Central Luzon State University

College of Business Administration and

Accountancy
Science City of Munoz

SPECIAL TOPICS
PROBLEM SET

CARLOS, JASMINE
SAHAGUN, JINNO
TORNE, CIARA HAIRA MAE
VICENTE, PRINCESS DIANE

May 2019
1. The BOC shall exercise the following duties and functions, except:
a. Exercise of exclusive jurisdiction over forfeiture cases under the under the tariff and
customs laws.
b. Supervision and control over the imposition of excise taxes over imported goods.
c. Supervision and control over the handling of foreign mails arriving in the Philippines
for the purpose of collecting revenues and preventing the entry of contraband.
d. Supervision and control on all import and export cargos, landed or stored in piers,
airports, terminal facilities including containers.

2. Statement I: Tariff duties and custom duties are synonymous.

Statement II: Tariffs or customs duties are classified as regular tariffs or customs duties
and special tariffs and customs duties.
a. Only Statement I is correct.
b. Only Statement II I correct.
c. Both Statements are correct.
d. Both Statements are incorrect.

3. Which of the following is a regular customs duty?

a. Ad Valorem customs duties
b. Specific customs duties
c. Mixed or compound customs duties.
d. All of the above

4. Which of the following statements a regular customs duties are correct?

a. This are taxes that are imposed or assessed upon merchandise from, or exported to a
foreign country for the purpose of raising revenues.
b. They may also be imposed to serve as protective barriers which would prevent the
entry of merchandise that would compete with locally manufactured items. Thus they
are also referred to as tariff barriers or protective tariffs.
c. A high tariffs on exports may also serve to discourage the exportation of certain
articles, usually materials, in order to promote their manufacture into finished
products.
d. All of the above.

5. Which of the following a special custom duty?

I. Anti-dumping Duty
II. Countervailing Duty
III. Marking Duty
 IV. Discriminatory Duty
a. I and II only
b. II and IV only
c. I, II, and III only
d. I, II, III, and IV

6. Consider the following statements:

I. The purpose of the regular customs duty is to raise revenues to meet the needs of
the government.
II. The imposition of customs duties also assists in economic development.
III. Customs duties are sometimes imposed to protect local customers.
IV. Compound customs duties are computed only on the basis of units of measure
such as weight measurement, quantity, etc.

a. All the above statements are correct.

b. Only statements I, III, and IV are correct.
c. Only Statements I, II, and IV are correct.
d. Only Statements I, II, and III are correct.

7. It is special duty charged whenever any product, commodity or article of commerce is

granted directly or indirectly by the government in the country of origin or exportation,
any kind or form of specific subsidy upon the production, manufacture or exportation of
such product, commodity or article, and importation of such subsidized product,
commodity or article has cause or threatens to cause material injury to a domestic
industry or has materially retarded the growth or prevents the establishment of a domestic
industry.
a. Anti-Dumping Duty
b. Countervailing Duty
c. Marking Duty
d. Discriminatory Duty

8. It is a special duty imposed in the event that a specific kind or class of foreign article is
being imported into, sold or is likely to be sold in the Philippines, at an export price less
that its normal value in the ordinary cost of trade for a like product, commodity or article
destined for consumption in the exporting country which is causing or threatening to
cause material injury to a domestic industry, or materially retarding the establishment of a
domestic industry producing similar products.
a. Anti-Dumping Duty
b. Countervailing Duty
c. Marking Duty
d. Discriminatory Duty
9. Which of the following statements is correct regarding Marking Duty?
a. The marking of articles (or its containers) is a prerequisite for every article or
container of foreign origin which is imported into the Philippines in accordance with
Section 303 of the TCCP.
b. The marking shall be done in any official language of the Philippines and in a
conspicuous place legibly, indelibly permanently as the nature of the article (or
container) may permit to indicate to an ultimate purchaser in the Philippines the
country of origin of the article.
c. In case of failure to mark an article or its container at the time of importation, unless
otherwise excepted from the government requirements of marking, there shall be
levied upon such article a marking duty of 5% Ad Valorem.
d. All of the above

