1.

Tax laws must be clear and concise, capable of proper enforcement and not burdensome,
convenient as to time and manner of payment
a. Fiscal Adequacy
b. Administrative Feasibility
c. Ability to Pay Theory
d. Theoretical Justice

2. Under this basic principle of sound tax system the government should not incur a deficit
a. Fiscal Adequacy
b. Administrative Feasibility
c. Ability to Pay Theory
d. Debt Restructuring

3. One of the following is not a manifestation of lifeblood theory:

a. Imposition of Tax even in the absence of constitutional grant.
b. Right to select objects and subjects of taxation
c. No injunction to enjoin tax collection
d. Equal protection of law.
4. Which statement is wrong? A revenue bill:
a. Must originate from the house of representative and on which same bill the Senate may
propose amendments
b. May originate from the Senate and on which same bill the House of Representative may
propose amendments
c. May have a house version and a Senate version approved separately
d. May be recommended by the President to Congress
5. First statement: Our constitution does not prohibit double taxation
Second statement: If double taxation occurs, the taxpayer may seek relief under the uniformity
rule or equal protection guarantee.
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are wrong
D. Both statements are correct
6. One of the following is not a public purpose?
a. National Defense
b. Improving sugar industry
c. building of churches common to all religion
d. retirement benefits of public officials
7. Which of the following may not raise money for the government?
a. Power of taxation
b. Police Power
c. Power of eminent domain
d. Privatization of government assets
8. Statement 1: the power of taxation cannot be exercised without a previous constitutional
authority
 Statement 2: The police power can be used to implement the power of taxation.
a. True, True
b. True, false
c. false, true
d. false, false
9. The following are the similarities of the inherent power of taxation, eminent domain and police
power, except one:
a. They are necessary attributes of sovereignty.
b. They interfere with private rights and property
c. They affect all persons of the public
d. They are legislative in Character
10. Police power as distinguished from taxation.
a. It involves taking of property
b. The amount collected is limited to the cost of regulation
c. It is an inherent power of the state
d. The benefit derived is the protection given by the state
11. In case of deductions and exemptions on income tax, doubts shall be resolved:
a. Liberally in favor of the tax payer
b. Liberally in favor of the employer
c. Strictly against the government
d. Strictly against the taxpayer
12. In case of conflict between the tax code and the Philippine Accounting Standards or the
Philippine Financial Reporting Standards:
a. PAS/PFRS shall prevail over the Tax code
b. Tax code shall prevail over PAS/PFRS
c. PAS/PFRS and Tax code shall be disregarded
d. The taxpayer may choose between PAS/PFRS or Tax Code.

13. Although the power of taxation is basically legislative in character, it is NOT the function of the
congress to:

a. Fix with certainty the amount of taxes

b. Identify who should collect the tax
c. Collect the tax levied under the law
d. Determine who should be subject to tax

14. Statement 1: Police power and the power of taxation are exercised primarily by the legislature but
not eminent domain
Statement 2: Taxation and eminent domain interferes with private right and property but not with
police power
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are wrong
D. Both statements are correct
15. The commissioner of Internal Revenue is granted certain powers under the Tax Code. Which of the
following is not a power granted to the commissioner under the Code?
a. Interpret tax laws and decide tax cases
b. Issue summons and subpoena
c. Enact tax laws and make amendments
d. Make assessment and prescribe additional requirements

16. Government agencies performing governmental functions are exempt from tax unless expressly
taxed while those performing functions are subject to tax unless expressly exempted to, refers to:
a. The tax imposed should be for public purpose
b. There should be no improper delegation of the taxing power
c. The power to tax is limited to the territorial jurisdiction of the taxing government
d. Exemption of government entities from taxation

17. The president of the Philippines and the Prime minister of Japan entered into an executive
agreement in respect of a loan facility to the Philippines from Japan whereby it was stipulated that
interest on loans granted by private Japanese financial institutions in the Philippines shall not be
subjected to Philippine Income taxes. What basic characteristics of taxation has been violated by this
agreement?
a. Territoriality
b. Theoretical Justice
c. Legislative in character
d. administrative feasibility

18. Treating persons who are similarly situated in the same manner
a. Uniformity of taxation
b. Equality of taxation
c. Due process of Law
d. Non-delegation of legislative power

