense 5,000
Rate of exchange of 1 US Dollar is P56.

5. The excise tax payable on the importation is:

a. P112,000 b. P119,000 c. P120,000 d. Exempt

6. The value-added tax due on the importation is:

a. P67,200 b. P71,400 c. P85,680 d. Exempt

7. An importer wishes to withdraw his importation from the Bureau of Customs. The
imported goods were subjected to a 10% customs duty in the amount of P12,500
and to other charges in the amount of P9,500. The value-added tax due is:
a. P12,500 b. P13,750 c. P17,640 d. P14,700

8. Daroya imported a car from U.S.A. for his personal use. Total landed cost is
P280,000 (about U.S. $4,000) including customs duties of P56,000. VAT payable is:
a. P28,000 c. P40,320
b. P33,600 d. None, because the importation is for personal use.

Items 9 and 10 are based on the following information:

Taxpayer is VAT-registered. Importations were for:
Any value-added tax not included. Sale Own use
Invoice cost (Exchange rate is $1 : P56) $ 80,000 $ 4,000
Expenses based on cost:
Freight and insurance 4% 4%
Other expenses up to the point of removal from
customs house 6% 6%
Transfer expenses from customs house to
warehouse in Manila 1/2% 1/2%

Selling price of goods imported for sale within the same taxable period of importation,
value-added tax included, was P6,720,000.
9. The value-added tax payable on the importations is:
a. P492,800 b. P491,300 c. P517,440 d. P620,928

10. The value-added tax payable on the sale is:

a. P99,072 b. P128,640 c. P107,200 d. P720,000

Items 11 and 12 are based on the following information:

Esprit Corp. imported an article from Japan. The invoice value of the following article
was 1,000,000 Yen (1 Yen = P0.50). The following were incurred in connection with
the importation:
Insurance P15,000
Freight 10,000
Postage 5,000
Wharfage dues 7,000
Arrastre charges 8,000
Brokerage fee 25,000
Facilitation fee 3,000
The imported article was subject to P50,000 customs duty and P30,000 excise tax.
Esprit Corp. spent P5,000 for trucking from the customs warehouse to its warehouse
in Quezon City.

11. The VAT on importation is:

a. P65,800 b. P78,000 c. P65,000 d. P50,000

12. Assuming that the imported article was sold for P950,000, VAT exclusive, the
VAT payable is:
a. P36,000 b. P29,200 c. P30,000 d. P114,000

Items 13 and 14 are based on the following information:

Falcon Co., a VAT-registered taxpayer, is a customs broker and a forwarder,
representing importers at the piers and transporting their importations to
warehouses all over Luzon. On an importation by Gencor Co., its costs were (taxes
not included) as follows:
Invoice cost of importation (Exchange rate is $1 : P56) $30,000
Expenses on the importation up to Philippine port P20,000
Excise tax 10,000
Customs duty 15,000
Customs brokerage charges paid to Falcon Co. 8,000
Forwarding charges paid to Falcon Co. 25,000

13. The value-added tax of Gencor Co available as tax credit is:

a. P210,960 b. P175,800 c. P173,300 d. P207,960

14. The business tax of Falcon Co., before any tax credits, is:
a. Value-added tax of P3,960 c. Value-added tax of P0
b. Percentage tax of P990 d. Percentage tax of P0

15. Louie, a VAT registered taxpayer-imported goods as follows:

Cost price of imported goods P 900,000
Insurance premiums 125,000
Freight charges 135,000
Customs duties 600,000
Wharfage fees 20,000
Arrastre fees 30,000
Internal processing fee 40,000
Customs broker fees 80,000
Documentary stamp tax 60,000
Interest and other bank charges 90,000
Warehouse and storage fees 100,000
Excise tax 120,000
Facilitation fees 50,000

The VAT on importation is A.

a. P235,000
b. P276,000
c. P230,000
d. P188,000

Questions:
1. Mapili owns a mango plantation. He harvested ripe mangoes and sold them to
Fatima, fruit stand owner and to Sweety, fresh fruit juice vendor whose annual
gross sales never exceeded P 3,000,000. For VAT purposes, which sale shall be
exempt from VAT?
a. The sale to Fatima only
b. The sale to Sweety only
c. The sale to both Fatima and Sweety
d. None, both sales to Fatima and Sweety shall be subject to VAT

2. Using the same information in the preceding number, assuming that Fatima and
Sweety sold the mangoes they bought from Mapili to their respective customers,
what is the tax consequence of the sale?
a. Both shall be subject to VAT
b. Only the sale of Fatima shall be exempt from VAT
c. Both shall be exempt from VAT
d. Only the sale of Sweety shall be subject to VAT

3. One of the following is not a poultry for VAT purposes:

a. Fowl b. Duck c. Goose d. Fighting cock

4. Which of the following shall be exempt from value-added tax?

a. Importation of feeds for race horses.
b. Sale of feeds for aquarium fish.
c. Sale or importation of feeds for zoo animals.
d. None of the above.
5. One of the following is not subject to value-added tax:
a. Sale or importation of ingredients, whether locally produced or imported,
used in the manufacture of finished feeds.
b. Sale or importation of breeding stock and genetic materials.
c. Sale or importation of coal and natural gas, in whatever form or state.
d. Sale or importation of petroleum products and raw materials used in the
manufacture of petroleum products subject to excise tax.