10. Choose the correct answer.

Smuggling
a. Does not extend to the entry of imported or exported articles by means of any false or
fraudulent invoice, statement or practices; the entry of goods at less than the true
weight or measure; or the filing of any false or fraudulent entry for the payment of
drawback or refund of duties.
b. Is limited to the import of contraband or highly dutiable cargo beyond the reach of
customs authorities.
c. Is committed by any person who shall fraudulently import or bring into the
Philippines, or assists in so doing, any article; contrary to law, or shall receive,
conceal, buy, sell or any manner facilitate the transportation, concealments or sale of
such article after importation, knowing the same to helping imported contrary to law.
d. None of the above

11. Under the Tariff and Customs Code, abandoned imported articles becomes the property
of the:
a. Government, whatever be the circumstances
b. Insurance company that covered the shipment
c. Shipping company in case the freight was not paid
d. Bank, if the shipment is covered by the letter of credit

12. Is an article previously exported from the Philippines subject to the payment of customs
duties?
 a. Yes, because all articles that are imported from any foreign country are subject to
duty.
b. No. because there is no basis for imposing duties on articles previously exported from
the Philippines.
c. Yes. Because exemptions are strictly construed against the importer who is the
taxpayer.
d. No, if it is covered by a certificate of identification and has not been improved in
value.

13. A violation of tariff and customs laws is the failure to:

a. Pay the customs duty and taxes and to comply with the rules on customs procedure.
b. Pay the customs duties and taxes or to comply with the rules on customs procedure.
c. Pay the customs duties and taxes.
d. Comply with the rules on customs procedure.

14. Amaretto Inc. imported 100 cases of Marula Wine from South Africa. The shipment was
assessed duties and value-added taxes of 300,000 pesos which Amaretto Inc. immediately
paid. The Bureau of Customs did not, however, issue the release paper of the shipment
yet since the FDA needed to test the suitability of the wine for human consumption. Is the
Bureau of Customs at fault for refusing to release the shipment just as yet?
a. Yes, because the importation was already terminated as a result of the payment of the
taxes due.
b. Yes, the Bureau of Customs estopped from holding the release of shipment after
receiving the payment.
c. No, if the amount paid as duties and value-added taxes due on the importation was
insufficient.
d. No, because the Bureau of Customs has not yet issued the legal permit for withdrawal
pending the FDA’s findings.

15. Importation of goods is deemed terminated

a. When the customs duties are paid, even if the goods remain within the customs
premises.
b. When the goods are released or withdrawn from the customs house upon payment of
the customs duties or legal permit to withdraw.
c. When the goods enter the Philippines territory and remain within the customs house
within 30 days from the date of entry.
d. When there is part payment of duties on the

16. The Bureau of Customs shall exercise the following duties and functions, except
 a. Assessment and collection of customs revenues from imported goods and other dues,
fees, charges, fines and penalties under the tariff and customs code.
b. Simplification and harmonization of customs procedures to facilitate movement of
goods in international trade
c. Border control to prevent entry of smuggled goods.
d. Prosecute persons illegally importing goods.
17. Which of the following statements is NOT a test of a valid ordinance?
a. It must be contravene the Constitution or any statute
b. It must not be unfair or oppressive
c. It must not partial or discriminatory
d. It may prohibit or regulate trade

18. Which of the following statements is correct?

a. new registered Board of Investments enjoys income tax holiday for six years from
commercial operations for six years from commercial operations for pioneer firms
and four years for non-pioneer firms.
b. The income tax holiday may be further extended not to exceed 8 years (maximum
ITH) upon meeting certain conditions.
c. For PEZA-registered enterprises, the income tax holiday is same with BOI-registered
companies in general.
d. All of the above.

