A. B. C. D.: General Principles
A. B. C. D.: General Principles
A. B. C. D.: General Principles
a. Reciprocity provisions
b. Tax Credit
c. Tax exemptions
d. Vanishing deduction.
Answer: C.
Answer: C.
3. Some franchise holders who are paying the franchise tax are being required by an amendatory
law to pay the value-added tax, while others remain subject to franchise tax. Which of the
following constitutional provisions makes the law unconstitutional?
A. No law shall be passed impairing the obligation of contract
B. The rule of taxation shall be uniform
C. No person shall be deprived of property without the due process of law
D. None of the above
Answer: D
C. Punishable by law
D. Maybe contrary to the intent of the legislature but nevertheless do not violate
the law
Answer: D
Answer: B
6. Which of the following is not considered as a step in making a revenue regulation effective?
Answer: C
7. Lualhati Educational Foundation, Inc., a stock educational institution organized for profit,
decided to lease for commercial use a 1,500 square meter portion of its school. The school
actually, directly and exclusively used the rents for the maintenance of its school buildings,
including payment of janitorial services. Is the leased portion subject to real property tax?
8. No law granting any tax exemption shall be passed without the concurrence of
9. After having been informed that some massage parlors are being used as fronts for
prostitution, the Sangguniang Panlungsod of Manila passed a tax ordinance subjecting massage
parlors within its jurisdiction to such onerous taxes that leave them no other alternative but to
stop operating. The passage of the ordinance is a valid exercise of –
A. taxation
B. eminent domain
C. police power
D. police power and power of taxation
ANSWER: D
The power to tax is a valid implement of the police power of the state in discouraging and
ultimately prohibiting in effect certain things or enterprises inimical to the public welfare.
10. A fundamental rule in taxation is that “the property of one country may not be taxed by
another country.” This is known as (RPCPA)
ANSWER: B
A.
14. Statement 1: The grant of a tax amnesty must be construed against the taxpayer and
liberally in favor of the taxing authority.
Statement 2: A tax exemption is a personal privilege which can be assigned and transferred
by the grantee unless disallowed in the law granting tax exemption.
Which of the above statements is true?
A. Statement 1 only
B. Statement 2 only
C. Neither statements
D. Both statements
Answer: C.
15. The reduction in the selling price of income-producing property by an amount equal to
the capitalized value of future taxes that may be paid by the purchaser
A. Shifting
B. Capitalization
C. Transformation
D. Tax exemption
Answer: B
16. One of the following is a false statement about double taxation. What is it?
D. A 20% final withholding tax on interest income on bank deposits and a 5% gross receipts
tax on banks is a direct duplicate taxation
Answer: D
c. For the exercise of the power of taxation, the state can tax anything at any time.
d. The power of taxation in the Philippine Constitution is grants of power and not
limitations on taxing powers.
Answer: D
20. The Bicol School of Business and Arts, a propriety educational institution which is offering
primary, secondary and tertiary education, is registered with and accredited by the Department
of Education (DepEd) and the Commission on Higher Education (CHED).
Which of the following is exempt from tax? What kind of tax?
21. Question 1: Can the state tax the Armed Forces of the Philippines?
Question 2: Are government-owned and controlled corporations subject to tax?
a. Yes, No
b. Yes, Yes
c. No, Yes
d. No, No
Answer: B. Yes, Yes
22. Statement 1: The Congress can enact tax laws even in the absence of a constitutional
provision granting said body the power to tax.
Statement 2: A tax may be validly imposed in the exercise of police power and not the power
to tax.
a. False, False
b. False, True
c. True, True
d. True, False
Answer: C. True, True
23. Real property taxes should not disregard increases in the value of property occurring over a
long period of time. To do otherwise violate the canon of a sound tax system referred to as
A. Theoretical Justice
B. Fiscal Adequacy
C. Administrative Feasibility
D. Symbiotic Relationship
Answer: B.
24. Statement 1: An Executive Order passed by the President of the Philippines directing the
Commission on Higher Education to regulate the operation of review centers is a valid exercise
of police power
Statement 2: Construction of a church building is exempt from the payment of building permit
fees because the constitution provides that churches are exempt from property taxes.
Which of the above statements is true?
A. Statement 1 only
B. Statement 2 only
C. Neither Statements
D. Both Statements
Answer: C.
25. The legislative body can impose a tax at any amount underscores the legal truism that
taxation is (RPCPA)
26. The municipality of MonteCristo has a ten (10) hectare cemetery consisting of four (4)
different cemeteries which are owned by different entities. Which of the following is subject to
real estate tax?
B. Monte Cristo Catholic Cemetery - owned by the Catholic Church payments are
remitted to the Catholic Church and for the improvement of the cemetery
C. Last Trip Memorial Park - owned by a corporation where dividends are distributed to
the shareholders at the end of the year
D. Quita-Quita Memorial Park - owned by an association consisting one hundred (100)
different families, each family owns several square meters of lot, not a single portion is
held for sale to either member or non-member of the association
Answer: C
27. When the refund of a tax supposedly due to the taxpayer has already been barred by
prescription and the said taxpayer is assessed with a tax at present, the two taxes may be set-off
with each other. This doctrine is called
A. Set-off doctrine
B. Doctrine of reciprocity
C. Tax Sparing doctrine
D. Equitable recoupment
Answer: D
28. Which of the following is not one of the canons of a sound tax system?
A. Quantifiability
B. Equality
C. Certainty
D. Convenience
Answer: A
30. Mr. Alas sells shoes in Makati through a retail store. He pays the VAT on his gross sales to
the BIR and the municipal license tax based on the same gross sales to the City of Makati. He
comes to you for advice because he thinks he is subjected to double taxation.