6. First statement: A taxpayer subject to VAT may be subject to excise tax also.
Second statement: A taxpayer subject to VAT shall not be subject to other percentage taxes
under title V of the Tax Code.
a. Both statements are correct
b. Only the first statement is correct
c. Both statements are incorrect
d. Only the second statement is correct

7. First statement: Sales of drugs and medicines of pharmacy run by the hospital
to outpatients are subject to VAT.
Second statement: Pharmacy items used in the performance of medical
procedures in hospital units such as in the operating and delivery rooms and by
other departments are considered part of medical services rendered by the
hospital, hence, not subject to VAT.
a. Both statements are correct
b. Only the first statement is correct
c. Both statements are incorrect
d. Only the second statement is correct

8. Oneof the following sale of real properties shall be subject to VAT:

a. Sale of real properties utilized for low-cost housing.
b. Sale of real properties utilized for socialized housing.
c. Sale of house and lot and other residential dwellings valued at P
2,500,000 and below.
d. Sale of apartment house held primarily for lease in the ordinary
course of trade or business.

9. First statement: Sale of residential lot valued at One million five hundred pesos
(P 1,500,000) and below shall be exempt from VAT.
Second statement: If two or more adjacent residential lots are sold or disposed
of in favor of one buyer, for the purpose of utilizing the lots as one residential
lot, the sale shall be exempt from VAT only if the aggregate value of the lots do
not exceed P 1,500,000.
a. Both statements are correct
b. Only the first statement is correct
c. Both statements are incorrect
d. Only the second statement is correct
10. To be exempt from value-added tax, the lease of residential units shall have:
I. Monthly rental per unit of P 15,000 or less.
II. Gross annual rentals exceeding P 3,000,000.
a. Both I and II are necessary c. Only I is necessary
b. Both I and II are not necessary d. Only II is necessary

11. To be exempt from value-added tax, the lease of commercial units shall have:
I. Monthly rental per unit not exceeding P 15,000 or less.
II. Gross annual rentals not exceeding P 3,000,000.
a. Both I and II are necessary c. Only I is necessary
b. Both I and II are not necessary d. Only II is necessary

12. To be exempt from VAT, sellers of goods or properties and services must satisfy
certain requirements such as:
I. Not VAT-registered.
II. Annual gross sales and/or receipts not more than P 3,000,000.
a. Yes to I and II
b. No to I and II
c. Yes to I only
d. Yes to II only

Questions:
1. Gross selling price includes all of the following, except one. Which one?
a. Total amount which the purchaser pays to the seller.
b. Total amount which the purchaser is obligated to pay to the seller.
c. Excise tax.
d. Value-added tax.

2. The basis of value-added tax on sale of real property under cash basis or deferred
payment plan is:
a. The higher between the selling price stated in the sales document or market
value.
b. Selling price stated in the sales document.
c. Instalment received plus interest and other charges.
d. Gross receipts.

3. Statement 1: The Output value-added tax is computed by multiplying the gross

selling price by 12%; or multiplying the total amount indicated in the invoice by
12/112.
Statement 2: The Output value-added tax is computed by multiplying the total
amount indicated in the invoice by 12%.
a. Both statements are correct
b. Both statements are wrong
c. The first statement is correct but the second statement is wrong
d. The first statement is wrong but the second statement is correct
4. Which statement is correct?
a. The sales invoice that shows a total, with an indication that it includes the
value-added tax even if it does not show the tax separately, is a correctly
prepared invoice.
b. The invoice which shows the selling price and the value-added tax separately,
but with a total which is a correct amount is a properly prepared invoice.
c. An invoice which shows the selling price and the value-added tax separately,
which is paid by the buyer, is violative of the revenue regulations on issuance
of sales invoices.
d. A sales invoice by a VAT taxpayer can be used only on a VAT sale.

5. Statement 1: In the books of accounts of a VAT-registered taxpayer, sales

are recorded net of output taxes.
Statement 2: In the books of accounts of a VAT-registered taxpayer,
purchases are recorded net of input taxes.
a. Both statements are correct
b. Both statements are wrong
c. The first statement is correct but the second statement is wrong
d. The first statement is wrong but the second statement is correct

6. Which of the following are not account titles with balances in the books of
accounts of a VAT taxpayer?
a. Output taxes c. Excess input taxes carry-over
b. Input taxes d. VAT payable

7. Which of the following is not a sale and therefore is not subject to the value-
added tax?
a. Transfer, use or consumption not in the ordinary course of business of
goods or properties ordinarily intended for sale or use in the course of
business.
b. Distribution or transfer to shareholders or investors of share in the profits
of a VAT-registered person.
c. Distribution or transfer to creditors in payment of debt.
d. Consignment sales.

8. Under the value-added tax law, which of the following sales may not be zero-
rated?
a. Export sales
b. Sale of goods to persons engaged in international shipping operations
c. Foreign currency denominated sales
d. Sale of goods to an export-oriented enterprise whose export sales exceed
70% of total annual production.

9. Which statement is correct? The value-added tax on goods or properties sold:

a. Is based on gross sales and not on net sales.
b. May be due even if the goods or properties were not actually sold.
c. Is not imposed on goods exported.
d. Is a selling expense of the trader.
10. Yakuza, a Japanese residing in the Philippines, bought garments from Halili Corp., a
domestic corporation, and exported the same to Japan. Total value of export is P100,
000. The output VAT due on the transaction is:
a. P10,000
b. P12,000
c. None, because 0% applies
d. None, because the sale is exempt from VAT

11. Tax credit for input taxes shall be allowed if:

a. Both the seller and the purchaser are VAT-registered.
b. Either one of the seller or the purchaser is VAT-registered.
c. Neither one of the seller or the purchaser is VAT-registered as long as VAT
invoice is issued.
d. The seller is VAT-registered regardless of whether the purchaser is VAT-
registered or not.

