1.

The following are secondary purposes of the power of taxation, except:

a.Regulation; b. Reduction of social inequity; c. Encourage economic growth; d. Raise revenue
for the Government.

2. In every case of doubt, tax statutes are construed:

a. Strictly against the government and the taxpayer.
b. Liberally in favor of the government and the taxpayer.
c. Strictly against the government and liberally in favor of the taxpayer.
d. Liberally in favor of the government and strictly against the taxpayer.

3. Which theory in taxation states that without taxes, a government would be paralyzed for lack of power
to activate and operate it, resulting in its destruction?
a. Power to destroy theory
b. Sumptuary theory
c. Lifeblood theory*
d. Symbiotic doctrine

4. Which of the following statements is wrong?

a. The power of taxation may be exercised by the government, its political subdivision, and public
utilities;*
b. Generally, there is no limit on the amount of tax that may be imposed;
c. .The money contributed as tax becomes part of the public funds;
d. The power of tax is subject to certain constitutional limitations.

5. The following are similarities among the Fundamental Powers of the State, except:
a. They can be abolished by the Constitution.*
b. They constitute the three methods by which the State interfered with private property rights.
c. Each presupposes an equivalent compensation to the inhabitants.
d. The emergence of the State carries with it these fundamental powers.

6. Bank Alpha deposited money with Bank Bebe which earns interest that was subjected to the 20%
final withholding tax. At the same time, Bank Alpha is subject to the 5% gross receipts tax on its
interest income on loan transactions to customers. Which statement below incorrectly describes the
transaction?
a. There is double taxation because two taxes – income tax and gross receipts tax are imposed on
the interest income described above, and double taxation is prohibited under the 1987
Constitution.*
b. There is no double taxation because the first tax is income tax, while the second is a business
tax.
c. There is no double taxation because the income tax is on the interest income of Bank Alpha on
its deposits with Bank Bebe (passive income), while the gross receipts tax is on the interest
income received by Bank Alpha from loans to its debtor-customers (active income).
d. Income tax on interest income of deposits of Bank A is a direct tax, while GRT on interest income
on loan transaction is an indirect tax.

7. Below are characteristics of a sound taxation system, EXCEPT

a. Administrative feasibility and compliance
b. Fiscal adequacy
c. Theoretical justice
d. Uniformity of taxation
8. Joe Durant, a resident and national of the United Kingdom flew into the Philippines to woo Ethel Mabenta.
A Filipina she met via Facebook. During Joe’s visit to Ethel’s home, her father informed him that he
would have to go through the traditional courting which is strictly followed in their Family. This entails,
fetching water from the deep well to their house, chopping wood and others. To this, Joe agreed. On his
8th month of courtship, Ethel died on a freak accident while drinking a cup of coffee. With tears in his
eyes, Joe returned home and vowed not to return to the Philippines. For purpose of income taxation,
Joe shall be classified as:

a. Resident alien;
b. Non-resident alien engaged in trade or business;
c. Non-resident alien not engaged in trade or business;
d. Non-resident citizen

9. Which of the following income derived from within the Philippines by a resident individual is not
subject to the graduated income tax rates of 0% to 35%:
a. Salary received by a managing partner of a general professional partnership.
b. Prize won in a singing contest amounting to Php4,000.
c. A gain from the sale of a motor vehicle by a Lawyer.
d. A gain on the sale of real property by a Lawyer, which he inherited from his grandmother.

10. Tonton deposited P300,000,000 pesos of his lotto winnings with the Bank of the Philippine islands.
Uncertain on which investment should he devote the money, he decided to temporarily deposit his
winnings with the said bank. His interest income from the said deposit will be subjected to:
a. 10% final tax
b. 20% final tax
c. added to his gross income and subjected to 5%-32% tax
d. Exemption from income tax

11. Who among the following individual taxpayers is taxable on income from within and without the
Philippines:
a. Amber, a native of Bacolod, working as overseas contract worker in Dubai;
b. Tracy, a resident of Manila and citizen of Australia; who has been working in the Philippines for
the past 10 years;
c. Manuel Chavez, a resident and citizen of Puerto Rico, sent to the Philippines, as an employee of
a local brewery for 5 months;
d. Juan Cruz, a Filipino, who was sent by his employer to the United States for 5 months.