19. Which of the following is statement is incorrect?

a. BOI-registered companies are subject to 5% gross income tax in lieu of national local
taxes.
b. After Income Tax Holiday period, BOI-registered companies are treated as ordinary
corporations.
c. BOI-registered are subject to zero-rated (0%) VAT.
d. None of the above

20. Statement I: The EO 226 otherwise known as the Omnibus Investment Code of 1987, is a
relatively focused and systematic of incentives based on an Investment Priorities Plan
(IPP).
Statement II: The IPP is an annual listing of activities/undertakings considered critical to
the attainment of the country’s overall economic growth and development.
a. Only statement I is correct.
b. Only statement II is correct.
c. Both statements are correct.
d. Both statements are incorrect.
21. Income Tax Holiday (ITH) for BOI registered enterprises presupposes that it shall be exempt
from the payment of income taxes reckoned from the scheduled start of commercial
operations until the period given by the BOI has lapsed. Which of the following is ITH
period is correct?
I. Six (6) years for new projects with pioneer status
II. Four (4) years for new project with non-pioneer status
III. Three (3) years for expansion projects

a. I and II only
b. II and III only
c. I and III only
d. I, II and III

22. Statement 1: New registered firms may avail of bonus year.

Statement 2: In no case shall the registered pioneer firm avail of the ITH for a period
exceeding eight (8) years.

a. only statement 1 is correct

b. only statement 2 is correct

c. both statements are correct

d. both statements are incorrect

23. Statement 1: To attract foreign and domestic investors into the country. The government
usually offers various tax incentives, principally through the Board of ‘investment (BOI)
pursuant to EO 226, as amended, otherwise known as the Omnibus Investment Code of 1987.

Statement 2: The overall declaration of government policy on investment initiatives under

EO 226 Includes investment made by foreign and local investors, providing for incentives
fiscal and non-fiscal, to preferred areas of investments, pioneer or non-pioneer, export
production as well as rehabilitation of expansion of existing operation.

Statement 3: Non-fiscal include, among others, employment of foreign nations,

simplification of custom procedure, unrestricted use of consigned equipment and multiple
entry visa.

a. only statements 1 and 2 are correct

b. only statements 1 and 3 are correct

c. all statements are correct

d. all statements are incorrect

24. Which of the following is/are a non-fiscal incentive(s) granted to BOI registered enterprises?

I. Employment of foreign nationals

II. Simplification of custom procedure

III. Unrestricted use of consigned equipment and multiple entry visa

a. I only

b. I and II only

c. II and III only

d. I, II, III
25. Which of the following incentives is/are granted to BOI registered enterprises?

I. Tax exemption

II. Tax credits

III. Additional deductions from taxable income

a. I only

b. I and II only

c. II and III only

d. I, II, III

26. Which of the following tax incentives is/are granted to BOI registered enterprises?

I. Income Tax Holiday (ITH)

II. Exemption from taxes and duties on imported spare parts

III. Exemption wharfage dues and export tax, duty, impost and fees

IV. Tax exemption breeding stocks and generic materials

a. I and II only

b. III and IV only

c. I, II and III only

d. I, II, III and IV

27. Which of the following incentives, in addition to tax exemption is/are granted to BOI
registered enterprises?

I. Tax credit on tax duty portion of domestic breeding stocks and generic materials

II. Tax credit on raw materials and supplies

III. Additional deductions for labor and expense (ADLE)

a. I only

b. I and II only

c. II and III only

d. I, II, III

28. Statement 1: BOI registered enterprises are subject to 5% gross income tax in lieu of national
and local taxes, except real property tax.

Statement 2: PEZA registered enterprises are subject to 5% gross income tax in lieu of
national and local taxes except real property tax.

a. only statement 1 is correct

b. only statement 2 is correct

c. both statements are correct

d. both statements are incorrect

29. Which of the following statements pertaining to Pioneer enterprises under EO 226 is correct?

a. Pioneer enterprises are registered enterprises engaged in the manufacture, processing or

production of commodities or raw materials that are not yet being produced in the
Philippines on a commercial scale.
 b. Pioneer enterprises also involves the use of a design, formula, method, process or system
of production or transformation of any element, substance or raw material into another raw
material or finished goods which is new and untried in the Philippines.

c. Pioneer enterprises are also engaged in the pursuit of agricultural, forestry and mining
activities and/or services and energy sectors.

d. All of the above.