12. A person who becomes subject to the value-added tax for the first time can have an
input tax out of the inventory of goods, materials and supplies on hand at the time
he became liable. This is called:
a. Value-added tax deemed paid c. Transitional input tax
b. Presumptive input tax d. None of these

13. The allowable transitional input tax is:

a. The lower between 2% of the value of beginning inventory or actual VAT
paid on such inventory.
b. The higher between 2% of the value of beginning inventory or actual VAT
paid on such inventory.
c. The actual VAT paid on the beginning inventory.
d. 2% of the value of beginning inventory.

14. One of the following statements is wrong. Identify. For a taxpayer who
becomes liable for the first time to the value-added tax:
a. There can be an input tax on purchases he made when not yet a VAT
taxpayer.
b. He must use a VAT invoice on the sale of the goods purchased when not
yet a VAT taxpayer.
c. He must still use the non-VAT invoice in use when he was not yet a VAT
taxpayer on the sale of goods on hand on the transition date.
d. There will be an adjustment on the inventory valuation on the transition
date.

15. Which is correct? The inventory balance in the financial statements at any given
date of a VAT-registered person is:
a. Balance, net of input taxes.
b. Balance, inclusive of input taxes.
c. Balance on which the transitional input tax is computed annually.
d. Balance where the value-added tax thereon may be calculated by
multiplying it by the VAT rate.
16. Which of the following statements is wrong? The value-added tax is:
a. Not an expense
b. Not a part of the gross selling price
c. A tax credit
d. On purchases, is a part of the cost of inventory

17. All of the following, except one, is allowed presumptive input tax. Which
one?
a. Processor of sardines, mackerel and milk.
b. Manufacturer of refined sugar and cooking oil.
c. Manufacturer of packed noodle-based instant meal.
d. Supplier of books and other school supplies.

18. Which statement is wrong?

a. There is a transitional input tax on sales of goods or properties.
b. There is a transitional input tax on sales of services.
c. There is a presumptive input tax on sales of goods or properties.
d. There is a presumptive input tax on sales of services.

19. Sugary is a processor of refined sugar. It purchases sugarcane from farmers for
processing into intermediate stages until it becomes refined sugar. In a month it
had the following sales and purchases, no tax included:
Sales P880,000
Purchases of sugarcane 220,000
Purchases of containers and paper labels 100,000
The value-added tax payable is:
a. P67,200 b. P89,200 c. P84,800 d. P69,200

20. The account title to best reflect the value-added tax on a purchase:
a. Sales tax payable
b. Input tax
c. Value-added tax payable
d. Output tax

21. Pfizer Corporation sold its capital goods to Wyetth Company on instalment basis. It
is agreed that the instalment selling price, including the VAT, shall be payable in 6
equal monthly installments, commencing on the date of sale. The data pertinent to
the assets sold are as follows:
Date of sale January 1, 2018
Instalment selling price P 6,000,000
Passed-on VAT 720,000
Original cost of assets 3,000,000
Accumulated depreciation at 1,000,000
the time of sale
Unutilized input tax (assets sold) 100,000
Remaining useful life 5 years
The VAT payable on the sale by Pfizer Corporation and the monthly
creditable input tax that Wyetth Company can claim are, respectively:
a. Pfizer, P720,000; Wyetth, P144,000
b. Pfizer, P620,000; Wyetth, P720,000
c. Pfizer, P620,000; Wyetth, P12,000
d. Pfizer, P720,000; Wyetth, P720,000

22. Ilarde, a VAT taxpayer, on January 1, 2018, made the following purchases from
VAT sellers, for use in his business. The amounts stated below are not inclusive
of value-added taxes:
Machine 1, with a useful life of 20 years P3,000,000
Machine 2, with a useful life of 3 years 1,800,000
Patent, with usefulness of 10 months 600,000
The input taxes from the purchases, available to Ilarde, for the month of
January, 2018:
a. P19,200 b. P70,000 c. P79,500 d. P84,000

23. Which statement is correct? Input value-added tax attributable to the purchase
of capital goods may:
a. If resulting in excess input taxes, be carried over to a next taxable period.
b. Be refunded.
c. Be credited against other internal revenue taxes of the taxpayer.
d. At the option of the taxpayer, avail of any of the above.

24. Jargon Corporation has the following sales (VAT not included) during the
month:
Sale to private entities subject to 12% VAT P 100,000
Sale to private entities subject to 0% VAT 100,000
Sale of exempt goods 100,000
Sale to Government subjected to 5% final VAT
withholding 100,000
Total sales for the month 400,000

The following input taxes were passed-on by its VAT suppliers:

Input tax on taxable goods (12%) 6,000
Input tax on zero-rated sales 3,000
Input tax on sale of exempt goods 2,000
Input tax on sale to Government 4,000
Input tax on depreciable capital goods not attributable
to any specific activity (monthly amortization for 60
months) 20,000

The allowable creditable input taxes for the month on sales to non- Government entities
and on sale to the Government are, respectively:
a. Non-Government, P26,000; Government, P9,000
b. Non-Government, P19,000; Government, P5,000
c. Non-Government, P19,000; Government, P9,000
d. Non-Government, P19,000; Government, P7,000

25. Which of the following statements is wrong? When a purchase from a VAT-
registered person is for use both in the VAT and non-VAT business of purchaser, the
VAT component of the total amount paid for the purchase:
a. May be debited at the time of purchase to the input taxes account.
b. May be debited at the time of purchase to the purchases account.
c. Must be allocated immediately and at the time of purchase between the VAT
and non-VAT business.
d. Must be allocated between the VAT and non-VAT business at the end of the
taxable period.

