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1. Alkalytes are subject to excise tax on fuel.

f

2. Bariatric surgeries are not subject to excise tax on non-essential services.

t

3. Lipsticks are subject to excise tax on non-essential goods

f

4. VAT refund can be claimed by a non-VAT registered taxpayer

f

5. Aromatic Hydrocarbons not used as lubricating oils or greases are subject to excise tax under Section 148 of the NIRC

f

6. Cigarettes packed by hand are subject to excise tax in the amount of Php60.00 per pack starting on January 1, 2022

f

8. Gatorade is subject to sweetened beverage tax

t

9. A sidewalk vendor selling palamig may be imposed with sweetened beverage tax

f

10. There shall be levied a 20% excise tax on fake/imitation rubies

t

11. Asphalts are subject to excise tax of Php10.00 per kg

f

12. An individual opting to pay his/her income tax using the 8% preferential rate is no longer subject to other percentage tax

t

7. Automobiles shall mean any four (4) or less wheeled motor vehicle regardless of seating capacity, which is propelled by gasoline, diesel, electricity or any other motive power

f

13. Transport of Passenger by an international carrier from the Philippines to the United Arab Emirates is VAT Exempt

t

14. Movie houses, such as SM Cinemas and Ayala Cinemas, are not subject to the percentage tax on amusement places under Section 125 of the Tax Code.

t

15. Radio and TV franchise holders whose gross sales for the preceding taxable year did not exceed P10 million have the option to register as VAT taxpayers. However, once such option is exercised, the same is irrevocable for a period of 3 years.

f

16. All professional boxing exhibitions held in the Philippines involving at least one Filipino citizen shall be subject to amusement tax of 10%.

f

17. Gas and water utilities whose gross sales from the preceding year exceed P10 million should be subject to VAT instead of the franchise tax.

f

18. The highest percentage tax rate for non-bank financial institutions not performing quasi-banking functions is 7%

f

19. For purposes of computing the gross receipts tax for banks and non-bank financial intermediaries performing quasi-banking functions, the trading loss should be deducted from the trading gain within the same taxable year.

t

20. Victory Bus Liner is a transportation contractor by land. Its gross sales for the year never exceeded P3 million. The company is subject to the 3% percentage tax, except from July 1, 2020 to June 30, 2023, where the applicable tax rate is 1%.

f

21. Cathay Pacific, an international air carrier, is subject to the percentage tax on its gross sales derived from the transport of cargo from the Philippines to another country.

t

22. If a person who is not VAT-registered issues an invoice showing his TIN followed by the word “VAT”, he shall be liable to the applicable percentage tax, plus the 12% VAT without the benefit of any input tax credit, plus the 50% surcharge.

t

23. The filing of the Monthly VAT Declaration is no longer mandatory for all VAT-registered taxpayers.

t

24. ABC Company has excess input VAT for the quarter ended June 30, 2026 because its creditable input VAT exceeded its output VAT during the quarter. Such input VAT were attributable to its VATable sales. ABC Company may file a claim for excess input VAT refund under Section 112 of the Tax Code.

f

25. ABC Company received the decision of the Commissioner of Internal Revenue denying its claim for tax refund. Under the Tax Code, as amended, the company may already appeal the decision to the Court of Tax Appeals within 30 days from receipt of the adverse decision.

f

1. What can an exporter of minerals do on the excise tax they paid for minerals upon export of said minerals?

A. Claim the excise tax for refund

B. Claim the excise tax as input tax credit

C. Claim the excise tax for tax credit

D. Cannot claim the excise tax for refund

d

2. Evaluate the following are independent statements:

i. Understatement of the suggested net retail price by as much as ten percent (10%) of the actual net retail price shall render the manufacturer or importer liable for additional excise tax equivalent to the tax due and difference between the understated suggested net retail price and the actual net retail price.

ii. The BIR is mandated to issue a revenue regulation prescribing the cigarette floor price or the minimum cigarette price taking into account the sum of the excise and value-added taxes as provided herein.

