1.

Value added tax

a. Is an indirect national tax levied on the value added in the production of a good (or service) as I
moves through the various stages of production
b. Is ad valorem tax
c. Is preferred in place of a personal income tax by many economists because income taxes are a
disincentive to work, whereas a VAT discourages unnecessary consumption
d. All of the above

2. Which of the following is incorrect?

a. An article exempt from vat may be exempt from percentage tax

b. An article subjected to exercise tax may be subjected to vat
c. An article subjected to vat may be subjected to percentage tax
d. None of the above

3. Which of the following is incorrect?

a. A. vat-taxable article may be exempt from vat

b. A vat-taxable article may be subject to vat
c. A taxpayer may have two business where one is subject to vat and the other is subject to
percentage tax
d. Manufacturers and importers of goods are subject to exercise tax

4. Which of the following is not a business tax?

a. Excise tax
b. Value-added tax
c. Other percentage tax
d. Income tax

5. Which is correct?

a. Without a business pursued in the Philippines (except importation) by the taxpayer, value added
tax cannot be imposed.
b. “In the course of trade business” means the regular conduct or pursuit of commercial or an
economic activity, including transactions incidental thereto, by any person regardless of
whether or not the person engaged therein is a non-stock, non-profit private organization or
government entity.
c. Services rendered in the Philippines by a non-resident foreign person shall be considered as
being rendered in the course of trade or business even if the performance is not regular.
d. All of the above.

7. 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 stick 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.

8. Statement 1: Nonstock and nonprofit private organizations which sell exclusively to their members in
the regular conduct or pursuit of commercial or economic activity are except from the value-added tax.

Statement 2: Government entities engaged in commercial or economic activity are generally exempt
form value-added tax

a. Both statements are correct

b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second state statement is correct.

9. The term “in the course of trade or business” does not include

a. Regular conduct or pursuit of a commercial or economic activity

b. Incidental business transactions
c. Transactions by any person, regardless of whether or not the person engaged therein is a non-
stock, non-profit private organizations (irrespective of the disposition of its net income and
whether or not it sells exclusively to members) or government entity.
d. None of the above

10. Who is the one statutorily liable for the payment of VAT?

a. Consumer
b. Buyer
c. Seller
d. Buyer or seller

11. An individual who is not an employee nor a license professional, deriving gross sales or receipts not
exceeding P100,000 from activities principally for subsistence or livelihood

a. Minimum Wage Earner

b. Marginal Income Earner
c. Ambulant Vendor
d. A Privileged Store

12. Pedro is a 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 (3)
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 the choices

13. Which is 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 isa
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.

14. Which of the following taxes describes the value added tax?

a. Income tax
b. Sales tax
c. Indirect tax
d. Personal tax

16. registration of taxpayers under the vat system may be classified as, except

a. Mandatory vat registration

b. Option vet registration
c. Mixed vat registration
d. None of the above

17. Which of the following has an option to register under the VAT system in 2018?

I. Common carriers by air transporting passengers, the gross receipts of which do not exceed
P3,000,000.
II. Radio and/or television broadcasting companies whose annual gross receipts of the preceding
year exceeds P10,000,000.
III. Operator of cockpit, the receipts of which do not exceed P3,000,000 during the year
IV. Seller of the vat-subject services the gross receipts of which do not exceed P3,000,000.
a. IV only
b. I and III only
c. I and IV only
d. All of the above

18. The following data were provided by spouses’ Pedro and Ana. In 2018, Pedro’s gross receipts from
his practice of profession was P2,850,000 while her wife, Ana, has gross sales of P2,200,000 derived
from her trading business. Assuming they are not vat registered, will they be subject to vat?
 a. Yes, because their aggregate gross receipts/sales exceeded the cat threshold of P3,000,000.
b. No, because for purpose of vat threshold, husband and wife shall be considered as separate
taxpayers.
c. Yes, because their gross receipts/sales are not specifically except from vat as provided in the tax
code.
d. None of the above

19. in 2016, the following gross receipts/sales were recorded by Juan:

Gross receipts from practice of profession P1,250,000
Gross sales from trading activities 600,000
Gross sales – sale of agricultural food products 475,000
Assuming Juan is non-cat registered, will he be subject to vat?

a. No, because his gross receipts/sales in each business do not exceed the cat threshold of
P1,919,500.
b. Yes, because if a professional, aside from the practice of his profession, also derives revenue
from other lines of business which are otherwise subject to VAT, the same shall be combined for
purposes of determining whether the threshold has been exceeded.
c. No, because he is not vat registered
d. None of the above

20. JJ is a certified public accountant. He applied for work and was hired by a Firm which is engage in
Business Process outsourcing business handling accounting work for US entities. He was paid for his
services. How should JJ treat such payment for business tax purposes?

