TAXATION Lecture 3 –

Percentage Taxation

PERCENTAGE TAXES

Mr. Masipag owns the following lines of business:

Annual Gross receipts
I. Restaurant P1,350,000
II. Barbershop 625,000
III. Seller of agricultural food products 1,875,000
1. Which of the above establishments is subject to 3% non-VAT?
a. I only c. I, II and III
b. I and II d. None

Tintin Dera is the owner of a small grocery store with gross sales in any one (1) year period that do not
exceed P1,919,500. She is not a VAT registered taxpayer. She submits the following data for the month of
January, 2017.
Merchandise Inventory, December 31, 2016 P123,450
Gross sales 67,800
Purchases from VAT registered suppliers 156,980
2. The percentage tax due is -
a. P34,823 c. P2,034
b. P6,780 d. P9,876

3. A tax on business is
a. Direct tax c. Property tax
b. Indirect tax d. None of the above

4. Which of the following taxes is not replaced by VAT?

a. common carrier's tax c. contractor's tax
b. sales tax on original sales d. compensating tax
5. One of the following is subject to 3% percentage tax
a. Establishments whose annual gross sales or receipts exceed P1,919,500 and who are VAT
registered
b. Business whose annual gross receipts or sales exceed P1,919,500 and who are not VAT
registered
c. VAT registered establishments whose annual gross receipts do not exceed P1,919,500
d. Establishments whose annual gross sales do not exceed P1,919,500 and who are not VAT
registered
Luigi Lines has the following gross receipt in February:
Bus 1 (carriage of goods, P8,000) P 100,000
Bus 2 (carriage of goods, P3,500) 65,000
Salaries of drivers and conductor 25,000
Cost of oil and gasoline 160,000
Taxi 30,000
Jeepney 7,500
Cargo truck 45,000
Sea vessel 250,000

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 6. During the month, Bus 1 was bumped by another bus owned by Tulak Lines and paid Luigi Lines
P20,000 for the damage done. The percentage tax due on Luigi Line in February is:
a. P 6,180 c. P 14,430
b. 3,630 d. 5,730

Common carrier 1: Domestic sea or air carriers for passengers or cargoes.

Common carrier 2: International sea or air carriers for cargoes.
7. What is the respective business tax rate on the common carriers identified above if they travel
from the Philippines to a foreign country?
Common Carrier 1 Common Carrier 2
a. 0% 3%
b. 3% 3%
c. 0% 0%
d. 12% 3%

8. The franchise tax on grantees of radio and television broadcasting companies whose annual
gross receipts in any year do not exceed P10,000,000 shall be
a. 1% of gross receipts c. 3% of gross receipts
b. 2% of gross receipts d. 4% of gross receipts
9. Radio Station DYKKL has an annual gross receipts ranging from P4,000,000 to P5,000,000. During
the month, it had a gross receipts from advertisements of P330,000 while the disbursements
subject to VAT amounted to P224,000, inclusive of tax. How much franchise tax is payable by
DYKKL?
a. P30,000 c. P50,000
b. P9,900 d. P10,000
10. One of the following is subject to percentage tax
a. Long distance call by a son from Sta. Cruz, Manila to his father in Iloilo City
b. Monthly telephone bill from Bayantel
c. Telephone bill on a call by a mother in the Philippines to her son in the United States
d. Telephone call by Magda in Hong Kong to her friend in Manila
Balatan telephone Company (BATELCO) had the following collections from its customers during the
quarter:
Regular monthly bills P 770,000
Domestics calls 501,600
Overseas Calls (outgoing) 533,500
11. The percentage tax to be remitted by BATELCO during the quarter is -
a. P73,600 c. P53,350
b. P48,500 d. P50,960
Makasalanan Corporation had the following data during the month of February:

Net income during the month P 40,000

Collections during the month:
From services rendered in January 50,000
From services rendered in February 300,000
From services to be performed in March (advances) 10,000
12. The business tax payable if Makasalanan Corporation is a bus company:
a. P12,000 c. P10,800
b. P22,800 d. P21,000
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 13. In Number 12, the business tax payable if Makasalanan Corporation is a cabaret -
a. P64,000 c. P72,000
b. P64,800 d. P136,800
14. In Number 12, the business tax payable if Makasalanan Corporation is a race track -
a. P 120,000 c. P 210,000
b. P228,000 d. P108,000
15. Admission fees to cockpits and race tracks are subjects to
a. tax on paid admission c. tax on gross receipts
b. tax on winnings d. None of the above

Rose Tear operates a cockpit in Zamboanga City. Inside the cockpit is a restaurant which he also operates.
The data during the month are as follows:

