VALUE-ADDED TAX and OTHER PERCENTAGE TAX – Questions

DLSU Lecture

1. Transaction by a VAT-registered taxpayer which is not subject to VAT:

a. Transaction deemed sale

b. Sale of services rendered in foreign countries
c. Export sale
d. Foreign currency denominated sale

2. A creditable input tax allowed on one who becomes subject to VAT for the first time

a. Presumptive input tax

b. Transitional input tax
c. Excess input tax
d. Total input tax

3. Anne Bake Shop sells cakes and pastry items to well-known establishments around the
Metro Manila area. The establishments are allowed credit based on their track record on
payments. The total amounts received or receivable from sales by the Bake Shop in the
2nd quarter of 2012 were P224,000, including the value-added tax. Seventy five percent
of the sales are normally on account. How much is the value-added tax on the sales for
the 2nd quarter of 2012?

a. P20,000
b. P24,000
c. P26,880
d. P15,000

Numbers 4 through 6 are based on the following information:

Transaction 1 – An agricultural food producer sells his products in their original state to a
food processor who also buys packaging materials and containers from a
manufacturer/supplier.
Transaction 2 – The food processor transforms the food products into processed foods and
sells to a wholesaler/exporter.
Transaction 3 – The VAT-registered exporter sells the goods to foreign buyers.
Transaction 4 – The wholesaler delivers the merchandise to retailers.
Transaction 5 – The retailers sell the goods to households or ultimate consumers.

4. Which of the above transactions is VAT exempt?

a. Transaction 1
b. Transaction 2
c. Transaction 3
d. Transaction 4

5. Based on the information above, which transaction is zero-rated?

a. Transaction 1
b. Transaction 2
c. Transaction 3
d. Transaction 4

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6. Based on the information above, the value-added taxes are absorbed by –

a. Food processor
b. Wholesaler/exporter
c. Retailer
d. Households/ultimate consumer

7. Joey, a non-VAT taxpayer, purchased merchandise worth P11,200, VAT inclusive, from
Willie, a VAT registered seller. The passed on VAT of P1,200 on the purchase is –

a. An expense
b. Part of the cost of purchases
c. A tax credit
d. Ignored

8. Kenneth Company, a newly VAT-registered business, has the following data in January
(all amounts are inclusive of tax):

Merchandise inventory P 204,000

Actual VAT paid on the inventory 16,000
Sales, total invoice amount 469,000
Purchases 57,400

Fifty percent (50%) of the merchandise inventory on January 1 were purchased from
non-VAT registered sellers.

The VAT payable by Kenneth Company is –

a. P 30,100
b. P 28,100
c. P 3,960
d. P 4,950

9. Lance, a trader, made the following transactions of goods, exclusive of VAT, during the
second quarter:

Cash sales P 200,000

Open account sales P 100,000
Consigned sales – delivered: February 15 P 100,000
April 15 P 100,000
May 15 P 100,000
June 15 P 100,000

The output tax for the second quarter is –

a. P 40,000
b. P 48,000
c. P 60,000
d. P 36,000

10. Pauffy Company, a VAT-registered business, had the following data during the quarter:

Export sales P 1,815,000

Domestic sales (tax included) 1,232,000
Purchases of goods for export 672,000

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 Purchases of goods for domestic sales 323,120
Purchases of supplies on domestic sales 124,850

Assuming that the input taxes paid on purchases of goods for export are claimed as tax
credit, the VAT payable by Pauffy Company is –

a. P 12,895
b. P 10,398
c. P 177,895
d. P 84,895

11. 1st statement: In case tax exempt products are sold domestically to a VAT registered
person, the VAT otherwise due on such product shall be considered as input tax
creditable against his output tax payable.

2nd statement: Export sales by a VAT registered person are subject to zero-rating and
so he can claim and enjoy a credit for the tax invoiced to him on his purchases. If he is
not VAT registered, his export sales are exempt, but he is not entitled to tax credits for
inputs.

a. Both statements are true.

b. 1st statement is false, 2nd statement is true.
c. 1st statement is true, 2nd statement is false.
d. Both statements are false.