30. __________ refers to the most recent list of the thirty (30) poorest provinces of the
Philippines at the time of application, as determined by the National Economic
Development Authority (NEDA).

a. Pioneer enterprises

b. Special Economic Zones (SEZ)

c. Investment Priorities Plan (IPP)

d. Less Developed Areas (LDA)

PEZA registered enterprises

31. __________ is a selected area with highly developed enterprises or which have the potential
to be developed into agro-industrial, industrial, tourist/recreational, commercial, banking
investment and financial centers.

a. Pioneer enterprises

b. Special Economic Zones (SEZ)

c. Investment Priorities Plan (IPP)

 d. Less Developed Areas (LDA)

32. Incentives to enterprises locating in export processing zones

a. Foreign merchandise, raw materials, spare parts, etc. brought into the zone shall not be
subject to customs and internal revenue laws and regulations nor to local tax ordinances.

b. BOI-registered enterprise incentives.

c. Exemption from local taxes and licenses except real estate taxes.

d. All of the above.

33. Statement 1: The PEZA law specifically provides that the ecozones shall be managed and
operated by PEZA (not by any other government entity) as a separate custom territory.

Statement 2: in keeping with the status of ecozone as separate custom territory, the PEZA is
conferred the power and function to operate, administer, anage and develop the ecozone,
and to register, regulate and supervise the enterprises in ecozones.

a. only statement 1 is correct

b. only statement 2 is correct

c. both statements are correct

d. both statements are incorrect

34. __________ are enterprises registered enterprises engaged in the manufacture, processing or
production of commodities or raw material that are not yet being produced in the Philippines
on a commercial scale.

a. Pioneer enterprises

b. Non-pioneer enterprises
 c. Multi-national companies

d. Export oriented enterprises

35. To encourage investment in desirable areas of activity, EO 226 provides incentives to the
following:

A B C D

enterprises registered with the BOI True True True True

enterprises locating in less developed False True True True

area (LDA)

MNCs establishing their RHQs/ROHQs True True True True

in the Philippines

MNCs establishing their regional ware- False False False True

Houses in the Philippines

Enterprises locating in export pro- True False True True

cessing zones

36. Statement 1: RA 7916 or the Special Economic Zone Act of 1995 (February 24, 1995)
provides the framework for the transformation, formation and monitoring of certain
designated areas in the country called special economic zones (ecozones) where companies
and industries establishing their operations therein are given incentives and privileges.

Statement 2: Enterprises locating or operating within the ecozones shall register with the
Philippine Export Zone Authority (PEZA) and are entitled to similar incentives granted as
provided for under PD 66 or those provided under EO 226 (Omnibus Investment Code).
 a. only statement 1 is correct

b. only statement 2 is correct

c. both statements are correct

d. both statements are incorrect

37. Statement 1: For PEZA purposes, the 5% gross income tax is in lieu of all taxes,
excluding local taxes.

Statement 2: PEZA registered enterprises paying the 5% tax on gross income are not liable
for local business taxes are not liable for local business taxes and other charges normally
due to the local government unit.

a. only statement 1 is correct

b. only statement 2 is correct

c. both statements are correct

d. both statements are incorrect

38. Statement 1: PEZA income tax holiday incentives imply exemption from income tax.

Statement 2: PEZA income tax holiday would mean that an entity entitled to it enjoys
exemption from income tax only, unless expressly exempted from other taxes.

a. only statement 1 is correct

b. only statement 2 is correct

c. both statements are correct

 d. both statements are incorrect

39. A PEZA registered enterprise has a registered and unregistered activity. The MCIT hall apply
to:

a. Registered activity

b. Unregistered activity

c. Both activities

d. Neither registered or unregistered activity

40. Private entities that employ disabled persons who meet the required skills or qualifications,
either as regular employee, apprentice or learner, shall be entitled to an additional deduction
from gross income equivalent to:

a. 15% of the total amount paid as salaries and wages to PWDs.

b. 25% of the total amount paid as salaries and wages to PWDs.

c. 50% of the total amount paid as salaries and wages to PWDs.

d. 100% of the total amount paid as salaries and wages to PWDs.