12. Which of the following is not a taxable corporation:

a) Gina, Naty and Tina agreed to contribute their money into a common fund to engage in the
business of buying and selling dried fish. Their total investment amounting to Php300,000 and
they did not bother to register their business with the DTI and the SEC.
b) Acel, Myra and Menchie, all certified public accountants, agreed to contribute their money,
property and industry to a common fund with the sole intention of jointly exercising their common
profession. They have registered with the SEC.
c) Batangas Bus Company and Laguna Bus Company owns separate franchises to operate a public
utility covering the area of Southern Luzon. To achieve maximum efficiency of utilizing their
assets and to avoid the negative effects of competition, the two companies agreed to pool their
resources together and operate as a single company.
 d) Nimrod and Daryl, lawyer and certified public accountants respectively, agreed to contribute their
money, property and industry to a common fund to render service of business process
outsourcing.

13. Which of the following is subject to income tax:

a) SSS and GSIS

b) Philippine Health Insurance Corporation
c) Professional Regulation Commission
d) Philippine Amusement and Gaming Corporation

14. In 2022 Coy Incorporated, a domestic corporation, declared dividend to its stockholders. Which if the
following statements is false:

a) Non-resident citizen stockholder shall be subjected to 10% final tax on the dividend income.
b) Non-resident alien engaged in trade or business stockholder shall be subjected to 20% final tax.
c) Non-resident foreign corporation stockholder shall be subjected to 15% final tax.
d) Non-resident alien not engaged in trade or business stockholder shall be subjected to 25% final
tax.
15. Dividend from a domestic corporation or share in the distributable income after tax of a taxable
partnership received by a citizen shall be subjected to the final tax rate of:
a) 10%
b) 15%
c) 20%
d) 25%

16. The minimum corporate income tax is imposed on…

a. Proprietary educational institution.
b. Corporations enjoying special tax regime under the PEZA law.
c. Business partnerships *
d. Non-profit hospital
b. and subject to the final tax rate of 10%.
17. The following income are subject to final tax, except:
a. Royalty income received by a domestic corporation from another domestic corporation.
b. Cash dividend received by a domestic corporation from a resident foreign corporation.
c. Cash dividends received by a domestic corporation from another domestic corporation.
d. Interest income received by a resident foreign corporation from a Philippine bank.
18. A corporation may employ as a basis for filing its annual corporate income tax return:
a. Calendar year only which begins January 1 and ends December 31.
b. Fiscal year only which could be any day within the calendar year at the discretion of the
corporation.
c. Either fiscal year or calendar year at the discretion of the corporation.
d. Fiscal year only which coincides on the day of registration with the BIR.
19. A corporation should file its quarterly return within.
a. 30 days following the end of each of the first three quarters of the taxable year.
b. 60 days following the end of each of the first three quarters of the taxable year.
c. 60 days following the end of each of the 4 quarters of the taxable year.
d. 30 days following the end of each of the 4 quarters of the taxable year.
20. A corporation on a fiscal year ending March 31, should file its annual income tax return:
a. On or before April 15 of the same year.
b. On or before April 15 of the following year.
c. On or before July 15 of the same year.
d. On or before July 15 of the following year.
21. Which of the following may be subject to corporate income tax:
a. Non-stock and non-profit educational institution.
b. A public educational institution.
c. A private educational institution.
d. Local water district
22. Joey and Bret, both unmarried, formed a general professional partnership. The partners agreed to
share profits equally. During the year 2022, the partnership earned a net income of Php500,000. Bret,
also engaged in the business of buying and selling cars, reports net income from his business
amounting to Php750,000. The income tax liability of the partnership is:

a. Php150,000
b. Php160,000
c. Php0
d. Php125,000

23. The share in the profits of a partner in a partnership is regarded as received by him and thus taxable
although not yet actually distributed. This principle is known as:

a. Advance reporting of income

b. Accrual method of recognizing income
c. Actual receipt of income
d. constructive receipt of income *