26. The formula: Output taxes (less) input taxes (equals) value-added tax payable
means that:
a. Value-added taxes are not deductible from gross income.
b. Value-added taxes paid on purchases are prepayments.
c. Value-added taxes during a taxable period may not appear in the financial
statements.
d. All the above statements are correct.

27. Statement 1: If the input tax at the end of any taxable quarter (inclusive of
input VAT carried over from the preceding taxable quarter) is in excess of the
output tax, the excess input tax shall be carried over to the succeeding taxable
month or quarter.
Statement 2: The input tax on capital goods shall be spread evenly over the
month of acquisition and fifty-nine succeeding months, or over the shorter
period of life if less than five (5) years, applies if the aggregate acquisition cost,
exclusive of VAT, exceeds one million pesos (P1,000,000).
a. Both statements are correct
b. Both statements are wrong
c. First statement is correct but second statement is wrong
d. First statement is wrong but second statement is correct

28. Zubiri had the following data arising out of sales and purchases in January,
2018:
Output taxes on sales P 240,000
Input taxes on purchases of goods sold 238,200
Input taxes on machine bought with a useful life of 12
years 180,000
The value-added tax payable for the month:
a. P0 b. P1,800 c. P72,000 d. P60,000

29. Statement 1: A value-added tax payment is not an expense in the books of

accounts of the VAT taxpayer.
Statement 2: The excess of input taxes over output taxes in a given month or
quarter is a deferred charge.
a. Both statements are correct
b. Both statements are wrong
c. First statement is correct but second statement is wrong
d. First statement is wrong but second statement is correct
30. Which of the following input taxes can be refunded or converted into tax credit
certificates at the option of the VAT-registered taxpayer?
a. Input tax on purchase of raw materials.
b. Input tax on importation of supplies.
c. Input tax on zero-rated sales of goods, properties or services.
d. Input tax on purchase of services.

31. Which statement is wrong? On goods exported by a VAT-registered person:

a. The excise tax is not imposed.
b. The value-added tax is not imposed.
c. The input taxes attributable to the goods exported may be credited against
other internal revenue taxes due from the taxpayer.
d. The input taxes attributable to the goods exported may be claimed as a refund
by the taxpayer.

32. Statement 1: When a VAT-registered manufacturer who is also subject to an excise

tax, exports his goods, the input taxes attributable to the goods exported may be
refunded or credited.
Statement 2: When a VAT-registered manufacturer who is also subject to an excise
tax, exports his goods, the excise tax on such goods may be refunded or credited.
a. Both statements are correct
b. Both statements are wrong
c. First statement is correct but second statement is wrong
d. First statement is wrong but second statement is correct

33. 1st statement: Unused input tax of persons whose registration had been cancelled
may be converted into tax credit certificate which may be used in payment of other
NIRC taxes.
2nd statement: Refund shall be granted within 90 days from the date of submission
of complete documents in support of the VAT refund application to the BIR.
a. Both statements are correct
b. Only the first statement is correct
c. Both statements are incorrect
d. Only the second statement is correct

34. Statement 1: Withholding value-added tax is required at five percent (5%) of

the gross payment for the purchase of goods by the Government or any of its
political subdivision, or by a government- owned or controlled corporation.
Statement 2: Withholding value-added tax is required at five percent (5%) on
every release of installment payment on purchase of service by the
Government or any of its political subdivision, or by a government-owned or
controlled corporation.
a. Both statements are correct
b. Both statements are wrong
c. First statement is correct but second statement is wrong
d. First statement is wrong but second statement is correct

35. A VAT-registered supplier sold goods amounting to P500, 000 gross selling price
to a government-controlled corporation during a particular quarter. Which of
the following statements is incorrect in relation to the sale of goods?
a. The sale is subject to withholding of final VAT.
b. The government-controlled corporation will withhold P25, 000 final VAT.
c. The government-controlled corporation shall remit the withholding VAT to
the BIR within 10 days following the end of the month the withholding
was made.
d. The VAT-registered supplier may refuse the withholding of VAT as long as
it is willing to pay the full 12% VAT.

36. Monthly VAT declaration is filed on or before the:

a. 15th day from the end of each month.
b. 25th day from the end of each month.
c. 20th day from the end of each month.
d. 30th day from the end of each month.

37. Kitkat, a VAT taxpayer, had the following data for the first three months of
taxable year 2018:
Data for the months of January February March
VAT not included:
Sales P1,150,000 P2,000,000 P1,850,000
Purchases 600,000 1,600,000 900,000
There was a deferred input tax of P20,000 at the end of the previous year. The
value-added tax payable at the end of March is:
a. P90,000 b. 95,000 c. P 180,000 d. P 114,000

38. Excess input tax carry-over can be done in:

a. The monthly VAT return but not in the quarterly VAT return.
b. The quarterly VAT return but not in the monthly VAT return.
c. Both in the monthly VAT return and quarterly VAT return.
d. Either only the monthly or the quarterly VAT return.