A. Statement i is correct

B. Statement ii is correct

C. Both statements are correct

D. Both statements are incorrect

b

3. Who can claim input VAT refund among the following persons?

A. A renewable energy developer with respect to local purchases of goods and services attributable to its sale of renewable energy

B. A Registered Business Enterprise registered with PEZA in relation to its local purchases of goods and services attributable to its export sales

C. A corn producer

D. The local supplier of a Registered Business Enterprise

d

4. VAT shall still be allowed to be used as input tax credit on the part of the purchaser pursuant to Section 110 of this Code if the lacking information do not pertain:

A. to the amount of sales

B. amount of VAT

C. name and TIN of both the purchaser and issuer/seller

D. address of both the purchaser and issuer/seller

E. description of goods or nature of services

F. the term “VATable” for VAT sales, “Non-VAT” for Non-VAT sales, “VAT Exempt” for VAT exempt sales and “Zero-Rated” for VAT zero rated sales

G. the date of the transaction

H. All of the above

I. None of the above

J. All of the above except d, e, f and g

K. All of the above except d, e and f

L. All of the above except d and f

l

5. The following are independent statements:

i. Domestic Air Carriers are subject to 3% OPT

ii. International Shipping Carriers doing business in the Philippines are subject to OPT equivalent to 3% of monthly gross sales derived from transport of cargo from the Philippines to another country

A. Only statement i is correct.

B. Only statement ii is correct.

C. Both statements are correct.

D. Both statements are incorrect.

d

6. The excise tax return on non-essential services is due when:

A. 10 days from the rendition of the service

B. 10 days from the close of the month following the service

C. 10 days from the close of the quarter following the service

D. 10 days from the end of the year following the service

b

7. What business tax is due from the fees received by PLDT Co. on its share of the service fees for calls originating from the United States going to the Philippines

A. It is subject to 3% OPT

B. It is subject to 12% VAT

C. It is subject to 0% VAT

D. It is VAT-exempt

c

8. The following are independent statements:

I. 'Cigars' mean all rolls of tobacco or any substitute thereof, wrapped in leaf tobacco that are consumed via combustion of the tobacco.

II. ‘Vapor products’ shall mean electronic nicotine delivery systems (ENDS), which are combinations of (i) a liquid solution or gel, that transforms into an aerosol without combustion through the employment of a mechanical or electronic heating element, battery or circuit that can be used to heat such solution or gel, and includes, but is not limited to (ii) a cartridge, (iii) a tank, and (iv) the device without a cartridge or tank. It is commonly known as nicotine salt/salt nicotine, and conventional “freebase” or “classic” nicotine, and other similar products: Provided, That all vapor products shall be covered by this Act regardless of its nicotine content.

A. Statement I is correct

B. Statement II is correct

C. Both statements are correct

D. Both statements are incorrect

a

9. The OPT on Life Insurance Premiums is:

A. 2% of the total premium earned

B. 2% of the total premium collected

C. 2% of the total premium earned minus premiums refunded within six (6) months after payment on account of rejection of risk

D. 2% of the total premium collected minus premiums refunded within six (6) months after payment on account of rejection of risk

d

10. If Manny Pacquiao held a boxing exhibition against Floyd Mayweather at Davao Arena using Top Rank, Inc., a U.S. company, as promoter, how much amusement tax is due?

A. 10%

B. 18%

C. 15%

D. 30%

E. Exempt

a

12. Electric Vehicles are subject to excise tax at

A. Exempt

B. twenty five percent (25%) of the applicable excise tax rates on automobiles

C. fifty percent (50%) of the applicable excise tax rates on automobiles

D. none of the above

a

13. Evaluate the following are independent statements:

i. Bus shall mean a motor vehicle of any configuration with gross vehicle weight of 3.0 tons or more with any number of wheels and axles, which is generally accepted and specifically designed for mass or public transportation.

ii. Special Purpose Vehicle shall mean a motor vehicle designed for specific applications such as cement mixer, fine truck, utility vans, boom truck, ambulance and/or medical unit, and off-road vehicles for heavy industries and not for recreational activities.