24. Which of the following is not subject to income tax:

a) Moral damages awarded to litigant for mental anguish on account of libelous articles written about
him.
b) Php5,000 received by a person from a raffle.
c) Excess remittance of dollar from a sister in the United States due to bank’s error whereby the
originally intended remittance was USD1,000 instead of the remitted USD1,000,0000.
d) Interest income on Php360,000 PCSO lotto winning.
25. The following may claim optional standard deductions, except:
a) General professional Partnership of Philippine lawyers;
b) Joint venture in the Philippines
c) Resident citizen individual
d) Non-resident alien individual
26. Sebastian, Inc. had the following items of income and expenses:

Sales P500,000
Cost of services, salary of personnel directly engaged in business
250,000
Dividends received 25,000
The dividends were received from a domestic corporation. What amount should be reported as gross
income for minimum corporate income tax purpose?
a. P210,000
b. P235,000
c. P250,000
d. P275,000

27. Tartan Corp., a calendar-year corporation, contributed P80,000 to a qualified charitable organization.
The corporation’s net income was P820,000. What amount can Tartan Corp deduct as charitable
contributions?
 a. P80,000
b. P45,000
c. P41,000
d. P51,000
28. Vecky Corp., a calendar-year corporation realized taxable income of P36,000 from its regular business
operations for calendar year 2022. In addition, Vecky had had the following capital gains and losses
during 2022.

Short-term capital gain P8,500

Short-term capital loss (4,000)
Long-term capital gain 1,500
Long-term capital loss (3,500)
Vecky did not realize any other capital gains or losses since it began operations.

What is Vecky’s total taxable income for 2022.

a. P36,250
b. P38,500
c. P39,500
d. P40,500

29. Thom See is 67 years old, retired. During 2022 he received a retirement pay from his former employer
for 8 years in the amount of P400,000. His net income from business is P1,050,000. What is Thom
See’s taxable income?
a. P 1,450,000
b. P1,050,000
c. P400,000
d. P145,000

30. Mr. Bruno Mars, an American residing in Hongkong came to the Philippines to sing the American
national anthem on a professional boxing championship match held in the Araneta Coliseum. He was
paid P1,000,000 as talent fee. His Philippine income tax would be: _
a. Php320,000
b. Php285,000
c. Php250,000
d. Php150,000

Numbers 31 to 33 are based on the following.

Daimos a VAT-registered person has the following data:

Export sales, total invoice amount P3,000,000

Domestic sales, exclusive of the VAT 6,000,000
Purchases used to manufacture Goods
for export and domestic sales:
Raw Materials, VAT exclusive 550,000
Supplies, VAT exclusive 400,000
Equipment, useful life of 3 years, VAT 500,000
exclusive

31. The amount of input tax which can be refunded or converted into tax credit certificates at the option of
Daimos is:

a. P174,000
b. P60,000
c. P116,000
 d. P58,000
32. Based on the preceding number, if the refundable input taxes were not refunded but used as tax credit,
the VAT due is:
a. P500,000
b. P604,000
c. P650,000
d. P546,000
33. But assuming further that the taxpayer opted to claim them as refund, the VAT due is:
a. P500,000
b. P604,000
c. P650,000
d. P546,000

Numbers 34 and 35 are based on the following.

Laloyd, vat registered person, imported machines from Australia as follows:

Machine Acquisition Cost Purpose
A P100,000 Personal use
B 200,000 Business use
C 300,000 For sale

The importations were subjected to 50% excise tax based on purchase price. Machine C was sold for
P1,000,000 exclusive of vat.