39. Which statement is not correct?

a. The excess input taxes of the first month of a quarter, arising from domestic
sales, may be carried over to the second month of the quarter.
b. The excess input taxes of a taxable quarter, arising from domestic sales, may
be carried over to the succeeding quarter.
c. The excess input taxes of a taxable period arising from domestic sales may be
refunded.
d. The excess input taxes of a taxable period arising from export sales may be
refunded.

40. The allowable transitional input tax is equivalent to .

a. the higher between 2% of the value of beginning inventory or actual VAT
paid on such inventory.
b. the lower between 2% of the value of beginning inventory or actual VAT paid
on such inventory.
c. the lower between 4% of the value of beginning inventory or actual VAT paid
on such inventory.
d. the higher between 4% of the value of beginning inventory or actual VAT
paid on such inventory.

Situational #1:
Inday Co. has the following sales during the month:
Sale to private entities (VAT inclusive) 224,000.00
Sale to export-oriented enterprise 100,000.00
Sale of exempt goods 100,000.00

The following input taxes were passed on by its VAT suppliers during the month:
Input tax on taxable goods 5,000.00
Input tax on zero-rate sales 3,000.00
Input tax on sale of exempt goods 2,000.00
Input tax on depreciable capital good not attributable
to any specific activity 20,000.00

41. The output VAT for the month:

a. 48,000
b. 36,000
c. 26,880
d. 24,000

42. The input VAT for the month:

a. 5,000
b. 8,000
c. 23,000
d. 15,000

43. The VAT payable for the month:

a. 1,000
b. 7,200
c. 9,000
d. 16,000
Situation #2:
Liliw, Co. is a fast growing vat registered business. Due to its expanding workforce, it
needed a bigger office. It hired the services of a building contractor to construct a 25
storey building for a contract price of P10 Million. It was agreed that Liliw Co. will
procure the necessary materials for the construction. For the month of January 2019, the
records of Liliw Co. pertaining to the construction showed the following:

Billings Payments
Services 1,000,000 700,000
Materials 650,000 500,000

44. How much is the creditable input tax?

a. 198,000 c. 162,000
b. 180,000 d. 144,000

45. Assuming it is the building contractor who will provide the materials, how
much is the creditable input tax?
a. 198,000
b. 180,000
c. 162,000
d. 144,000
QUIZZER 1 – BUSINESS TAXES PART 1: THEORIES

1. Statement 1: Sale by agricultural cooperatives to non-members can only be

exempted from VAT if the producer of the agricultural products sold is the
cooperative itself. If the cooperative is notthe producer (e.g. trader), then only
those sales to its members shall be exempted from VAT.
Statement 2: Sale or importation of agricultural food products in their original
state is exempt from VAT irrespective of the seller and buyer thereof.
A. True, True
B. True, False
C. False, False
D. False, True

2. Statement 1 – the VAT on sale of goods shall be determined based on gross selling
price. As such, output on sale of goods is substantiated by the VAT invoice
Statement 2 – discounts determined and granted at the time of sale, which are
expressly indicated in the invoice, the amount thereof forming part of the gross
sales duly recorded in the books of account, and sales returns and allowances, are
allowable deductions from the gross selling price
A. True, True
B. True, False
C. False, False
D. False, True

3. One of the following is not a transaction deemed sale

A. Consignment of goods if actual sale is made within 60 days following the date
such goodswere consigned
B. Transfer use or consumption not in the ordinary course of business, of goods
or properties originally intended for sale or for use in the course of business
C. Distribution or transfer to shareholders or investors of goods or properties as
share in theprofits of a VAT-registered person or to creditors in payment of
debt
D. Retirement from or cessation of business, with respect to inventories of taxable
goods on hand as of the date of such retirement or cessation

4. Which of the following input taxes can be refunded, converted into tax credit
certificates orcarried over to the next quarter at the option of the VAT-registered
taxpayer?
A. Input tax on purchase of services.
B. Input tax on importation of supplies
C. Input tax on purchase of raw materials.
D. Input tax on zero-rated sales of goods or services.
5. First statement: Unused input tax of persons whose registration has been cancelled
may be converted into tax credit certificate, which may be used in payment of
other NIRC taxes.
Second statement – Claim for refund or conversion to tax credit certificate of
input arising fromzero-rated transactions should be filed within 2 years from the
close of the quarter
A. True, True
B. True, False
C. False, False
D. False, True

6. Persons who are exempt from the VAT may voluntarily register under the VAT
system. Amongthe consequences of optional registration are as follows, except
A. Shall be allowed to claim input VAT on all purchases of goods and services
B. Shall be required to submit a monthly VAT declaration and quarterly VAT
return
C. Shall be allowed to claim transitional input VAT during the first year of VAT
registration
D. Optional VAT registration shall be irrevocable for three years from the
quarter the election was made (forever for radio and television networks)

7. Which among the following is subject to the VAT

A. Sale of rice
B. Feed for race horse
C. Sale of polished or husked rice
D. Sale of roasted chicken for take-out

8. The following importation are exempt from the VAT, except:

A. Importation of fertilizers
B. Importation of newspaper
C. Importation of a motorcycle, intended for personal use of the importer
D. Importation personal or household effects of belonging to residents of the
Philippines, provided said importation is also exempt under the Tariff and
Customs Code of the Philippines

9. Which of the following transactions is exempt from value added tax.

A. Transportation of cargoes
B. Medical, dental hospital and veterinary services rendered by a professional.
C. Sale by an art gallery of literary works, musical composition, work of art
and similar creations, or devices performed for the production of such
works.
D. Sale of books and any newspaper, magazine, review or bulletin, which
appears at regular intervals with, fixed prices for subscription and sale
which is not devoted principally to the publication of paid advertisements.

