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    Percentage Tax: Bar Examination Questions and Answers in Taxation

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    HaRry Peregrino
    1) ABC Corp, a newly established company in an economic zone, was granted a 3-year exemption from all taxes. ABC purchased equipment from XYZ Inc., which was normally subject to sales tax. 2) XYZ Inc. claimed it did not need to pay the sales tax since the sale was to ABC Corp, which was tax exempt. However, tax exemptions are personal and only cover taxes the taxpayer is directly liable for. XYZ Inc. is directly liable for the sales tax, so its claim is not valid. 3) Even if XYZ Inc. paid the sales tax and passed the cost to ABC Corp by increasing the purchase price, ABC Corp cannot claim a refund from the Bureau of Internal Revenue since

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    Percentage Tax: Bar Examination Questions and Answers in Taxation

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    HaRry Peregrino
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    1) ABC Corp, a newly established company in an economic zone, was granted a 3-year exemption from all taxes. ABC purchased equipment from XYZ Inc., which was normally subject to sales tax. 2) XYZ Inc. claimed it did not need to pay the sales tax since the sale was to ABC Corp, which was tax exempt. However, tax exemptions are personal and only cover taxes the taxpayer is directly liable for. XYZ Inc. is directly liable for the sales tax, so its claim is not valid. 3) Even if XYZ Inc. paid the sales tax and passed the cost to ABC Corp by increasing the purchase price, ABC Corp cannot claim a refund from the Bureau of Internal Revenue since

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    13 Percentage Tax

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    1) ABC Corp, a newly established company in an economic zone, was granted a 3-year exemption from all taxes. ABC purchased equipment from XYZ Inc., which was normally subject to sales tax. 2) XYZ Inc. claimed it did not need to pay the sales tax since the sale was to ABC Corp, which was tax exempt. However, tax exemptions are personal and only cover taxes the taxpayer is directly liable for. XYZ Inc. is directly liable for the sales tax, so its claim is not valid. 3) Even if XYZ Inc. paid the sales tax and passed the cost to ABC Corp by increasing the purchase price, ABC Corp cannot claim a refund from the Bureau of Internal Revenue since

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views2 pages

    Percentage Tax: Bar Examination Questions and Answers in Taxation

    Uploaded by

    HaRry Peregrino
    1) ABC Corp, a newly established company in an economic zone, was granted a 3-year exemption from all taxes. ABC purchased equipment from XYZ Inc., which was normally subject to sales tax. 2) XYZ Inc. claimed it did not need to pay the sales tax since the sale was to ABC Corp, which was tax exempt. However, tax exemptions are personal and only cover taxes the taxpayer is directly liable for. XYZ Inc. is directly liable for the sales tax, so its claim is not valid. 3) Even if XYZ Inc. paid the sales tax and passed the cost to ABC Corp by increasing the purchase price, ABC Corp cannot claim a refund from the Bureau of Internal Revenue since

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    © All Rights Reserved
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    Download as docx, pdf, or txt
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    BAR EXAMINATION QUESTIONS AND ANSWERS IN TAXATION

    PERCENTAGE TAX

    Question No. 6 (2004)

    As an incentive for investocrxs a law was passed giving newlt established


    companies in certain economies zone exemption from all taex, duties, fees, imposts
    and other charges for a period of three years. ABC Corp. was organized and was
    granted such incentive. In the course of business, ABC Corp. purchased
    mechanical equipment from XYZ Inc. Normally, the sale is subject to a sales tax.

    a. XYZ Inc. claims, however, that since it sold the equipment to ABC Corp.
    which is exempt. XYZ should not be liable to pay the sales tax. Is this claim
    tenable? (5%)

    Suggested Answer:

    a. No. Exemption from taxes is personal in nature and covers only taxes for
    which the taxpayer-grantee is directly liable. The sales tax is a tax on the
    seller who is not exempt from taxes. Since XYZ Inc. is directly liable for the
    sales tax and no tax exemption privilege is ever given to him, therefore, its
    claim that the sale is tax exempt is not tenable. A tax exemption is construed
    in strictissimi juris and it can not be permitted to exist upon vague
    implications (Asiatic Petroleum Co., Ltd. V. Llanes, 49 Phil 466 (1926)).

    b. Assume arguendo that XYZ had to and did pay the sales tax, ABC Corp.
    later found out, however, that XYZ merely shifted or passed on to ABC the
    amount of the sales tax by increasing the purchase price. ABC Corp. now
    claims for a refund from the Bureau of Internal Revenue in an account
    corresponding to the tax passed on to it since it is tax exempt. Is the claim of
    ABC Corp. meritorious? (5%)

    Suggested Answer:

    b. No. The claim of ABC Corp. is not meritorious. Although the tax was
    shifted to ABC Corp. by the seller, what is paid by it is not tax but part of
    BAR EXAMINATION QUESTIONS AND ANSWERS IN TAXATION

    the cost it has assumed. Hence, since ABC Corp. is not a taxpayer, it has no
    capacity to file a claim for a refund is the person statutorily liable for the
    payment of the tax.

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