Answer: D
31. The basic community tax of P5.00 of an individual is a (an):
32. Pat Reyes, a student activist, wants to impugn the validity of a tax on text messages. Aside
from claiming that the law adversely affects her since she send messages by text, what may she
allege that would strengthen her claim to the right to file a taxpayer’s suit?
a. That she is entitled to the return of the taxes collected from her in case the court nullifies the
tax measure.
b. That tax money is being extracted and spent in violation of the constitutionally guaranteed
right to freedom of communication.
c. That she is filing the case in behalf of a substantial number of taxpayers.
d. That text messages are an important part of the lives of the people she represents.
Answer: B.
a. Construction of bridges
b. Payment of Christmas bonuses of government officials and employees
c. Opening of road on a tract of land owned by private individual
d. Scholarship to poor but deserving students
Answer: C. Opening of road on a tract of land owned by private individual
34. Double taxation in its general sense means taxing the same subject twice during the same
taxing period. In this sense, double taxation (BEQ)
35. 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 subject to Philippine income taxes. What basic characteristic of taxation has been violated by
this agreement?
A. inherent limitation C. legislative in character
B. theoretical justice D. administrative feasibility
Answer: C
36. One of the characteristics of internal revenue taxes is that they are
A. Criminal in nature
B. Penal in nature
C. Political in nature
D. Generally prospective in application
Answer: D
B The Constitution grants exemption from all finds of taxes to religious and charitable
organizations.
C Because the power to tax is unlimited, comprehensive, plenary and supreme, the
power to tax can reach over to any jurisdiction to seize upon person or property.
Answer: D
Opinions of tax experts may be used as basis of tax legislation but they are not, strictly
speaking, sources of tax laws.
Religious and charitable institutions may be exempt from property and income tax but not on
all taxes.
Although the scope of taxation is that the power is unlimited, comprehensive, plenary and
supreme, the taxing authorities should not go beyond the constitutional and inherent
limitations.
Under the "benefits-protection theory", the citizen supports the state by paying taxes that is
demandable in order that he may, by means thereof, be secured in the enjoyment of the
benefits of an organized society.
A Different tax rates on boarding stables for racehorses and boarding horses that are not
for racing
B Wholesale dealers in oil are subject to occupational tax while wholesale dealers in
other articles such as sugar, bacon, coal, iron and other things are not so subject.
C A road user's tax imposed on all motor vehicles registered and operating in the City
of Manila but does not subject vehicles not registered therein but also operating temporarily in
the said city.
D A tax of P2 per square meter of fraction thereof is imposed on every billboard or sign
anywhere in the country.
Answer: C
A. provinces
B. cities
C. Barangays
D. barrios
Answer: D.
Provinces, cities and barangays have no inherent power to tax. However, taxing power
has been tied up to them by the local autonomy, thus authorizing these local government
units to exercise the power, subject to limitations set by law.
40. Business College (BC) is a non-stock, non-profit educational institution. It owns a 5-hectare
lot one half of which is being used as its school campus while the other half is vacant. To cope
with the increasing operating costs and to upgrade its facilities, BC plans to do the following
effective January 1, 2016. (1) Rent out to a marketing firm the vacant portion of the lot, (2)
increase tuition fees by 10% in accordance with government regulations, and (3) import 20 sets
of computers for use in its computer courses.
Which of the following questions is answerable by “Yes.”?
A. Is BC subject to real estate tax on the one-half portion to be rented out to a business
establishment?
B. Will it be exempt from income tax on its rental to the marketing firm?
C. Will the increase in tuition fees be subject to income tax if it results to a net income
from school operations?
D. Will it be subject to customs duties on the importation of the computer?
Answer: A
The portion to be leased to a marketing firm will not be used actually, directly,
and exclusively for educational purposes.
All revenues of non-stock, non-profit educational institutions are exempt from taxes and
duties. Thus, the income is exempt from income tax so long as the income are used actually,
directly and exclusively for educational purposes.
The exemption from taxes of non-stock, non-profit educational institutions includes
exemption from customs duties.
d. Both in the country where the income earner is a resident and in the country where the
service has been earned
Answer: D.
42. The following, except one, are exceptions to the rule that tax exemptions must be strictly
construed against the tax payer
a. Where the statute granting the exemption provides for liberal interpretation thereof.
b. If the taxpayer does not fall within the purview of he exception by clear legislative intent.
c. In case of special taxes relating to special cases and affecting only special classes of
persons
Answer: B.
43. Which of the following is not a scheme of shifting the incidence of tax burden? (PICPA)
A. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of
the goods sold.
B. The purchaser asks for a discount or refuse to buy at regular price unless it is reduced by an
amount equal to the tax he will pay.
C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination
abroad, so that the title passes abroad instead of in the Philippines.
D. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, to the
retailer and finally to the consumer.
Answer: C
44. Statement 1: A BIR Ruling issued by a Commission of Internal Revenue which grants tax
exemption in favor of the taxpayer
Statement 2: A tax exemption may be withdrawn anytime at the pleasure of the taxing
authority.
A. Statement 1 only
B. Statements 1 and 2
C. Statement 2 only
D. Neither of them
Answer: C
45. In case of deductions and exemptions on income tax returns, doubts shall be resolved
Answer: A
46. Which of the following is not correct with respect to a taxpayer’s suit?
Answer: B
47. XYZ Corporation manufactures glass panels and is almost at the point of insolvency. It has
no more cash and all it has are unsold glass panels. It received an assessment from the BIR for
deficiency income taxes. It wants to pay but due to lack of cash, it seeks permission to pay in
kind with glass panels. Should the BIR grant the permission? (BEQ)
Answer: A.
Answer: C.