41. Which of the following statements is not a requirement in order for private establishments
employing senior citizens to be entitled to additional deduction form their gross income
equivalent to fifteen percent (15%) of the total account paid as salaries and wages for senior
citizens?

a. The employment shall have to continue for a period of at least one (1) year.
b. The annual taxable income of the senior citizen does not exceed the poverty level as
determined by NEDA.
c. Both statements “a” and “b”
d. Neither “a” nor “b”
42. Which of the following statements regarding discounts to PWDs is incorrect?

a. In case the seller provides promotional discounts, the PWD will have the option to
choose either the promotional discount or the PWD discount.
b. Only the PWD discount is exempted from VAT.
c. In cases the PWD shall also be entitled to SC discount in order to maximize the discounts
granted under Magna Carta for PWDs and SCs.
d. None of the above.

Use the following data for the next three (3) questions:
Mabuhay Services Corporation (MSC) provides 20% discount to senior citizens. It recorded the
following during the year:
CUSTOMERS

Regular Senior Citizen Total

Receipts P8,000,000 P1,000,000 P9,000,000
Cost of services 5,000,000
Other deductible expenses 2,000,000

43. The amount of gross receipts to be reported is?

a. P1,000,000
b. P1,250,000
c. P9,000,000
d. P9,250,000

44. The regular and special itemized deductions deductible from gross income of MSC is?

a. P2,000,000
b. P2,250,000
c. P5,350,000
d. P7,000,000

45. The taxable net income of MSC is?

a. P750,000
b. P1,000,000
c. P1, 750,000
d. P2,000,000

Mabisa Drugs Incorporation had the following during the year:

Customers
Regular Senior Citizen Total
Gross Sales P8,000,000` P2,000,000 P10,000,000
Cost of Sales P5,000,000 P1,000,000 P6,000,000
Other deductible expenses P2,000,000

Mabisa adopts a policy of giving senior citizens 25% discount. As a result, it granted P500,000
total senior citizens’ discount during the year.

46. The amount of gross sales to be reported is?

a. P8,000,000
b. P9,500,000
c. P9,600,000
d. P10,000,000

47. The amount of other deductible expenses to be reported is?

a. P400,000
b. P500,000
c. P2,400,000
d. P2,500,000

48. The taxable net income is?

a. P1,500,000
b. P1,600,000
c. P1,800,000
d. P2,000,000

49. Bobads Corporation employs both regular and senior citizen employees and paid the
following compensation:

Regular Employees P800,000

Senior Citizen Employees:

With salary above the poverty level P200,000
With salary below the poverty level P1,000,000

The deductible expense is?

a. P1,100,000
b. P1,115,000
c. P1,120,000
 d. P1,145,000

50. Using the above information except that 20% of the regular employees are persons with
disability receiving a total compensation of P160,000 the deductible compensation of the
corporation is?

a. P1,152,000
b. P1,155,000
c. P1,178,000
d. P1,192,000

51. Statement 1: If a taxpayer, classified as PWD, is unable to make his own return, the return
may be made by his duly authorized agent or representative or by the guardian or other person
charged with care of the person or property.
Statement 2: The principal (PWD) and his representative or guardian shall assume the
responsibility of making the return and incurring penalties provided for erroneous, false,
fraudulent returns.
Statement 3: The privileged of statement 1 and transfer of responsibility in statement 2 is
likewise available to a senior citizen taxpayer.

a. Only statement 1 is correct

b. Only Statement 2 is correct
c. Only statement 3 I incorrect
d. None of the above statements is correct