a. Subject to 12% VAT

b. Subject to Percentage Tax
c. Exempt from VAT and Percentage Tax
d. It is a zero-rated transaction

21. Where even if there is a business, there is no vat imposable when

I. A business is pursued by an individual where the aggregate gross sales and or receipts do not
exceed P100,000 during any twelve-month period.
II. Sale of real properties for low cost housing
III. Sale of real properties for socializing housing
IV. Sale of residential lot at P1,500,000 per unit and below beginning January 1, 2018
V. Sale of house and lot and other residential dwellings valued at P2,500,000 and below beginning
January 1, 2018
a. I, II and III only
b. II and III only
c. III, IV and V only
d. All of the above
22. Where even if there is no business, vat is Imposable on:

I. Importations of goods for personal use

II. Services rendered in the Philippines by nonresident foreign persons, even isolated shall be
considered as being rendered in the course of trade or business.
a. I only
b. II only
c. I and II
d. None of the above

23. One of the following is not a activity subject to VAT:

a. Sale in retail of goods by a dealer

b. Sale of bamboo poles by a dealer
c. Sublease of real property in the course of business
d. Importation of ordinary feeds for poultry chicken

24. the following are exempt from vat, except

a. Sale of 1 sack of rice

b. Sale of lechon manok
c. Sale of pet food
d. Sale of newspaper

25. the following are exempt from vat, except

a. Sale of marinated fish

b. Sale of gold to the bangko sentral ng pilipinas
c. Association dues, membership fees, and other assessments and charges collected by home
owners associations and condominium corporations.
d. None of the above

26. which of the following shall be exempt from vat?

a. Services of banks
b. Services of money changers and pawnshops
c. Services of credit cooperatives
d. All of the above

27. which of the following is exempt from VAT?

a. Common carriers transporting passengers by air within the Philippines

b. Common carriers transporting passengers by sea within the Philippines
c. Common carriers transporting passengers by land within the Philippines
d. Common carriers transporting cargoes by air within the Philippines
28. Which of the following carrier shall be subject to value-added tax?

a. Sea carrier classified as resident foreign corporation, annual gross receipts is P2,000,000.
b. Air carrier classified as resident foreign corporation, annual gross receipts is P2,000,000.
c. Sea carriers classified as domestic corporation, voyage is from Philippines to Japan, annual
gross receipts is P2,000,000.
d. None of the choices.

29. A dealer in securities sold unlisted shared of stocks of a domestic corporation in 2018 and derived a
gain of P100,000 therefrom. The sale is:

a. Subject to capital gains tax

b. Subject to percentage tax if ½ of 1% of gross selling price.
c. Subject to 12% vat
d. Exempt from business tax

30. determine the business taxes of the following for 2018 taxable year:

I. Lease of residential units worth a monthly rental per unit not exceeding P15,000 (regardless of
the amount of aggregate annual gross rentals)
II. Lease of residential units with a monthly rental per unit exceeding. P15,000 but the aggregate of
such rentals during the year do not exceed P3,000,000.
III. Lease if commercial units regardless of monthly rental per unit.

A B C D
I None None None Vat
II OPT OPT OPT Vat
III Vat OPT Vat Vat
a. A
b. B
c. C
d. D

31. Determine the correct statement form the following:

In cases where a lessor has several residential units for lease, some are leased out for a monthly rental
per unit of not exceeding P15,000 while others are leased out for more than P15,000 per unit, his tax
liability will be:

a. The gross receipts form rentals not exceeding P15,000 per month per unit shall be exempt
from vat regardless of the aggregate annual gross receipts.
b. The gross receipts from rentals exceeding P15,000 per month per unit shall be subject to vat if
the annual gross receipts from said units including the gross receipts from units leased out for
not more than P15,000 exceed P3,000,000.
c. Both statement are correct
 d. Both statement are incorrect

32. To be subject to vat under the TRAIN law, the lese of residential units shall have

I. Monthly rental per unit exceeding P15,000

II. Gross annual rental exceeding P3,000,000
a. Both I and II are necessary
b. Both I and II are not necessary
c. Only I is necessary
d. Only II is necessary

33. To be subject to vat under the TRAIN law, the lese of commercial units shall have

I. Monthly rental per unit exceeding P12,800

II. Gross annual rental exceeding P3,000,000
a. Both I and II are necessary
b. Both I and II are not necessary
c. Only I is necessary
d. Only II is necessary

34. Sale of the following real properties prior to 2018 are exempt from vat, except.

a. Residential lot, held for sale in the ordinary course of business, sild P1,600,000/
b. Residential house and lot, held for sale in the ordinary course of trade, sold for P2,700,000.
c. Sale of real property used in the ordinary course of business.
d. Sale of real property not primarily held for sale in the ordinary course of business.