A. Statement i is correct

B. Statement ii is correct

C. Both statements are correct

D. Both statements are incorrect

d

14. Which of the following domestic common carriers is subject to the common carriers tax?

A. 2GO Shipping on its transport of cargo by sea within the Philippines

B. GrabCar on its transport of passengers by land within the Philippines

C. Angkas Padala on its transport of cargo by land within the Philippines

D. Cokaliong Shipping Lines on its transport of passengers by sea within the Philippines

b

15. Which of the following international airlines is subject to the common carriers tax?

A. Japan Airlines on its transport of passengers from Cebu to Tokyo

B. British Airways on its transport of cargo from London, to Manila

C. Cathay Pacific Air on its transport of cargo from Davao, Philippines to Hongkong

D. American Airlines on its transport of cargo from New York to London

c

16. The following are exempt from the payment of the overseas communication tax, except?

A. US Embassy in Manila

B. Manila City Government

C. Philippine Daily Inquirer newspaper

D. De La Salle University

d

17. Which is not a requirement for a promoter of a boxing exhibition to be exempt from the percentage tax?

A. The fight is for a World or Oriental championship

B. Both fighters must be Filipino citizens

C. The promoter is a Filipino citizen or a corporation where 60% is owned by Filipinos

D. All of the above are requirements

b

19. The sale, importation, printing, or publication of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale, and which is not devoted principally to the publication of paid advertisements is:

A. Subject to VAT or OPT

B. Subject to VAT, exempt from OPT

C. Exempt from VAT, subject to OPT

D. Exempt from VAT and OPT

d

20. An individual taxpayer operates a grocery store and is not VAT-registered. He opted to avail of the 8% tax based on gross income. In 2025, his annual gross sales amounted to P2,900,000. However, due to high operating costs, his operations resulted in a net loss for the year 2025. In addition to the 8% tax, the taxpayer shall be subject to:

A. VAT

B. 3% OPT

C. 2% MCIT

D. None of the above taxes.

d

21. In January 2026, Mikha Niko started a car repair business. She did not expect his gross receipts to exceed Php 3 Million a year, and thus did not register for purposes of the VAT. She also signified in her first quarter ITR her intention to be taxed under the 8% income tax rate option. However, by mid-June

2026, her receipts had already reached the amount of Php 3,000,050.00. When should Mikha Niko register for VAT, and when will she start to become liable for VAT? Will she still pay OPT under Section 116 of the Tax Code?

A. Mikha Niko should register in July 2026 which is the month following the month where her gross receipts exceeded PhP 3 Million. She will become liable for VAT starting July 2026. She will be liable for OPT for the months January to June 2026, and shall pay such OPT on or before July 25.

B. Mikha Niko should register in July 2026, the month following the month where her gross receipts exceeded Php 3 Million. She will become liable for VAT starting July 2026. As she chose to be taxed under the 8% option, she will not be liable for the OPT from January to June 2026. Nonetheless, she will be subject to the schedular income tax rates beginning July 2026.

C. Mikha Niko should register within 10 days after the end of June or from July 1 to July 10, 2023. She shall be liable for VAT on August 1, 2026. She will no longer be liable to OPT.

D. Mikha Niko should register within 10 days after the end of December (the last month of the 12 month period) or from January 1 to 10, 2027. He shall be liable for VAT beginning on the 1st day of the month following his registration, or February 1, 2027. He will be liable for OPT from January to December, 2026.

b

22. The manufacturer or processor of the following may be allowed to claim the presumptive input VAT, except:

A. Century Tuna

B. 555 Sardines

C. Lucky Me! Pancit Canton

D. Baguio Cooking Oil

a

23. Which of the following is the acceptable tax treatment of input VAT attributable to VAT-exempt sales?

A. Credited against any output VAT arising from sale of goods.

B. Credited against any output VAT arising from sale of services.

C. Claimed as tax refund or tax credit certificate.

D. Claimed as part of the related expense or cost which may be deductible from gross income.

d

1. A resident foreign corporation is one that is:

A. Organized under the laws of a foreign country and does business in another country.

B. Organized under the laws of the Philippines and sets up a regional headquarter in the Philippines doing product promotion and information dissemination.