52. Statement 1: While the 20% senior citizen discount and VAT exemption shall not apply to
“children’s meals” as these are primarily prepared and intentionally marketed for children, if the
PWD is a child will be applicable as long as it is his for personal consumption.
Statement: The 20% discount in the purchase of food and drinks, beverages, dessert and other
consumable items served by establishments includes value meals and other similar food
counters, fast food, cooked food and short order including take outs.

a. Statement 1&2 are false

b. Statement 1 is true but Statement 2 is false
c. Statement 1 is false but Statement 2 is true
d. Statements 1&2 are true

53. Statement 1: Any donation, bequest, subsidy or financial aid which may be made to
government agencies engaged in the rehabilitation
Statement 2: The 20% discount on purchase of food and drinks, beverages, dessert and other
consumable items served by establishments includes value meals and other similar food
counters, fast food, cooked food and short orders including take outs.

a. Statement 1&2 are false

 b. Statement 1 is true but Statement 2 is false
c. Statement 1 is false but Statement 2 is true
d. Statement 1&2 are true

54. Taxing power of local government units shall NOT extend to the following taxes except one:

a. Income tax on banks and other financial institutions;

b. Taxes of any kind on the national government, its agencies ad instrumentalities, and local
government units.
c. Taxes on agricultural and aquatic products when sold by the marginal farmers or
fishermen;
d. Excise taxes on articles enumerated under the Internal Revenue Code

55. Real property taxes should not disregard increases in the value of real property occurring
over a long period of time. To do otherwise would violate the canon of a sound tax system
referred to as:

a. Theoretical Justice
b. Fiscal Adequacy
c. Administrative Feasibility
d. Symbolic Relationship

56. A municipality may levy an annual ad valorem tax on real property such as land, building,
machinery, and other improvement only if

a. The real property is within the Metropolitan Manila Area

b. The real property is located in the municipality
c. The DILG authorizes it to do so
d. The power is delegated to it by the province.

57. Real property owned by the national government is exempt from real property taxation
unless the national government:

a. Transfers it for the use of local government unit

b. Leases the real property to a business establishment
c. Gratuitously allows its use for educational purposes by a school establish for profit
d. Sells the property to a government-owned non-profit corporation

58. Where the real property tax assessment is erroneous, the remedy of the property owner is:

a. To file a claim for refund in the Court of Tax Appeals if he has paid the tax, within thirty
(30) days from the date of payment
b. To file an appeal with the Provincial Board of Assessment Appeal within thirty (30) days
from receipt of the assessment
 c. To file an appeal with the Provincial Board of Assessment Appeal within sixty (60) days
from receipt of the assessment
d. To file an appeal with the Provincial Board of Assessment Appeal within thirty (30) days
from receipt of the assessment and playing the assessed tax under protest.

59. Which statement on prescriptive period is true?

a. The prescriptive periods to assess taxes in the National Internal Revenue Code and local
government code are the same;
b. Local taxes shall be assessed within five (5) years from the date they become due;
c. Action for the collection of local taxes may be instituted after the expiration of the period
to assess and to collect the tax;
d. Local taxes may be assessed within ten (10) years from the discovery of underpayment of
tax which does not constitute fraud.

60. The appraisal, assessment, levy and collection of real property tax shall be guided by the
following principles. Which statement does NOT belong here?

a. Real property shall be appraised at its current and fair market value;

b. Real property shall be classified for assessment purposes based on its actual use;
c. Real property shall be assessed on the basis of a uniform classification within each
local political subdivision;
d. The appraisal and assessment of real property shall be based on audited financial
statements of the owner.

61. After the province has constructed a barangay road, the Sangguniang Panlalawigan may
impose a special levy upon the lands specially benefitted by the road up to the amount not to
exceed

a. 60% of actual cost of road without giving any portion to barangay

b. 100% of actual project cost without giving any portion to barangay
c. 100% of actual project cost, keeping 60% for the province and giving 40% to the
barangay
d. 60% of actual cost, dividing the same between the provice and the barangay.