12. X-Men Corporation is a VAT registered dealer of appliances. The following data are for
the month of October 2012:

Sales, total invoice value P5,800,000

Purchases, net of input taxes 2,820,000
Sales return 200,000
Purchase return, net of input tax 300,000
Deferred input taxes 9,500
(carried over from 3rd quarter)

The VAT payable for the month of October 2012 by X-Men Corporation is:

a. P320,500
b. P285,500
c. P 80,000
d. P288,100

13. A tax on business is –

a. Direct tax
b. Indirect tax
c. Property tax
d. None of the above

14. Which of the following is not a valid support for claiming input tax as credit against
output tax?

a. Original VAT invoice for purchase of goods with TIN of both the customer the
supplier.
b. Certified true copy of VAT official receipt for purchase of services.

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 c. Original VAT invoice for purchase of goods with authority to print dated January
2012.
d. Validated original import entry and internal revenue declaration for importation of
goods.

15. In which of the following situations, the name, business style, if any, address and TIN of
the purchaser may not be required to be indicated on the face of the VAT invoice/official
receipt?

a. VATable collections amounting to P25,000.

b. VATable sales of P500.
c. Sale of real property.
d. Offsetting of accounts where accounts receivable of P5,000 for sale of goods is
considered collected.

16. Which of the following income payments to non-residents is not subject to withholding
VAT?

a. Royalty payments to a non-resident for licensed software used in the Philippines.

b. Commission payments to a non-resident for looking for potential clients abroad.
c. Service fees payments to a non-resident for professional fees rendered within the
Philippines.
d. Rental payments to a non-resident for lease of equipment brought into the
Philippines.

17. Which of the following sales transactions is not subject to withholding VAT?

a. Sales to Department of Education.

b. Sales to University of the Philippines.
c. Sales to the Office of the City Mayor.
d. Sales to Philippine Council for Non-Government Organization Certification.

18. Peter Pan is a VAT-registered professional business with the following information
during the quarter:

Collections from clients including VAT P4,480,000

Billings including VAT 1,680,000
Supplies used including VAT 560,000

The net VAT payable would be:

a. P600,000
b. P480,000
c. P420,000
d. P120,000

19. Makabayan Corporation had the following data during the month of February 2012:

Net income during the month P 40,000

Collections during the month:
From services rendered in January P 50,000
From services rendered in February 300,000
From services to be performed in March 10,000
(advances)

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 The VAT payable if Makabayan Corporation is:

a. P48,000
b. P91,200
c. P43,200
d. P84,000

20. Which of the following sales transactions of a domestic corporation is subject to 0%

VAT?

a. Export sale of goods to non-resident paid in Philippine peso.

b. Sale of services to non-resident rendered in Singapore paid in US dollars.
c. Sale of goods to a PEZA-registered company paid in Philippine peso.
d. Sale of goods located in Hong Kong to a PEZA-registered company in the Philippines
paid in US dollars.

21. Which of the following transactions is not subject to 12% VAT?

a. Sale of medicines by hospitals to inpatients.

b. Professional fees paid directly to a doctor.
c. Sale of medicines by hospitals to outpatients.
d. Rentals of medical clinics from hospitals.

22. The following are transactions deemed sales, except:

a. Inventories paid as property dividend.

b. Real properties used in business used to pay debt.
c. Consignment of goods not sold after three months.
d. Inventories consumed for construction of plant.

23. Skyfall, a non-VAT person, reported the following during the month:

Export sales, peso denominated P1,000,000

Export sales, inwardly remitted in foreign currency 1,500,000
Importation of goods 500,000

Its zero-rated VAT transactions would amount to –

a. P2,500,000
b. P2,000,000
c. P1,500,000
d. None

24. Statement 1: The VAT base for supply of services is the gross receipts.
Statement 2: VAT base on services does not include receivables.

a. Only Statement 1 is correct.

b. Only Statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect.