Gross receipts from the gates P 390,000

Receipts from advertisement inside the cockpit 15,000
arena
Gross receipts from restaurant:
Sale of food and soft drinks 21,000
Sale of Liquor 33,000
Disbursements (subject to VAT) 24,200
Disbursements (not subject to VAT) 12,000
16. The amusement tax due is -
a. P82,620 c. P72,900
b. P81,828 d. P19,980
17. In Number 16, suppose the restaurant is owned and operated by Mon, a non-VAT registered
person, the percentage tax payable by Mon is -
a. P1,260.00 c. P4,909.09
b. P534.00 d. P1,620.00
18. n Number 16, suppose the restaurant is operated by Mon, the percentage tax due on Rose is -
a. P3,300 c. P92,700
b. P12,150 d. P72,900
19. In Number 16, assume that Mon, a VAT registered taxpayer is operating the restaurant. The
business tax payable by Mon is -
a. P81,600.00 c. P4,909.09
b. P3,576.00 d. P2,709.09
Carlos operates the Peacock Nightclub along Avenida Avenue, Manila. His gross receipts in February
2016 amounted to P126,700. The foods and drinks being served inside the nightclub are being delivered
by Tiberio, a non-VAT taxpayer. During the month, Tiberio sold P32,400 worth of goods and drinks to
Carlos.
20. The amusement tax payable is -
a. P19,005 c. P28,638
b. P22,806 d. P5,832
Panda Hotel offers the following services to its guests and from which revenues were delivered for the
month, as follows:
Revenues Collections
Hotel rooms P1,250,000 P984,000
Dining hall:

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 Sale of food and refreshments 940,000 860,000
Sale of wine, beer and liquors 780,000 620,000
Disco:
Admission fee 25,000 15,000
Sale of food and soda 250,000 115,000
Sale of wines beer and liquor 650,000 540,000

21. The amusement tax due is -

a. P110,700 c. P552,240
b. P120,600 d. P386,640
Gross receipts pertain to collection and not to revenues.
Boy Arana is the operator of Arana Coliseum. During the month, it had the following gross receipts from
various activities, to wit:
Concert by Rosa Mia P85,000
Professional basketball 120,000
Amateur basketball 36,700
Billiard 45,000
22. The percentage tax payable by Boy Arana on the coliseum is -
a. P18,000 c. P43,005
b. P23,505 d. P24,750
23. In Number 22 above, assuming that the other enumerated events therein a world championship
boxing fight between Namamacquiao and Salariosa, American and Mexican, respectively, in
lightweight division was held in Arana Coliseum during the month and the total gross receipts
was P780,000, the amusement tax payable is -
a. P135,000 c. P43,005
b. P96,000 d. P160,005
Paiyakan Insurance Company, a domestic corporation, had the following collections from insurance
premiums during the month:
Health and accident insurance P2,340,000
2,340,00+1,850,000 = 4,190,000
Motor vehicle insurance 1,250,000
Life and disability insurance 1,850,000 4,190,000*3% = 125,700.00
Property insurance 2,840,000
24. The percentage tax due is - None of the above
a. P92,500 c. P272,000
b. P414,000 d. P209,500
25. Which of the following is not considered as a percentage tax?
a. 1/2 of 1% stock transaction tax on shares traded
b. 10% - 20% tax on shares not traded through the local stock exchange
c. 10% overseas communications tax
d. 3% tax on keepers of garage
26. Bayani's ticket (daily double) won P42,000 in a horse race in San Lazaro Hippodrome. His ticket
had cost him P250. How much tax should withheld on winnings in horse races by Bayani?
a. P1,680 c. P1,670
b. P4,200 d. P4,175
Campos sold the following shares of stock thru his stockbroker:
Selling Price Market Value
Ex Company, not traded P123,670 P114,850

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Why Company, traded 65,980 62,540
See Company, traded 143,750 156,230
27. The percentage tax due on the above transactions is -
a. P1,667.00 c. P1,093.85
b. P1,048.65 d. P1,668.10
Biscadero had the following transactions of shares of stock:
Selling price Cost
Sales:
Bee Corporation, not traded P32,450 31,980
Cee Corporation, traded 69,780 64,321
Dee Corporation, traded 123,820 98,760
Purchases:
Eef Corporation, not traded 32,415
Gee Corporation, traded 48,657

28. The total percentage tax on the above transaction is -

a. P1,130.25 c. P968.00
b. 724.89 d. 815.40
29. Tito owns shares of stock of domestic corporations which are actively traded in the Philippines
Stock Exchange. Due to the unstable prices in the stock exchange, he decided to sell the shares
to the public. The data of which are as follows:
Selling price Cost Gain/Loss
Vic Corporation P230,000 P220,000 P10,000
Joey Corporation 360,000 395,000 (35,000)
The stock transaction tax is -
a. P2,950 c. P50
b. P1,150 d. zero
30. Open Sesame Corporation, a closely held corporation, decided to open itself to the public. The
initial public offering of its shares had a selling price of P6,250,000 which is 22.5% of its total
outstanding shares after the listing in the local stock exchange. The percentage tax due is -
a. P31,250 c. P1,406.250
b. P125,000 d. P250,000

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