62. What is the tax base for the imposition by the province of professional taxes?

a. That which Congress determined

b. The pertinent provision of the local government code
 c. The reasonable classification made by the provincial sanggunian

d. That which the Dept. of Interior and Local government determined

63. GG Foundation, a stock educational institution organized for profit, decided to lease for
commercial use a 1,500 sq. m. portion of its school. The school actually, directly, and
exclusively used the rents for maintenance of its school buildings. Is the leased portion subject to
real property tax?

a. Yes, since GG Co. is a stock and for profit institution

b. No, since the school used the rents for educational purposes

c. No, but it may be subject to income tax

d. yes, since the leased potion is not actually, directly, and exclusively used for
educational purposes.

64. The head priest, as a corporation sole, rented out a lot registered in its name for a school site
of a school organized for profit. The sect used the rentals for the support and upkeep of its
priests. The rented lot is

a. not exempt from real property taxes because the user is organized for profit

b. exempt from real property taxes since it is used for religious purposes

c. not exempt from real property taxes since it is the rents, not the land, that I used for
religious purposes
d. exempt from real property taxes since it is actually and exclusively used for
educational purposes.

65. Apparently the law does not provide for the refund of real property taxes that have been
collected as a result of erroneous or illegal assessment by the provincial or city assessor. What
should be done in such instance to avoid an injustice?

a. question the legality of the no-refund rule

b enact a new ordinance amending the erroneous or illegal assessment

c. subsequent adjustment in tax computation and application of excess payment to future

real property taxes liabilities
 d. pass a new ordinance providing for the refund of excess real property taxes paid

66. Prior to the enactment of the Local Cooperative Code, consumer’s cooperatives registered
under the CDA enjoyed exemption from all the taxes imposed by a local government. With
the local government code’s withdrawal of exemptions, could these cooperatives continue to
enjoy such exemption?

a. Yes, because the local government code could not amend a special law

b. No, congress has not by the majority vote of all its members granted exemption

c. No, the exemption has been withdrawn

d. Yes, their exemption is specifically mentioned among those not withdrawn by the
Local Government Code

67. The following resident Foreign Corporations are subject to preferential tax rates, except

a. Regional Operating Headquarters

b. International Carriers

c. Regional Area Headquarters

d. Offshore Banking Units

68. Which of the following may be subject to Minimum Corporate Income Tax?

a. Philippine Carriers

b. International carriers

c. Regional Operating Headquarters

d. Regional or area headquarters

69. A ____________ is defined as any business enterprise engaged in production, processing, or

manufacturing of products, including agro-processing, as well as trading and services,
with total assets of not more than 3 million.
 a. Ecozones

b. RHQs/ROHQs of MNCs

c. PEZA entities

d. BMBEs

70. Which of the following are the incentives that may be granted to BMBEs?

a. Income tax exemption

b. Exemption from coverage pf Minimum Wage Law

c. Technology transfer and marketing assistance for BMBE beneficiaries

d. All of the above

71. The BMBE purposes, the concerned officer shall cancel the registration of a BMBE for the
following cause, except

a. When the BMBE transfers its place of business to another locality

b. When the value of its total assets as determined exceeds 3 million

c. When the BMBE surrenders certificate

d. When it establishes warehouse outside the locality

72. The ___________ of each city shall register BMBE and issue certificate of authority to
enable the BMBE to avail of the incentives under BMBE act

a. Office of the Mayor

b. Office of the Treasurer

c. Office of the barangay chairman

d. BIR RDO
73. One can register as a BMBE if it is a business entity or enterprise, engaged in, which
activities are barangay based and micro-business in nature and scope, except

a. Production of products/commodities

b. Agro-processing

c. Trading and services

d. Professional services

74. For BMBE purposes, the Certificate of Authority shall be effective for a period of _____ and
renewable for the same period. The concerned officer shall indicate in the certificate the
date when the registration of the BMBE commences