10. Statement 1 – All sales of goods and services, in the course of trade or
business, is subject to the VAT.
Statement 2 - Importation, whether for business or personal use, except those
which are exempt from the VAT by the Tax Code and other special laws, is
subject to the VAT.
A. True, True
B. True, False
C. False, False
D. False, True

11. Statement 1 – Generally, a taxpayer whose gross sales or receipts, in a taxable

year, exceeded Php3, 000, 000 is subject to the VAT, even if he is not VAT
registered.
Statement 2 – Service rendered in the Philippines by a non-resident alien,
including a non-resident foreign corporation (importation of service) is subject
to the final withholding VAT.
A. True, True
B. True, False
C. False, False
D. False, True

12. Statement 1 – Sale of goods or services subject to the zero percent (0%) vat is
also considered a VAT exempt transaction.
Statement 2 – A non-VAT registered person who issues a vat receipt on a given
transaction is subject to the VAT on the said transaction.
A. True, True
B. True, False
C. False, False
D. False, True

13. The following are business taxes under the National Internal Revenue Code,
except:
A. Value-added tax
B. Other Percentage tax
C. Documentary stamp tax
D. Excise tax on manufacturing and importation

14. The following are subject to the excise tax, as business tax:
A. Non-invasive cosmetic surgery
B. Manufacturing and importation of automobile
C. Manufacturing and importation of cigar, cigarette, tobacco products;
D. Manufacturing and importation of wine, whisky and fermented spirit
15. The allowable transitional input tax is equivalent to .
A. the higher between 2% of the value of beginning inventory or actual VAT paid
on such inventory.
B. the lower between 2% of the value of beginning inventory or actual VAT paid
on such inventory.
C. the lower between 4% of the value of beginning inventory or actual VAT paid
on such inventory.
D. the higher between 4% of the value of beginning inventory or actual VAT
paid on such inventory.

16. Value-added tax, as to rate is an example of .

A. proportional tax
B. graduated tax
C. progressive tax
D. regressive tax

17. Which of the following statement/s is/are CORRECT?

I. Excise tax on domestic goods shall be paid by the manufacturer or
producer before the removal of such goods from the place of production.
II. Excise tax for indigenous petroleum, locally extracted natural gas and
liquefied natural gas shall be paid by the manufacturer or producer.
III. Excise tax on exported products shall be paid the owner, lessee,
concessionaire or operator of the mining claim.
A. Statements I, II and III are correct.
B. Statements I and II are correct.
C. Only Statement I is correct.
D. Only Statement II is correct.

18. The following items are not part of the taxable base for Value Added Tax
purposes, EXCEPT .
A. cost of sales of the taxable goods sold
B. discounts that are expressly indicated in the invoice
C. sales return with proper credit or refund made during the month
D. sales allowance with proper credit or refund made during the month

19. Love, a Filipino resident who went to Hong Kong for a vacation, bought 10
signature bags and brought them all to the Philippines upon her return. What
is the tax implication of the importation of her bags?
A. The importation is both subject to Value Added Tax (VAT) and customs
duties tax
B. The importation is exempted from both VAT and customs duties tax
C. The importation is subject to VAT but not to customs duties tax
D. The importation is subject to customs duties tax but not VAT

20. Which of the following is INCORRECT?

I. Persons not subject to mandatory registrations (because their actual or
expected gross sales/receipts from non-exempt businesses for the past year
do not exceed P3,000,000) shall not be allowed to cancel their VAT
registrations for the next three years.
II. Persons who are VAT-registered but enter into VAT-exempt transactions may
opt to apply the VAT to their transactions (which would have been exempt)
but shall not be allowed to cancel their VAT registrations for the next three
years.
III. Franchise grantees of radio and/or television broadcasting whose annual gross
receipts of the preceding year do not exceed P10M may opt for VAT
registration, but shall not be allowed to cancel their VAT registrations for the
next three years.
A. III only
B. II only
C. I only
D. I, II, and III

21. Which of the following is NOT a transaction deemed sale?

A. Consignment of goods, if actual sale is made within 60 days following the date
such goods were consigned
B. Transfer, use or consumption not in the ordinary course of business of goods or
properties originally intended for sale or for use in the course of business
C. Distribution or transfer to shareholders or investors of goods or properties as
share in the profits of a Value Added Tax-registered person or to creditors in
payment of debt
D. Retirement from or cessation of business, with respect to inventories of taxable goods
on hand as of the date of such retirement or cessation

22. Which of the following refers to the term “In the Course of Trade or Business”?
I. “Engaged in the course of trade or business” means the regular conduct
or pursuit of a commercial or economic activity, including transactions
incidental thereto, by any person regardless of whether or not the person
is a non-stock, non- profit private organization or government entity
II. Non-resident persons who perform services in the Philippines, even if the
performance of services is not regular
III. All taxpayers who are engaged in the course of trade or business are
subject to business taxes
A. I and II
B. I, II and III
C. I only
D. I and III

23. A business owned by an individual, with an aggregate gross sales or receipts

not exceeding P100,000 during any 12-month period, shall be subject to what
kind of business tax?
A. Exempt from business tax
B. Value-added tax
C. Other percentage tax
D. Excise tax

