CHAPTER 17 ><

Question 1

1 Which is not a major business internal revenue tax?
a. percentage tax
b. excise tax
c. donor’s tax
d. value-added tax

Answer 1

c. donor’s tax

Question 2

Who is not engaged in business?
a. a trader
b. a seller of his residential house
c. a person employed by a corporation
d. a partner in a professional partnership

Answer 2

b. a seller of his residential house

Question 3

Which is not an onerous transfer?
a. barter
b. exchange
c. succession
d. sale

Answer 3

c. succession

Question 4

Which of the following sale of goods or property is not subject to VAT?
a. Real property held as capital asset.
b. Real property held primarily for sale to customers.
c. Right to use in the Philippines of any industrial equipment.
d. Right to use in the Philippines of any scientific equipment.

Answer 4

a. Real property held as capital asset

Question 5

Of the following sales by a VAT-registered person, which is not a zero-rated sale?
a. Sale of consigned goods within 60 days
b. Export sales
c. Foreign currency denominated sale
d. Sales as provided under special law or international agreement to which the Philippines is a signatory

Answer 5

a. Sale of consigned goods within 60 days

Question 6

T OR F
Value-added tax (VAT) is a direct tax imposed on consumers.

Answer 6

false

Question 7

T OR F
VAT is applicable to the value added at each stage of distribution

Answer 7

true

Question 8

T OR F
VAT is an indirect tax that can be passed on to the buyer.

Answer 8

true

Question 9

T OR F
As per Republic Act 9337, the VAT threshold is currently set at P1,500,000.

Answer 9

false

Question 10

T OR F
Any person who imports goods is subject to VAT.

Answer 10

true

Question 11

T OR F
Transactions by non-stock, non-profit organizations are always exempt from VAT.

Answer 11

false

Question 12

T OR F
A business with gross sales not exceeding P100,000 in a 12-month period is not considered in the course of business.

Answer 12

true

Question 13

T OR F
Services rendered in the Philippines by a non-resident foreign person are always VAT-exempt.

Answer 13

false

Question 14

T OR F
VAT on sales of goods is calculated based on the net selling price.

Answer 14

false

Question 15

T OR F
The TRAIN Law removed the term “deemed sale” from the VAT provisions

Answer 15

true

Question 16

T OR F
The standard VAT rate in the Philippines is 10%.

Answer 16

false

Question 17

T OR F
The VAT on taxable sales is paid by the buyer of goods or services

Answer 17

false

Question 18

T OR F
Export sales by VAT-registered persons are subject to zero-rated VAT

Answer 18

true

Question 19

T OR F
Before the TRAIN Law, foreign
currency denominated sales were subject to zero-rated VAT.

Answer 19

true

Question 20

T OR F
VAT zero-rating on local purchases
requires a certification from the concerned Investment Promotion Agency (IPA).

Answer 20

true

Question 21

T OR F
a Bonafide transfer of property in the ordinary course of business is considered as made for an adequate and full consideration in money or money’s worth.

Answer 21

true

Question 22

T OR F
When there is no reciprocity, the transfer of intangible personal property located in the Philippines of a non-resident alien donor is not subject to tax.

Answer 22

false

Question 23

T OR F
the gross gift of a resident citizen, a non-resident citizen or a resident alien donor shall include all his property wherever situated.

Answer 23

true

Question 24

T OR F
If the donor was a non-resident alien, only his property located in the Philippines shall form part of his gross gift.

Answer 24

true

Question 25

T OR F VAT is an indirect tax that can be passed on to consumers.

Answer 25

true Justification: VAT is a tax on the value added at each stage of distribution and is ultimately borne by the end consumer.

Question 26

T OR F All businesses, regardless of gross sales, are subject to VAT.

Answer 26

false Justification: Businesses with gross sales below P3,000,000 are not required to register for VAT.

Question 27

T OR F VAT is an indirect tax that can be passed on to consumers.

Answer 27

true Justification: VAT is a tax on the value added at each stage of distribution and is ultimately borne by the end consumer.

Question 28

T OR F If the gift is made in property, the fair market value thereof at the time of the gift shall be considered the amount of the gift

Answer 28

true

Question 29

T OR F The TRAIN Law removed the phrase "foreign currency denominated sale" as a zero-rated sale.

Answer 29

true Justification: Under RA 10963, foreign currency denominated sales no longer qualify for VAT zero-rating.

Question 30

T OR F Local government units are automatically exempt from VAT registration requirements.

Answer 30

False Justification: No automatic exemption exists; if a government entity engages in taxable transactions, it must register for VAT.

Question 31

T OR F the inclusion of intangible personal property located in the Philippines in the gross gift of a non-resident alien donor is subject to reciprocity rule.

Answer 31

true

Question 32

T OR F The VAT rate for taxable sales in the Philippines is 10%.

Answer 32

false Justification: The correct VAT rate is 12% as per current tax laws.

Question 33

T OR F Services rendered in the Philippines by a non-resident foreign person are considered "in the course of trade or business."

Answer 33

true Justification: Regardless of the frequency of transactions, non-residents providing services in the country are subject to VAT.

Question 34

T OR F All services purchased by export enterprises are automatically subject to VAT zero-rating.

Answer 34

False Justification: Certain services such as janitorial, security, and administrative services do not qualify for VAT zero-rating unless proven indispensable.

Question 35

T OR F VAT is imposed at each stage of distribution rather than just on final consumption.

Answer 35

true Justification: VAT is levied on the value added at every stage of production and distribution

Question 36

T OR F VAT is imposed at each stage of distribution rather than just on final consumption.

Answer 36

true Justification: VAT is levied on the value added at every stage of production and distribution.

Question 37

T OR F The VAT zero-rating of local purchases is subject to post-audit verification by the BIR.

Answer 37

true Justification: The BIR ensures that purchases are indeed directly and exclusively used for registered projects.

Question 38

T OR F Businesses with gross sales under P100,000 are still required to register for VAT.

Answer 38

false Justification: Businesses operating primarily for subsistence with gross sales under P100,000 are not considered engaged in trade or business.

Question 39

A tax imposed on the value added at each stage of distribution in the sale, lease, or exchange of goods, properties, or services.

Answer 39

Answer: Value-Added Tax (VAT)

Question 40

The law that increased the VAT threshold to P3,000,000 and took effect on November 1, 2005.

Answer 40

Answer: Value-Added Tax Reform Act **(Republic Act 9337)**

Question 41

The **tax rate** applicable to taxable sales, barter, or exchange of goods and services in the Philippines.

Answer 41

12%

Question 42

A tax that may be shifted or passed on to the buyer, transferee, or lessee.

Answer 42

indirect tax

Question 43

The law that removed "foreign currency denominated sale" as a zero-rated sale.

Answer 43

Answer: Tax Reform for Acceleration and Inclusion (TRAIN) Law (RA 10963

Question 44

The **gross selling price or gross value** in money of goods or services on which VAT is computed.

Answer 44

tax base

Question 45

The sale of goods or services by VAT-registered persons to foreign buyers that are exempt from VAT.

Answer 45

export sale

Question 46

The government agency responsible for **VAT regulation and collection** in the Philippines.

Answer 46

Answer: Bureau of Internal Revenue (BIR) 7

Question 47

The body that **issues VAT zero-rating certification** for local purchases of goods related to registered projects or activities.

Answer 47

Answer: Investment Promotion Agency (IPA)

Question 48

The phrase referring to the **regular pursuit** of a commercial or economic activity, making it subject to VAT.

Answer 48

Answer: In the Course of Trade or Business 8