19. A tax law is not violative of the due process clause when it is
a. arbitrary
b. discriminatory
c. excessive
d. proportionate

20. Which of the following statements is incorrect?

a. No person shall be imprisoned for non-payment of poll taxes or non-payment of debt.
b. The passage of laws granting tax exemptions requires the concurrence by a majority of all the
members of congress.
c. The supreme court’s jurisdiction over tax cases cannot be impaired.
d. The revenues and assets of non-stock, non-profit educational institutions and donations for
educational institutions and donations for educational purposes are exempted from taxes and duties.
21. Deals with the provision of the law which determines the person or property to be taxed, the sum or
sums to be raised, the rate thereof and the time and manner of levying receiving and collection of taxes
a. collection
b. payment
c. enforced contribution
d. levy

22. The amount required is dictated by the needs of the government

a. license fee
b. tax
c. toll
d. tariff

23. All of the following are sources of tax laws, except

a. Legislation, tax treaties and tax ordinances
b. Judicial decisions
c. Opinions of author’s
d. Administrative rules and regulations

24. Which of the following statements constitute tax avoidance?

a. Deliberate failure of a taxpayer to pay the taxes due to the government
b. Connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes.
c. Punishable by law
d. Maybe contrary to the intent of the legislature but nevertheless do not violate the law

25. Statement 1: A BIR ruling issued by a Commissioner of Internal Revenue which grants tax exemptions
would create a perpetual exemption in favor of the taxpayer.
Statement 2: A tax exemption may be withdrawn anytime at the pleasure of the taxing authority.
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are wrong
D. Both statements are correct

26. Also known as tax dodging

a. Tax exemption
b. Tax evasion
c. Tax avoidance
d. Transformation

27. One of the following is a false statement about double taxation. Which is it?
a. There is no constitutional prohibition on double taxation
b. Direct duplicate taxation is a valid defense against a tax measure if its is violative of the equal
protection clause.
c. Absence of any of the elements of direct double taxation makes it indirect duplicate taxation.
d. A 20% Final withholding tax on interest income on bank deposits and a 5% Gross receipt tax (a
business tax) on banks is a direct duplicate taxation.

28. Transfer of the tax burden by one on whom the tax is assessed to another
a. shifting
b. Capitalization
c. Transformation
d. Tax exemption

29. Christopher, a staff auditor of SGV & Co. took and passed the examination for Certified Internal
Auditor. The following year, he resigned from his job and left the Philippines on April 10, 2020 to work as
an internal auditor in a big establishment in Australia. For income tax purposes, which of the following
statements is correct with respect to Christophe’s qualifications?
a. He shall be classified as Nonresident Citizen for the whole year of 2020.
b. His classification as a nonresident citizen will start on 2021
c. He shall be He shall be classified as Nonresident Citizen for the year 2010 with respect to his income
derived from sources without from April 10,2020
d. He shall be He shall be classified as Nonresident Citizen for the year 2010 with respect to his income
derived from sources without from April 11,2020

30. Which of the following income is subject to Final Tax if received by an individual taxpayer?
I. Share of a partner in net income of a business partnership
II. Cash dividend from a domestic corporation
III. Winnings in Lotto amounting to 9,500
IV. Raffle prizes amounting to 6,000

A. I and II
B. III and IV
C. I, II and IV
D. I, II, III and IV

31. Ana operates a pet shop and at the same time, offers interior design services to her clients. The
following data were provided by Ana for the 2018 taxable year:
Pet Shop:
Gross sales 1,800,000
Cost of sales 600,000
Operating Expenses 200,000

Interior Design Services

Gross receipts 1,150,000
Cost of Direct Services 120,000
Operating Expenses 80,000

How much is her income tax payable?

A. 216,000
B. 345,000
C. 475,000
D. 540,000

32.

Juan had the following data for the current taxable year (exchange ratae 1$= P50)
PH Abroad
Business Income P1,000,000 $20,000
Professional Income 400,000 $10,000
Salaries 200,000 0
Business and professional expenses 250,000 $8,000
Personal Expenses 500,000 $5,000

If Juan is a resident citizen how much is his income tax payable?