a. 1 year

b. 2 years

c. 3 years

d. 4 years

75. The following are agents and deputies for collection of National Internal Revenue taxes,
except

a. The commissioner of customs and subordinates

b. The head of appropriate government office

c. Banks duly authorized by the commissioner

d. City treasurer with regard to collection of real estate tax

76. The chief officials of the BIR shall be composed of

a. 1 commissioner, 4 deputy commissioner

b. 1 commissioner, 5 deputy commissioner

c. 1 commissioner
 d. 1 commissioner and 7 deputy commissioner

77. Statement 1: Microfinance NGOs are NGOs with the primary purpose of implementing a
microenterprise development strategy.

Statement 2: Microfinance NGOs are prohibited from directly engaging in insurance business.

a. Only statement 1 is correct

b. S2 is correct
c. All are correct
d. All are incorrect
78. Dr. Albert Rebosa, a VAT registered OB-gyne specialists, owns a maternity lying-in-clinic.
The payment received for the month totaling 750,000 pesos are broken down as follows: 350,000
professional fees, 400,000 as payment for use of lying-in-clinic. His output VAT for the month is

a. 90,000

b. 48,000

c. 42,000

d. 80,357

79. S1: The office of the treasurer of each city shall register the BMBE and issue a certificate.

S2: LGUs shall issue the certificate promptly and free of charge

a. S1 is correct
b. S2 is correct
c. Both are correct
d. Both are incorrect
80. S1: Services offered by BMBEs shall exclude those rendered by a licensed professional

S2: Any enterprise can qualify for registration as BMBE

a. Both are correct

b. S2 is correct
c. S1 is correct
d. Both are incorrect
Answer Key

1. B 21. D 41. A 61. A

2. C 22. C 42. C 62. C

3. D 23. C 43. D 63. D

4. D 24. D 44. B 64. D

5. D 25. D 45. D 65. C

6. D 26. D 46. D 66. D

7. B 27. D 47. D 67. C

8. A 28. B 48. A 68. A

9. D 29. D 49. B 69. D

10. C 30. D 50. B 70. D

11. A 31. B 51. C 71. D

12. D 32. D 52. D 72. D

13. B 33. C 53. D 73. D

14. D 34. A 54. A 74. B

15. B 35. C 55. B 75. D

16. D 36. C 56. A 76. A

17. D 37. D 57. B 77. C

18. D 38. B 58. C 78. C

19. A 39. B 59. B 79. C

20. C 40. B 60. D 80. C

Solution

43-45

Solution:
RECEIPTS:
Regular customers P8,000,000
SC (P1M/80%) 1,250,000
Total gross receipts 9,250,000
Less:
Cost of services (5,000,000)
Other deductible expense
(P2M + SC discount of P250,000) (2,250,000)
Taxable Net Income P2,000,000

The gross sales or receipts to be reported should be the undiscounted amount.

The senior citizen /PWD discount shall be reported as part of the operating expense

46-48

Solution:
GROSS SALES
Regular Customer P8,000,000
Senior Citizens (SC) 2,000,000
Total gross receipts 10,000,000
Less:
Cost of Sales-Regular (5,000,000)
Cost of Sales- SC (1,000,000)
Other deductible expense
(P2M + SC discount of P500,000) (2,500,000)
Taxable Net Income P1,500,000

49

Regular employees P800,000

Senior Citizen employees:

With salary grade above the poverty level P200,000
With salary grade below the poverty level P100,000
Additional deductible salary (100,000 x 15%) P15,000
Total compensation Expense P1,115,000
Additional compensation of 15% for those salary grade is below poverty level.
50

Solution:
Regular employees P640, 000
PWD employees 160, 000
Additional Compensation-PWD@25% 40, 000
Senior Citizen employees:
With salary grade above poverty level 200, 000
With salary grade below the poverty level 100,000
Additional deductible salary(P100,000 x 15%) 15, 000
Total Compensation Expense P1, 155, 000
Additional deductible compensation of 25% for PWD employees.