C. Organized under the laws of the Philippines that engages business in a special economic zone.

D. Organized under the laws of a foreign country and engages in business in the Philippines.

E. Organized under the laws of a foreign country and does business in the Philippines through an independent local distributor which transact business in its own name and account.

d

2. In 2026, Keyrand, Inc., a Philippine corporation, sold through the local stock exchange 10,000 PLDT shares that it bought 2 years ago. Keyrand sold the shares for P2 million and realized a net gain of P200,000. How shall it pay tax on the transaction?

A. It shall declare a P2 million gross income in its income tax return, deducting its cost of acquisition as an expense.

B. It shall report the P200,000 in its corporate income tax return which shall be subject to the normal income tax rates.

C. It shall pay 15% tax on the net gain of P200,000.

D. It shall pay a tax of one-tenths of 1% of the P2 million gross sales.

E. It shall pay 6% tax on the selling price of P2 million.

d

3. A non-stock, non-profit charitable association that sells its idle agricultural property at a gain is:

A. Not required to pay income tax on the transaction as it is exempt from income tax.

B. Subject to the 6% capital gains tax on the gross selling price or fair market value, whichever is higher.

C. Mandated to pay the applicable regular corporate income tax on the gain from sale.

D. May be exempt from income tax if the proceeds from such sale is used for charitable purposes.

E. Required to withhold the applicable expanded withholding tax on the transaction.

b

4. Interest income from peso bank deposits of a domestic non-stock, non-profit charitable association is:

A. Exempt from income tax.

B. Subject to 20% final withholding tax.

C. Subject to 15% final withholding tax.

D. Subject to the 20% creditable withholding tax.

E. Subject to the RCIT, or MCIT, whichever is higher.

b

5. The following will form part of cost of goods sold for minimum corporate income tax purposes, except:

A. Depreciation of production facilities.

B. Freight out incurred for the delivery of finished goods to customers.

C. Freight in transporting the goods to the place where the goods are actually sold,

D. Salaries and wages of production employees.

E. Raw materials used in production.

b

6. The following corporations are taxable only on their income within the Philippines, except:

A. Domestic corporation engaged in trading with branch in Switzerland.

B. Non-resident foreign corporation deriving royalties for the use of brand in the Philippines.

C. Philippine branch of a Spanish company engaged in the manufacture of semi-conductor products.

D. International carrier incorporated in South Korea, with daily flights from Manila to Seoul.

E. Regional operating headquarters of a Vietnamese company in the Philippines.

a

7. Rio de Janeiro Corporation was incorporated on December 20, 2023 adopting the calendar year accounting period. It registered with the BIR on January 15, 2024. When will Rio de Janeiro’s imposition of minimum corporate income tax (MCIT) commence?

A. January 1, 2028.

B. January 15, 2028.

C. January 1, 2027.

D. December 20, 2028.

E. December 20, 2027.

a

8. The interest income on bank deposit in a depository bank under the expanded foreign currency deposit system by a domestic corporation is:

A. Subject to the RCIT before the CMEPA and 20% final withholding under the CMEPA.

B. Subject to 20% final withholding tax.

C. Subject to 15% final withholding tax.

D. Subject to 15% final withholding tax before the CMEPA and 20% final withholding tax under the CMEPA.

E. Subject to 20% final withholding tax before the CMEPA and 15% final withholding tax under the CMEPA.

d

9. Which of the following is not correct about the taxability of disposal of shares of stock?

A. The sale of Philippine Stock Exchange (PSE) listed domestic shares through the PSE is subject to the 6/10 of 1% stock transaction tax before the CMEPA and 1/10 of 1% stock transaction tax under the CMEPA.

B. The sale of foreign stock exchange listed domestic shares through said foreign stock exchange is subject to the RCIT before the CMEPA while it is exempt from income tax but subject to 1/10 of 1% stock transaction tax under the CMEPA.

C. The sale of foreign stock exchange listed domestic shares over-the-counter is subject to the 6/10 of 1% stock transaction tax before the CMEPA and 1/10 of 1% stock transaction tax under the CMEPA.