35. Sale of the following real properties beginning January 1, 2018 are subject to vat except:

a. Residential lot, held for sale in the ordinary course of business, sold P1,600,000.
b. Residential house and lot, held for sale in the ordinary course of trade, sold for P2,700,000.
c. Sale of real property used in the ordinary course of business
d. Sale of real property not primarily held for sale in the ordinary course of business.

36. in 2017, Ana bought one unit of residential house and lot for P2,850,000 form Lorna, a vat registered
real estate developer, in one of the latter’s subdivision projects located in Bulacan. A month after the
purchase, she learned that the owner of the adjacent residential house and lot, Fe, is about to relocate
in Batangas. She bought the adjacent unit for P1,500,000. Based on the information provided, which of
the following statements is correct?

a. The purchase of residential house and lot from Lorna and Fe are subject to vat. Since the units
are adjacent and the aggregate purchase price of two (2) units (P2,850,000 and P1,500,000) is
more than the vat threshold of P3,199,200, the said units shall be subject to 12% vat.
b. Only the sale of residential house and lot by Lorna is subject to vat, regardless of selling price,
because it was made in the course of trade or business and the seller is a vat registered
 c. Both acquisitions are exempt from vat, however, the sale of residential house and lot by Fe to
Ana shall be subject to 6% capital gains tax.
d. None of the above

37. Statement 1: the same of two (2) adjacent residential lots in the course of trade or business to one
buyer within the same taxable year for P1,000,000 each is subject to vat.

Statement 2: the sale of parking lot as an adjunct of a condominium unit in the course of trade or
business at a gross selling price of P500,000 is exempt from vat as long as its price, together with the
unit, does not exceed P3,199,000.

A B C D
Statement 1 True True False False
Statement 2 True False True False
a. A
b. B
c. C
d. D

38. Prior to 2018, a real estate dealer sold two (2) adjacent residential lots in the city for a price of
P800,000 each, or a total price of P800,000, to a vendee who intends to erect his residential house
thereon.

The sale shall be classified as a:

a. 12% VAT transactions

b. 0% VAT transactions
c. VAT exempt transactions
d. None of the foregoing

39. Assume the taxable year in the preceding number is 2018, the sale shall be classified as

a. 12% VAT transactions

b. 0% VAT transactions
c. VAT exempt transactions
d. None of the foregoing

40. Clifford purchase a condominium unit from his friend in 2017, Ronald (condo unit owner) for
P3,000,000 and a parking lot from the subdivision developer for P800,000. The correct amount of vat is

a. P456,000
b. P360,000
c. P96,000
d. P0
41. Prior to 2018, a subdivision developer sold five (5) residential house and lots, each to different
vendees, for P3,000,000 per lot, or a total sale of P15,000,000 for the taxable period. These sales shal be
classified as:

a. 12% VAT transactions

b. 0% VAT transactions
c. VAT exempt transactions
d. None of the foregoing

42. Assume the sale in the preceding number was made in 2018, the sale shall be classified as:

a. 12% VAT transactions

b. 0% VAT transactions
c. VAT exempt transactions
d. None of the foregoing

43. Statement 1: Lease of a parking lot attached to a residential unit at P8,000 per month is exempt from
vat.

Statement 2: Lease of 8 residential units at P18,500 per month is subject to vat.

A B C D
Statement 1 True True False False
Statement 2 True False True False
a. A
b. B
c. C
d. D

44. Statement 1: Sale of drugs and medicines of pharmacy run by the hospitals to outpatients are
subject to VAT.

Statement 2: 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 B C D
Statement 1 True True False False
Statement 2 True False True False
a. A
b. B
c. C
d. D

45. Statement 1L Sale of drugs and medicines prescribed for the treatment/and or prevention of
diabetes, high-cholesterol and hypertension is exempt from vat beginning January 1, 2019.
Statement 2: Importation of drugs and medicines prescribed for the treatment/and or prevention of
diabetes, high-cholesterol and hypertension is exempt from vat beginning January 1, 2019.

A B C D
Statement 1 True True False False
Statement 2 True False True False
a. A
b. B
c. C
d. D

46. Statement 1: the word “vat exempt” shall prominently be included in the invoice issued for the sale
of drugs and medicines prescribed for the treatment/ and or prevention of diabetes, high-cholesterol
and hypertension.

Statement 2: The word sale of drugs not included in the list of vat exempt drugs and medicines
prescribed for the treatment/and or prevention of diabetes, high-cholesterol and hypertension as
identified ad published by the Food and Drug Authority (FDA) shall be subject to vat.