24. Which of the following is INCORRECT with regard to Value-Added Tax (VAT)?
I. VAT is a consumption tax.
II. VAT is a direct tax.
III. VAT is an ad valorem tax.
A. II only
B. II and III
C. I, II and III
D. I only

25. Which of the following statements is INCORRECT?

A. Imported goods which are subject to excise tax are no longer subject to
Value Added Tax (VAT).
B. VAT on importation is paid to the Bureau of Customs before the imported
goods are released from its custody.
C. Expenses incurred after the goods are released from Customs custody are
disregarded in computing the VAT on the importation.
D. In case of importation, the person liable for the payment of VAT is the
importer.
QUIZZER 2 – BUSINESS TAXES PART 1: PROBLEMS

1. On January 5, 2017, CRC Co., VAT-registered, sold on account goods for P112,000.
The term was: 2/10, n/30. Payment was made on January 10, 2017. The total
amount due is:
A. P107,800
B. P109,760
C. P110,000
D. P112,000

2. Virgin is a producer of cooking oil from coconut and corn. Previously exempt
from the value-added tax, he became subject to the value- added tax on
January 1, 2022. For January 2022, with sales, value- added tax not included,
of P700,000, he had the following other data for the month:
Inventory, January 1, 2022: NRV Cost
Corn and coconut purchased from P120,000 P100,000
farmers
Packaging materials purchased from 24,640 22,400
VAT suppliers
Supplies purchased from VAT 11,200 13,440
suppliers
Purchases during the month of 330,000
coconut and corn from farmers
Purchases during the month from
VAT suppliers:
Packaging materials 56,000
Supplies 16,800

The presumptive input tax is:

A. P 13,200
B. P 33,000
C. P 6,600
D. P 39,600

3. Goldis sells cakes and pastry items to well-known hotels and restaurants in
Metro Manila. The hotels and restaurants are allowed credit based on their
track record. The total amounts received or receivable from sales by Goldis in
January of 2018 were P224,000, including the value-added tax. 75% of the
sales are normally on account. How much is the value-added tax on the sales
amount for the month of January 2022?
A. P20,000
B. P22,400
C. P24,000
D. P26,880

4. The following are data of Samson Appliances for the month ended January 31,
2022:
Sales up to January 15, total invoice value PHP319, 200
Purchases up to January 15, net of input taxes 215,000

Additional information:
On January 16, 2022, Samson Appliances retired from its business and the
inventory valued at P190,000 net of input taxes was taken and transferred to Allied
Appliances. There is a deferred input taxes from the last quarter of P3,500. How
much is the total value-added tax due and payable by Samson Appliances in its
operations for the month ended January 31, 2022 and its retirement from
business?
A. P10,260
B. P27,700
C. P31,200
D. P31,804

5. Virgin is a producer of cooking oil from coconut and corn. Previously exempt from
the value-added tax, he became subject to the value- added tax on January 1,
2022. For January 2022, with sales, value- added tax not included, of P700,000, he
had the following other data for the month:
Inventory, January 1, 2022: NRV Cost
Corn and coconut purchased from farmers P120,000 P100,000
Packaging materials purchased from VAT 24,640 22,400
suppliers
Supplies purchased from VAT suppliers 11,200 13,440
Purchases during the month of coconut 330,000
and corn from farmers
Purchases during the month from VAT
suppliers:
Packaging materials 56,000
Supplies 16,800
The creditable input taxes are:
A. P21,762
B. P24,600
C. P25,080
D. P21,672
6. Virgin is a producer of cooking oil from coconut and corn. Previously exempt
from the value-added tax, he became subject to the value-added tax on
January 1, 2022. For January 2022, with sales, value-added tax not included,
of P700,000, he had the following other data for the month:
Inventory, January 1, 2022: NRV Cost
Corn and coconut purchased from P120,000 P100,000
farmers
Packaging materials purchased from VAT 24,640 22,400
suppliers
Supplies purchased from VAT suppliers 11,200 13,440
Purchases during the month of coconut 330,000
and corn from farmers
Purchases during the month from VAT
suppliers:
Packaging materials 56,000
Supplies 16,800

The value-added tax payable for the month is:

A. P62,328
B. P58,920
C. P59,400
D. P62,238

7. Annie, an importer, enjoys 90% exemption from custom duties. The total customs
duties (gross of exemption) of the imported goods is P500,000. For VAT purposes,
how much shall be the customs duty to be included in the computation of the tax
base?
A. P 50,000
B. P500,000
C. P450,000
D. None

8. FEEL-O INC., a VAT registered hardware supply, had the following data for year
2022 and 2021:
Balance Sheet 2022 2021
Assets
Cash 200,000 100,000
Receivables From Customers, Net 56,000 28,000
Input Tax Carry Over 5,000 3,000
Properties And Equipment 120,000 150,000
Other Security Deposit 50,000 50,000
431,000 331,000
Liabilities And Equity
Accounts Payable 66,000 83,000
Share Capital 150,000 150,000
Retained Earnings, End 215,000 98,000
431,000 331,000
Income Statement
Sales And Other Income 500,000 300,000
Cost Of Sales 300,000 175,000
Expenses 150,000 75,000
Net Income 50,000 50,000
Information
 Sales and other income in 2022 include interest from banks amounting to
P2,000 (net of final tax)
 Expenses in 2022 include provision for bad debts amounting to P50,000.
 Expenses in 2022 and 2021 include income tax expense.
 Input tax from VAT purchases for year 2021 amounted to P30,000
 In January 10, 2023, the Company declared stock dividends amounting to
P100,000.
How much is the value-added taxes paid for year 2022?
A. P31, 760
B. P29, 120
C. P26, 760
D. P30, 000