D. The sale of domestic shares over-the-counter is subject to the 15% CGT.

E. All of the statements are correct.

c

10. Which of the following transactions do not form part of the gross Philippine billings for purposes of computing the income tax of international carriers?

A. Revenues from cargo for a Cathay Pacific flight, a resident foreign corporation, from Manila to Hongkong, where the tickets were sold outside the Philippines.

B. Revenues from passengers and mail services for a Philippine Airlines flight, a domestic corporation, from Manila to San Francisco, USA, the tickets were sold in Manila.

C. Revenues from cargo for a Singapore Airlines flight, a resident foreign corporation, from Davao City to Singapore, where the tickets were sold in Davao City.

D. Revenues from passengers for a Korean Airlines flight from Manila to Seoul, but the tickets were sold outside the Philippines.

E. All of the choices form part of the gross Philippine billings.

b

11. Which of the following statements pertaining to taxation of educational institutions is incorrect?

A. A proprietary educational institution, which is a private school maintained by private individuals issued with a permit to operate by the DepEd, CHED, or TESDA, is subject to the preferential tax rate of 10%.

B. A domestic non-stock, non-profit educational institution, whose net income or assets accrue or inure for the benefit any member or specific person, is subject to the preferential tax rate of 10%.

C. A government educational institution, whose charter does not expressly provide that it is exempt from income tax, may nevertheless be exempt from income tax on its income received as such under Sec. 30 of the Tax Code.

D. A non-stock, non-profit educational institution, whose income is used actually, directly, and exclusively for educational purposes, is exempt from income tax under the 1987 Constitution.

E. All of the statements are correct.

e

12. When is the deadline for filing the second quarter income tax return of a corporation for the fiscal year ended March 31, 2025? (Disregard holidays, weekend and leap year)

A. December 30, 2024.

B. August 29, 2024.

C. November 29, 2024.

D. March 1, 2025.

E. None of the choices.

c

13. Due to high inflation and weakening purchasing power of the peso because of the Middle East conflict, Pitiful Corporation, a domestic corporation, incurred a taxable loss for the year 2026. As such, its income tax due for the year is zero. In filing its annual income tax return for 2026, what BIR Form should Pitiful Corporation use?

A. BIR Form 1702-RT.

B. BIR Form 1702-MX.

C. BIR Form 1702-EX.

D. Either BIR Form 1702-RT or BIR Form 1702-EX at the option of the company.

E. Either BIR Form 1702-EX or BIR Form 1702-MX at the option of the company.

a

14. What is the corporate income tax rate for a branch established in the Philippines by multinational companies and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communications and coordinating center for their affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets?

A. 0% (Exempt).

B. 10% special rate

C. 10% special rate before 01 January 2022, and 25% RCIT beginning 01 January 2022 onwards.

D. 25% RCIT before 01 January 2022, and 10% special rate beginning 01 January 2022 onwards.

E. 25% RCIT.

a

15. When will the tax sparing rule apply?

A. The country of residence of the corporate shareholder allows a credit of 10% tax deemed to have been paid in the Philippines.

B. The country of residence of the corporate shareholder does not impose any tax on the dividend.

C. Both A and B.

D. Either A or B.

E. None of the choices.

d

16. Which of the following tax on corporations was repealed by the CREATE Act?

A. Improperly accumulated earnings tax.

B. Branch profits remittance tax.

C. Minimum corporate income tax.

D. Gross Philippine billing tax.

E. Final withholding tax on dividends received by a domestic corporation.

a

17. The following revenues earned by a nonresident foreign corporation from Philippine sources are subject to 25% Final Withholding Tax (assuming no tax treaty rate is applicable), except:

A. Interest on peso deposits from domestic banks.

B. Dividends received from domestic corporations, where the tax sparing rule does not apply.

C. Royalties on copyright used in the Philippines.

D. Gain on sale of shares of stocks not traded in the local stock exchange.

E. All of the above are subject to 25% FWT.

d

18. What is the treatment of corporations adopting the fiscal year accounting period in computing their taxable income?

A. Their taxable income shall be computed based on the specific date when specific sales, purchases, and other transactions occur.