A. 570,500
B. 634,000
C. 650,000
D. 720,000

33.
Juan had the following data for the current taxable year (exchange ratae 1$= P50)
PH Abroad
Business Income P1,000,000 $20,000
Professional Income 400,000 $10,000
Salaries 200,000 0
Business and professional expenses 250,000 $8,000
Personal Expenses 500,000 $5,000

If Juan is a non-resident citizen how much is his income tax payable?

A. 570,500
B. 634,000
C. 295,000
D. 340,000

34.
Juan had the following data for the current taxable year (exchange ratae 1$= P50)
PH Abroad
Business Income P1,000,000 $20,000
Professional Income 400,000 $10,000
Salaries 200,000 0
Business and professional expenses 250,000 $8,000
Personal Expenses 500,000 $5,000

If Juan is a resident alien how much is his income tax payable?

A. 570,500
B. 634,000
C. 295,000
D. 340,000

35. Ana, a resident citizen provided the following data for the current taxable year
Gross income from business 700,000
Business Expenses 300,000
Royalty from books 40,000

how much is the regular income tax payable of Ana?

A. 12,000
B. 18,000
C. 30,000
D. Nil

36. Erika, a Resident citizen sold his land at a loss of 500,000 which she acquired for 1,500,000 when the
zonal value was 1,200,000. How much capital gains tax should she pay?
A. 0
B. 90,000
C. 72,000
D. 60,000

37, Carl, a Resident citizen sold his land at a gain of 200,000 which he acquired for 1,500,000 when the
zonal value was 1,400,000. How much capital gains tax should he pay?
A. 0
B. 100,000
C. 102,000
D. 90,000

38.
Kit, a nonresident citizen received a dividend income of 300,000 from a foreign corporation doing
business in the Philippines. The gross income of the foreign corporation from sources around the world
for the past 3 years is provided as follows:
Source 2015 2016 2017
PH 14,000,000 10,000,000 12,000,000
Abroad 10,000,000 16,000,000 18,000,000

The amount of income subject to tax should be?

A. 0
B. 135,000
C. 165,000
D. 300,000
39. Which of the following statements if incorrect?
A. To be subject to final tax, passive income must be from Philippine sources.
B. An income which is subject to final tax is excluded from the computation of income subject to Section
24(A) of the tax code.
C. Lotto winnings in foreign countries is exempt from income tax in the Philippines
D. None of the above

40. A non-resident alien not engaged in trade or business derived 50,000 from interest from his long
term bank deposit here in the Philippines. How much is the income tax due?
a. 10,000
b. 12,500
c. 5,000
d. 0

41. Which of the following royalties earned within the Philippines is not subject to 10% final withholding
tax?
a. Royalties from computer software
b. Royalties from books
c. Royalties from literary works
d. Royalties from musical compositions

42. It is important to know the source of income for tax purposes (i.e. from within and without the
Philippines) because:
a. Some individuals are taxable based on their worldwide income while others are taxable only on their
income from sources within the Philippines.
b. The Philippines imposes income tax only on income from sources within.
c. Some individual taxpayers are citizens while others are aliens
d. Export sales are not subject to income tax

43. Philippines
Abroad
Salaries 265,000
$3,000
Business Income 450,000
6,000
Business Expense 120,000
1,500
Interest Income:
Personal Receivable 30,000
FCDU $2,500
On Bank Deposits
(40% Long term deposits) 25,000
600
Royalty Income (60%
from books) 22,000
500
Dividend Income:
From Domestic Corp. 8,000
From Resident Foreign Corp. 3,000
150
From Non-resident foreign Corp. 5,000
275
Winnings from PCSO 10,000

Exchange Rate- $1= P50

43. How much is the Regular Income Tax?

a. 215,275 b. 210,000 c. 212,365 d. 223,201

44 How much is the Final Tax?

a. 24,765 b. 22,340 c. 25,650 d. 25,630

1.b 25.b 26.b 27.d 28.a 29.d 30.a 31. C 32. B 33.c 34.c 35.c 36.c 37.c 38.a 39.c 40.b
2.a 41.a 42.a 43.a 44.d
3.d
4.b
5.d
6.c
7.c
8.c
9.c
10.b
11.d
12.b
13.c
14.c
15.c
16.d
17.c
18.b
19.d
20.a
21.d
22.b
23.c
24.d