9. MS. LAGUNDI, a VAT-registered grocery operator has the following

transactions during the month of January 2022 (amounts are exclusive of
VAT):
 Taxable sales (inclusive of sales to government – P100, 000) – P4, 000, 000
 Exempt sales (inclusive of sales to government – P50, 000) – P1, 000, 000
 VAT purchases attributable to taxable sales – P3, 500, 000
 VAT exempt purchases – P800,000
 VAT purchases (not attributable) – P500, 000.
How much is the creditable input tax for January?
A. P465,400
B. P468,000
C. P473,000
D. P480,000

10. LIBERTAD CO., is a VAT registered trader of construction supplies, had the
following data for the 4th quarter of 2021 and 1st quarter of 2022:
4th Qtr 1st Qtr
2021 2022
Gross sales to export oriented P0 P5,000,000
enterprise
Gross sales to government (gross of 5,000,000 5,000,000
final withholding tax)
Gross sales to other customers 25,000,000 30,000,000
Total VAT purchase of goods other 20,000,000 25,000,000
than capital goods
Total VAT purchase of services 5,000,000 5,000,000

For the first quarter of 2021, the Company has filed a tax refund on its input VAT
attributable to zero-rated sales. No payments have been made for the monthly VAT
returns filed. How much is the input tax credit for the 4th quarter of 2022?
A. P2,850,000
B. P3,000,000
C. P2,500,000
D. P3,500,000

11. LIBERTAD CO., is a VAT registered trader of construction supplies, had the
following data for the 4th quarter of 2021 and 1st quarter of 2022:
4th Qtr 1st Qtr
2021 2022
Gross sales to export P0 P5,000,000
oriented enterprise
Gross sales to government 5,000,000 5,000,000
(gross of final withholding tax)
Gross sales to other customers 25,000,000 30,000,000
Total VAT purchase of goods 20,000,000 25,000,000
other than capital goods
Total VAT purchase of services 5,000,000 5,000,000
For the first quarter of 2021, the Company has filed a tax refund on its input VAT
attributable to zero-rated sales. No payments have been made for the monthly
VAT returns filed. How much is the VAT payable for the 4th quarter of 2021?
A. P500,000
B. P750,000
C. P600,000
D. P350,000

12. LIBERTAD CO., is a VAT registered trader of construction supplies, had the
following data for the 4th quarter of 2021 and 1st quarter of 2022:

4th Qtr 1st Qtr

2021 2022
Gross sales to export oriented P0 P5, 000 000
enterprise
Gross sales to government (gross 5, 000, 000 5, 000, 000
of final withholding tax)
Gross sales to other customers 25, 000, 000 30, 000, 000
Total VAT purchase of goods other 20, 000, 000 25, 000, 000
than capital goods
Total VAT purchase of services 5, 000, 000 5, 000, 000

For the first quarter of 2021, the Company has filed a tax refund on its input
VAT attributable to zero-rated sales. No payments have been made for the
monthly VAT returns filed. How much is the input tax credit for the 1st quarter
2022?
A. P3,150,000
B. P3,600,000
C. P3,050,000
D. P3,500,000

13. LIBERTAD CO., is a VAT registered trader of construction supplies, had the
following data for the 4th quarter of 2021 and 1st quarter of 2022:

4th Qtr 2021 1st Qtr

2022
Gross sales to export P0 P5,000000
oriented enterprise
Gross sales to government 5,000,000 5,000,000
(gross of final withholding tax)
Gross sales to other customers 25,000,000 30,000,000
Total VAT purchase of goods 20,000,000 25,000,000
other than capital goods
Total VAT purchase of services 5,000,000 5,000,000

For the first quarter of 2021, the Company has filed a tax refund on its input VAT
attributable to zero-rated sales. No payments have been made for the monthly
VAT returns filed. How much is the VAT payable for the 1st quarter of 2022?
A. P800,000
B. P350,000
C. P900,000
D. P450,000

14. Kim Tiu made the following sales during the 3rd quarter of 2022:
Gross sales – ducks, geese and turkey P5,000,000

Gross sales – fighting cocks 1,500,000

Gross sales – specialty feeds for fighting cocks 800,000

Total Sales P7,300,000

How much is the correct business tax of Kim Tiu during the quarter?
A. P 876,000
B. P 276,000
C. P 69,000
D. nil

15. Dalandan Mou, Inc. is a manufacturer of alcoholic beer. During the quarter, it had
the following transactions (net of VAT):
January 4, 2022: Consigned beer to a retailer in Quezon City amounting to P200,000.
February 14, 2022: Exported P1,000,000 worth of beer to South Korea.
February 27, 2022: President of Green Homes celebrated his birthday consuming P50,000
worth of beer given to him by the company as a birthday gift.
March 20, 2022: Declared property dividend of one case of beer for every 10 shares,
amounting to P150,000.
Additional information:
From January to March, domestic sales to wholesalers amounted to
P600,000. The consignee returned no beer until the end of the quarter. The
output tax for the quarter is:
A. 72,000 C. 120,000
B. 192,000 D. 60,000