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25. Ryan is engaged in the sale of excisable goods, which are also subject to VAT. The
selling price of certain goods sold amounted to P100,000, excluding excise tax of
P20,000. However, Ryan granted 10% discount if it is paid within 10 days. How much
is the gross selling price for VAT purposes?

a. P120,000
b. P110,000
c. P108,000
d. P100,000

26. Crissee Insurance Corporation, a domestic corporation, had the following collections
from insurance premiums during the month:

Health and accident insurance P2,340,000

Motor vehicle insurance 1,250,000
Life and disability insurance 1,850,000
Property insurance 2,840,000

The VAT due is –

a. P 993,600
b. P 771,600
c. P 490,800
d. P 340,800

27. The following are subject to VAT, except:

a. Long distance call by a son from Malate, Manila to his father in Cagayan.
b. Monthly domestic telephone bill from Bayantel, a domestic corporation.
c. Telephone bill on a call by a mother in the Philippines to her son in Canada.
d. Telephone call by Magda in Hongkong to his friend in Manila.

28. In case of tax-free importation of goods into the Philippines by persons exempt from tax,
where such goods are subsequently sold in the Philippines to non-exempt persons:

a. The purchaser shall be considered as the importer who shall be liable for any VAT on
such importation.
b. The tax exempt importer shall be required to pay VAT on such importation before the
transfer can be made.
c. The tax-exempt importer shall report said transfer as sales transaction subject to
VAT.
d. The purchaser or the tax exempt importer shall be liable to any VAT on such
transaction, depending on their agreement.

29. Sales discounts can be deducted from the gross selling price for VAT purposes, if all of
the following requirements are met, except:

a. Sales discount is indicated in the invoice at the time of sale.

b. Sales discount does not depend upon happening of a future event.
c. Sales discount is evidenced by a credit memo.
d. Amount of gross selling price reported is gross of sales discount from which said
discount can be deducted.

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30. The Commissioner has the power to determine the appropriate VAT base under the
following situations, except:

a. Transfer of fixed asset as property dividend.

b. Inventories used as payment of debt.
c. Sale of goods at significantly below fair market value.
d. Sale of real property at fair market value.

31. The following are allowed to claim presumptive input tax, except:

a. Firms engaged in the processing of sardines.

b. Firms engaged in the manufacture of cooking oil.
c. Firms engaged in the manufacture of packed noodle-based instant meals.
d. Firms engaged in the manufacture of processed meat products.

32. Gangnam Transport Company is a land transportation contractor. During the month, it
had the following gross receipts (exclusive of VAT, if any)::

From transport of passengers P 485,000

From transport of cargo 220,000
From rentals of cargo trucks to individual lessees 33,000
From rental of its ‘rent-a-car’ to balikbayans (with chauffeur) 30,000

The VAT due is –

a. P 92,160
b. P 61,800
c. P 33,960
d. P 30,360

33. Given the following establishments:

I. Cebu Pacific Air

II. Pegasus Nightclub
III. Camarines Sur III Electric Cooperative
IV. Banco de Oro (Unibank)

Which of the above establishments is/are subject to other percentage tax?

a. II only
b. II and III
c. III and IV
d. II and IV

34. Which of the following is not subject to 12% VAT?

a. Establishments whose annual gross sales or receipts exceed P1,919,500 and who
are VAT registered.
b. Businesses whose annual gross receipts or sales exceed P1,919,500 and who are
not VAT registered.
c. VAT registered establishments whose annual gross receipt do not exceed
P1,919,500.
d. Establishments whose annual gross sales do not exceed P1,919,500 and who are
not VAT registered.

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35. Smithsonian owns the following businesses:

Annual Gross Receipts

I. Restaurant P 1,350,000
II. Barbershop P 625,000
III. Seller of agricultural food products P 1,875,000

Which combination will subject Smithsonian to VAT?

a. I only
b. I and II
c. I, II and III
d. None

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