No choices and answer

56. On January 5, 2018, Pinoy Food Corporation, va-registered, sold on account goods for P112,000
inclusive of vat. The term was: 2/10, n/30. Payment was made in January 10, 2018. The total amount
due is:

a. P110,000
b. P107,000
c. P112,000
d. P109,760

57. Mr. Andres, VAT-registered real estate dealer, transferred a parcel of land held for sale to his sone as
gift on account of his graduation. For VAT purposes, the transfer is:

a. Not subject to VAT because it is a gift

b. Subject to VAT because it is a deemed sale transaction
c. Not subject to VAT because it is subject to gift tax
d. Subject to VAT because it is considered an actual sale

58. One of the following is not a transaction deemed sale:

a. Transfer, use or consumption not in the course of business of goods or properties originally
intended for sale or use in the course of business.
 b. Distribution or transfer to shareholders or investors of goods or properties as share in the
profits of a VAT-registered person or creditors in payment of debt.
c. Retirement from or cessation from business with respect to all goods on hand as of the date of
such retirement or cessation.
d. Consignment of goods if actual sale is made within 60 days following the date such goods are
consigned.

59. The following are the data of Davao International for the last quarter of 2018:

Sales up to Dec. 15 (invoice value) P380,000

Purchases up to Dec, (net) 150,000
Additional Information:

On December 16, 2016, the Company retired from its business and the inventory valued at P190,000
remained unsold. There is a deferred input tax from the third quarter of P3,500.

How much is the total value-added taxes payable of Davao International?

a. P42,100
b. P21,500
c. P22,800
d. P19,300

60. Genson Distribution Inc., a VAT taxpayer, had the following data in a month:
Cash sales P200,000
Open account sales 500,000
0 to 30 days old (on which there were remittances
From consignee of P200,000) 600,000
31 to 60 days old 700,000
61 days old and above 900,000
How much is the output tax?
a. P348,000
b. P216,000
c. P264,000
d. P108,000

61. Ana, a vat registered lessor of commercial spaces received P1,337,500 rentals during the year from
various clients, net of the 5% creditable withholding tax on rental income. How much is the correct
output vat?

a. P154,080
b. P142,500
c. P150,000
d. P160,500
62. Assume that in the preceding number, Ana is a non-vat registered lessor, how much is her correct
business tax?

a. P42,237
b. P40,125
c. P38,118
d. P0

63. Prior to 2018, sale raw materials or packing materials to export-oriented enterprise is considered
export sales when export sales of such enterprise

a. Exceed 50% or total production

b. Exceed 50% or total production
c. Exceed 50% or total production
d. Exceed 50% or total production

64. Bobs Corporation is a local export-oriented enterprise engage in the business of manufacturing of
sardines. In 2017, it sold to Mr. Bo Huang of China under the term FOB Shipping Point.

Mr. Huang wants a specialized packing material for his sardines. He ordered the said packaging materials
from another Philippine Company Norhan Packaging Inc. (NPI). It was agreed that NPI will deliver the
packaging materials to Bobs Corporation so that the latter can use the same for the sardines to be
delivered to Mr. Huang in China.

What is the tax treatment for cat purposes of the sale of Bobs Corporation to Mr. Huang?

a. Subject to 12%
b. Subject to 0%
c. Exempt
d. None of the choices

65. Based on the preceding number, what is the tax treatment of the sale of NPI to Mr. Huang?

a. Subject to 12%
b. Subject to 0%
c. Exempt
d. None of the choices

66. Suppose Bobs Corporation bought packaging materials from NPI, what is status of the sale?

a. Subject to 12%
b. Subject to 0%
c. Subject to 0% only if NPI’s export sales exceed 70% of total annual production in the current
year
 d. Subject to 0% only if Bobs Corporation’s export sales exceed 70% of total annual production in
the current year.

67. Which of the following service may be subject to VAT?

a. Hospital services
b. TESDA-registered educational services
c. Seminars and Training services
d. Employee’s services

68. 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 purchase 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.

69. Any input tax attributable to zero-rated sales by a vat-registered person may at his option be:

a. Deducted from output tax

b. Refunded
c. Applied for a tax credit certificate (TCC) which may be used in payment of internal revenue
taxes.
d. All of the above

70. Which statement is not correct?

a. The excess input taxes of a taxable month arising from domestic sales may be carried over to the
succeeding month.
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 payable period arising from exports sales may be refunded.

71. The vat on importation of goods which are subsequently used or sold in the course of trade or
business by a vat registered importer shall be treated as

I. Tax credit
II. Inventoriable cost
III. Expense
a. I only
b. II only
c. III only
d. None of the above
72. Which of the following statement is incorrect?

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