34. How much is the vat paid to the BOC?

a. P90,000
b. P72,000
c. P108,000
d. P36,000

35. Using the above data, the amount of vat to be remitted to the BIR should be
a. P30,000
b. P12,000
c. 84,000
d. 106,000

36. Momo is engaged in buying and selling of fresh fruits at the Blumentritt and Divisoria Markets. He is
also exporting fruit jams to Japan. In 2010, he made a gross sales of P2,500,000. The following
conclusions are incorrect, except :

a. He shall be required to register under the VAT system and shall be subjected to the VAT from the
point of his registration. As such, he may claim input VAT on his purchases from VAT suppliers.
b. He may register under the VAT system and be allowed to claim input VAT on his purchases from
VAT suppliers.
c. He shall not be required to register under the VAT system and be allowed to claim input VAT on his
purchases from VAT suppliers.
d. He may register under the VAT system and will not be allowed to claim input VAT on his purchases
from VAT suppliers.

37. Statement 1: Resident international carriers are exempt from the VAT on carriage of passengers from
the Philippines to a foreign destination.
Statement 2: Domestic international carriers are exempt from the VAT on carriage of passengers from
the Philippines to a foreign destination.
a. True; True
b. False; False
 c. True; False
d. False; True

38. Dodong Kaliwete, CPA sold his condominium unit where he and his family resides for Php15,000,000.
He purchased said family home for 8,000,000. The value-added tax on the sale is:

a. Php0
b. Php1,800,000
c. Php840,000
d. Php450,000

39. If a radio and/or television broadcasting company who is not mandatorily required to register under the
VAT system chose to be a VAT taxpayer. Its choice is:
a. Revocable after 2 years
b. Revocable after 3 years
c. Revocable after 5 years
d. Irrevocable

40. Your client is Mr. Paul Soon, an American residing in the Philippines, consulted you on how he can
transfer properties; composed of family home valued at Php11,000,000 and cash in bank amounting
to Php3,000,000, to his lone son with a minimum tax consequence . What will you advise Mr.Soon?
a. Sell all his properties in favor of his son.
b. Incorporate and give all stockholdings to his son.
c. Liquidate, convert all his properties into cash.
d. Donate his property to his son, mortis causa.

41. The following are the requisites for vanishing deduction to be allowable, except one.
a. In case inherited, the estate tax of the prior succession must have been finally determined and
paid.
b. The present decedent died at least five (5) years from date of death of the prior decedent or
donation from the donor.
c. The property with respect to which deduction is sought can be identified as having been received
by the present decedent from the prior decedent or donor.
d. the property claimed for vanishing deduction must be located within the Philippines.

42. The following statements are correct regarding standard deduction, except:
a. A deduction in the amount of P5,000,000 shall be allowed as an additional deduction without need
of substantiation.
b. The full amount of P5,000,000 shall be allowed as deduction for the benefit of the decedent.
c. Standard deduction is not allowed to decedents who are non-resident aliens.
d. For decedents who died before January 1, 2018, the standard deduction amounts to P1,000,000

43. In filing the estate tax return, beginning January 1, 2018, a CPA certificate is required when:
a. Gross estate exceeds P 2,000,000
b. Gross estate exceeds P 5,000,000
c. Gross estate exceeds P10,000,000
d. Gross estate reaches P 2,000,000
.
44. Phil Wabbit is a common carrier utilizing passenger buses and cargo trucks. For the month, it had the
following data on receipts, taxes not included:

From transport of passengers 800,000

From transport of cargoes 200,000
From bus rentals for school fieldtrips 400,000

Common carrier’s tax is:

a. P36,000
b. P24,000
c. P12,000
d. nil

45. One of the following statements is incorrect.

a. Overseas communications tax is imposed on overseas communications originating from the
Philippines.
b. The person liable to overseas communications tax may or may not be engaged in any trade or
business.
c. The overseas communications tax is imposed whether the overseas communications are made in
the course of trade or business or not.
d. The overseas communications tax is imposed on the owner of the communication facilities used to
make overseas communications.

