The income tax due from compensation is

a. 8% income tax rate on gross sales or receipts and other non-operating income in excess of
Php250,000
b. Based on graduated tax rates under Section 24 (A)
c. Based on taxable income after deducting expenses and exemptions
d. Either graduated income tax rate or 8% tax rate on gross sales or receipts and other non-
operating income in excess of Php250,000

Statement 1. A foreigner who shall stay in the Philippines without a definite intention is considered a
non-resident alien.

Statement 2. A non-resident alien who shall stay in the Philippines for 180 days shall be considered
engaged in trade or business.

Statement 3. A nonresident citizen is a citizen of the Philippines who leaves the Philippines during the
taxable year to reside abroad, either an immigrant or for employment on a permanent basis.
a. Only one (1) of the above statement is true
b. Two (2) of the statements are true.
c. All of the above statements are false.
d. All of the above statements are true.

Mr. X is a purely self employed individual and his gross sales/receipts and other non operating income
exceed the VAT Threshold. He signified his intention to avail of the 8% income tax rate on his first quarter
return, he will pay:
a. Income tax on gross sales/ receipts and other non-operating income in excess of P250,000 in
lieu of graduated tax rates and percentage under Section 116
b. Income tax on gross sales/receipts excluding non-operating income in excess of P250,000 in
lieu of graduated tax rates and percentage under Section 116.
c. Percentage tax under Section 116 in lieu of income tax.
d. Income tax on gross sales/receipts and other non-operation income in excess of P250,000
and the percentage tax under Section 116.

All of the following statements are correct, except one. Which is the exception?
a. Rents are considered derived from the country where the property is located/
b. The source of interest income is the country where the debtor resides.
c. The source of dividend income is the country where the corporation was incorporated.
d. Income from personal services is considered derived from the country where the services were
rendered.
Statement 1: There can be double taxation in the Philippines.
Statement 2: Double taxation is illegal if it violates the uniformity of taxation.
a. If only the first statement is correct.
b. If only the second statement is correct.
c. If both statements are correct.
d. If both statements are incorrect.

Statement 1: Tax avoidance is a form of tax escape.

C, an American singer, was engaged to sing for one week at the Western Philippine Plaza after
which she returned to USA. For income tax purposes, she shall be classified as:
a. Resident alien.
b. Nonresident alien engaged in trade or business.
c. Nonresident alien not engaged in trade or business.
d. Resident citizen.

I. Due process of law in taxation under the constitution is a grant of power.

Which of the following is not considered as “de minimis” benefits?

a. Employees achievement award for length of service or safety achievement in the form of cash or
gift certificate not exceeding P10,000 per year
b. Medical cash allowance to dependents of employees not exceeding P3,000 per year
c. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per year
d. Medical allowance to cover medical and healthcare needs, annual medical/executive check-up,
maternity assistance and routine consultations not exceeding P10,000 per year
Which of the following fringe benefits shall be subject to the fringe benefit
tax?
a. Benefits given to the rank-and-file employees, whether granted under a
collective bargaining agreement or not
b. Fringe benefits required by the nature of, or necessary to the trade,
business or profession of the employer
c. Fringe benefit given for the convenience or advantage of the employer
d. Membership fees, dues and other expenses borne by the employer for the
managerial and supervisory employee in social and athletic clubs and similar
organizations

Gains, profits and income from the sale of real property are from sources
within the Philippines if:
a. the real property sold is located in the Philippines.
b. the real property is sold in the Philippines.
c. the real property sold is located outside the Philippines.
d. the real property sold is owned by a resident citizen.

Ms. Leni operates a convenience store while she offers bookkeeping services to her clients. In 2018, her gross sales
amounted to P800,000.00, in addition to her receipts from bookkeeping services of P300,000.00. She already
signified her intention to be taxed at 8% income tax rate in her 1st quarter return. How much is the income tax
liability for the year?

How much is her taxable income for the year?

How much is the income tax due?

Big Boy, a part-time exercise trainer, also operates a shoe store while offering her services to clients
living in Metro Manila. In 2019, the gross sales of her shoe store amounted to ₱1,100,000 while her
receipts from her training services amounted to ₱400,000. Her total cost of sales and operating
expenses amounted to ₱150,000 and ₱35,000, respectively. Her non-operating income (not subject to
FTs) amounted to ₱300,000.
She signified in her 1st Quarterly ITR her intention to be taxed at the 8% income tax rate.
Compute her income tax due for 2019.
a. ₱100,000
b. ₱124,000
c. ₱ 68,000
d. None of the above.

If Big Boy failed to signify her intention to be taxed at the 8% income tax rate, what will be her
income tax due in 2019?
a. ₱374,500
b. ₱369,800
c. ₱284,500
d. None of the above.

Lily Bag is the CEO of Sesame Zoo Corporation. In 2019, he received total compensation of
₱10,000,000 inclusive of 13th month pay and other benefits in the amount of ₱800,000. He also owns
a poultry farm which supplies the wet market in his province. Its gross sales totalled ₱2,000,000.
The farm’s cost of sales and operating expenses amounted ₱300,000 and ₱180,000, respectively. Its
non-operating income amounted to ₱230,000.
Compute his income tax due in 2019.
(a) ₱3,691,000
(b) ₱3,874,760
(c) ₱3,901,000
(d) None of the above.

In 2018, Thirst Sayao, the CEO of the Philippine Nuclear Fusion Corporation, earned compensation
income of ₱4,000,500. This amount is inclusive of his 13 th month pay and other benefits of ₱250,000,
but net of the mandatory contributions to SSS and Philhealth.
Aside from his employment, he also owns a cafeteria. In 2018, the cafeteria had gross sales of
₱1,500,000, cost of sales of ₱500,000, and operating expenses of ₱300,000. It also had non-operating
income of ₱700,000.
What would be Thirst Sayao total income tax due if he did not avail of the 8% income tax rate on
gross sales plus non-operating income arising from his business?
(a) ₱ 696,969
(b) ₱1,650,920
(c) ₱1,549,360
(d) None of the above