46. One of the following statements is incorrect.

a. The 6/10 of 1% tax shall be collected by the broker who made the sale and shall be remitted within
5 banking days from the date of collection
b. The 6/10 of 1% stock transaction tax is a final withholding tax on income.
c. The 6/10 of 1% stock transaction tax is collected whether there is an income or a loss and is a
percentage tax.
d. None of the above
47. Shares of stock held as investment when sold not through the local stock exchange shall be subject
to:
a. Percentage tax – 6/10 of 1% based on gross selling price or gross value in money.
b. Value-added tax – 12% based on gross income.
c. Capital gains tax of 15% on the net capital gain.
d. Percentage on IPO – 4%, 2%, 1%, based on gross selling price or gross value in money.

48. Three of the following are subject to the value-added tax. Which is the exception?
a. Sales or importation of pet foods.
b. Sale by a non-VAT registered person who issued a VAT receipt.
c. Receipts from leasing of real properties with a monthly rental of P12,000 per unit. Whereby the
lessor has 50 units for lease.
d. Importations by persons who are not VAT registered.

49. The following are the characteristics of the value-added tax, except:
a. Excise
b. Indirect
c. Progressive
d. Proportionate

50. The following transactions are subject to the Value-added tax, except:
a. Domestic carrier by land with respect to their gross receipts from the transport of passengers .
 b. Domestic carrier by air and sea on their gross receipt from their transport of passengers from one
place in the Philippines to another place in the Philippines.
c. Domestic carrier by air and sea on their gross receipt from their transport of passengers from one
place in the Philippines to another place outside of the Philippines.
d. Domestic carrier by land with respect to their gross receipts from the transport of cargoes and
goods.
51. The sale of the following real properties are subject to the VAT except:
a. Residential lot, held for sale in the ordinary course of business, sold for P3,000,000
b. Parking lot, held for sale in the ordinary course of trade, sold for P700,000
c. Sale of real property used in the ordinary course of business.
d. Sale of residential house and lot, in the ordinary course of business, for P2,000,000.

52. the following are the consequences of issuing a VAT receipt by a non-VAT person, except:
a. The non-VAT person shall be liable to the other percentage tax on his transactions;
b. The non-Vat person shall be liable to the 12% VAT on the transaction without the benefit of
input VAT credit thereon;
c. The non-VAT person shall be liable to 25% surcharge applicable on the amount of tax due;
d. The purchaser shall be allowed to recognize input VAT credit duly substantiated by the VAT
receipt issued by the non-VAT person.

53. Queenie Ripot operates a sari-sari store whose annual gross receipts is P3,500,000. She opted not to
register under the VAT system:
Statement 1: Her sales are subject to the 12% output VAT.
Statement 2: She can claim input VAT credit arising from her purchases from VAT suppliers.
a. True, True;
b. True, False;
c. False, False;
d. False, True

54. Rico Ver is a professional entertainer who frequents town fiestas throughout the Philippines as his
usual gig. His annual gross receipts never exceeded P3,919,500. He is liable to pay the following
taxes. 1. Income Tax 2. 3% Other percentage Tax 3. 12% VAT
a) 1 only
b) 1 and 2
c) 1, 2 and 3
d) 1 and 3

55. Statement 1: If the tax is not billed separately in the inventory, the VAT shall be determined by
multiplying the gross selling price including the amount intended to cover the tax by the factor 12/112.
Statement 2: If the tax is billed erroneously, the VAT shall be determined by multiplying the gross selling
price including the tax billed erroneously by the factor 12/112.
a. True; True
b. True; False
c. False; False
d. False; True

56. Salipawpaw Airlines , a domestic corporation plying domestic routes, had the following gross receipts
for the month ended April 2023: Carriage of Passenger P4,500,000; Carriage of CargoP7,000,000.
The business tax for the month ended April 2023 is:
a. P1,380,000
b. P345,000
c. P0
d. P135,000

57. Salipawpaw Airlines , a domestic corporation plying domestic and international routes, had the
following gross receipts arising from flight originating from the Philippines to Japan for the month
 ended April 2023: Carriage of Passenger P4,500,000; Carriage of CargoP7,000,000. The business
tax due for the month of April 2023 is:
a. P1,380,000
b. P345,000
c. P0
d. P135,000

58. The following are subject to the VAT, except:

a. Sale of electricity;
b. Sale of Petroleum products
c. Sale of rice
d. Sale of dog food

59. The following are the requisites of a validly imposed tax, except:
a.That the subject matter thereof be within the jurisdiction of the state;
b. That the assessment and collection thereof be subject to the due process guarantee of the
constitution:
c. That the tax must not impinge on the inherent and constitutional limitations on the exercise of
taxation power;
d. it should be generally payable in money.

60. The following are the requisites of a taxpayer’s suit, except:

A. That public money, earned from taxes, are being spent on any improper purpose;
B. That the petitioner should assume the personality of a taxpayer to gain personality to file the suit;
C. That the petitioner must be a citizen of the Philippines;
D. That the petitioner seeks to restrain the respondent from wasting public funds.

61. 1st Statement –Ordinarily, Internal revenue taxes shall be assessed within three (3) years after the last
day of filing as prescribed by law or when the return is filed which ever is later.
2nd Statement – Internal revenue taxes shall be administratively collected within five (5) years
following the valid assessment of the tax.
a. True; False c. False; True
b. True; True d. False; False

62. The minimum compromise rate for cases other than financial incapacity of the taxpayer is equivalent
to:
a. Ten percent (10%) of the basic assessed tax.
b. Twenty percent (20%) of the basic assessed tax.
c. Thirty percent (30%) of the basic assessed tax.
d. Forty percent (40%) of the basic assessed tax.

63.1st Statement – Criminal violation of NIRC may be compromised even those already filed in court.
2nd Statement – Criminal violation of NIRC may be compromised except those involving fraud.
a. True; False c. False; True
b. True; True d. False; False

64. Remedies of the government for the collection of delinquent taxes shall be by:
a. Levy or/and distraint
b. Civil or criminal action
c. Either of these remedies or both simultaneously.
d. None of the above

65. The prescription of check or warrant refund or tax credit shall be within:
a. 4 years from the date of issue
b. 5 years from the date of issue
 c. 10 years from the date of issue
d. 12 years from the date of issue

66. First statement – The BIR Commissioner upon the recommendation of the Secretary of Finance, shall
promulgate all needful rules and regulations for the effective enforcement of the provisions of NIRC.
Second statement – The rules and regulations of the BIR shall contain the conditions to be observed
by revenue officer respecting the institution and conduct of legal actions and proceedings.
a. True; False c. False; True
b. True; True d. False; False

67. First Statement: All violations of any provision of the NIRC shall prescribe after five (5) years.
Second statement: Prescription shall begin to run from the day of the commission of the violation of
the law, even if the offender is outside the Philippines.
a. True; False
b. False; True
c. True; True
d. False; False

68. Which of the following statement is wrong?

a. An assessment which is not protested and appealed to the CTA becomes final and executory;
b. The proceedings on the protest in the BIR is administrative proceedings;
c. The proceedings in the CTA may be appealed to the CA;
d. The proceedings in the CTA are quasi-judicial proceedings.

69. 1st Statement:: The Commissioner of Internal Revenue shall have the power to inquire into a
taxpayer’s bank deposit in relation to all internal revenue taxes.
2nd Statement: The Commissioner of Internal Revenue shall have the power to divide the Philippines
into zones for purposes of prescribing real property values:
a. True, True
b. False, True
c. True, False
d. False, False

70. The following are the powers of the BIR, except:

a. The assessment and collection of all national internal revenue taxes.

b. The execution of all judgments in all cases decided in its favor by the CTA and the
ordinary courts.
c. The enforcement of all forfeitures, penalties and fines connected with national internal
revenue taxes.
d. The assessment and collection of some customs duties.