B. Their taxable income shall be computed based on the date when specific sales, purchases, and other transactions occur, but only for the first six months of the fiscal year.

C. Their taxable income shall be computed based on the date when specific sales, purchases, and other transactions occur, but only for the first six months of the fiscal year.

D. Their income and expenses for the fiscal year shall be deemed to have been earned and spent equally for each month of the period.

E. None of the choices.

d

19. Which of the following statements is true? Dividends received by a

A. Domestic corporation from a resident foreign corporation are subject to final withholding tax

B. Resident foreign corporation from another resident foreign corporation are subject to schedular income tax in the Philippines

C. Non-resident foreign corporation from domestic corporation are subject to final withholding tax

D. Domestic corporation from another domestic corporation are subject to schedular income tax in the Philippines

E. All of the above statements are true.

c

20. Foreign-sourced dividends received by a domestic corporation may be exempt from income tax provided the following requisites are complied with. Which is not a requirement?

A. Dividends are reinvested into the business operations of the domestic corporation within the next taxable year from the time the foreign-sourced dividends were received.

B. Dividends shall be used to fund working capital requirements, capital expenditures, dividend payments, investment in domestic subsidiaries, and infrastructure project;

C. Domestic corporation holds directly at least 20% of the outstanding shares of the foreign corporation and has held the shareholdings uninterruptedly for a minimum of two years at the time of the dividends distribution.

D. Comply with the substantiation requirements, including the attachment of the sworn certification in the annual ITR on the year the dividends were received, based on the template prescribed by the BIR.

E. All the above requirements are correct.

e

21. Under the Tax Code, who is authorized to suspend the imposition of the minimum corporate income tax on any corporation which suffers losses on account of prolonged labor dispute, or because of force majeure, or because of legitimate business reverses?

A. President of the Philippines.

B. Secretary of Finance.

C. Commissioner of Internal Revenue.

D. Senate President.

E. None of the choices.

b

22. This question is worth two points. Which of the following corporations may avail of the lower 20% RCIT rate? Choose all correct options.

A. Haruhi Corporation, a domestic corporation, whose taxable income is at P5 million, and whose total assets, including land where the business is situated, amount to P110 million. The book value of the land is at P10 million.

B. Kyon Corporation, a resident foreign corporation, whose taxable income is at P6 million, and whose total assets amounts to P101 million, and is considered a registered business enterprise availing of the enhanced deductions regime.

C. Mikuru Corporation, a nonresident foreign corporation, whose taxable income is at P4 million, and whose total assets amount to only P90 million.

D. Yuki Corporation, a resident foreign corporation, whose taxable income is at P4 million, and whose total assets amount to only P90 million.

E. Itsuki Corporation, a domestic corporation, whose taxable income is at P4 million, and whose total assets, including land where the business is situated, amount to P110 million. The book value of the land is at P8 million.

a, b

23. What is the applicable MCIT rate for a corporation whose fiscal year begins on April 1, 2023 and ends on March 31, 2024?

A. 1.00%

B. 1.25%

C. 1.50%

D. 1.75%

E. 2.00%

d

24. Under the Tax Code, any profit remitted by a Philippine branch to its head office abroad shall be subject to a tax of 15% which shall be based on the total profits applied or earmarked for remittance without any deduction for the tax component thereof, except:

A. Those activities registered with the Philippine Economic Zone Authority

B. Those granted with special certificate of tax exemption by the Bureau of Internal Revenue

C. Those whose remittance exceeds the VAT threshold of P3 million.

D. Those branches without a license to operate from the Securities and Exchange Commission.

E. None. There are no exceptions to the branch profit remittance tax.

a

25. Statement 1: A cinematographic film owner, lessor, or distributor shall pay a tax of 20% of its gross income from all sources within the Philippines.

Statement 2: A nonresident owner or lessor of vessels shall be subject to a tax of 7.5% of gross rentals, lease or charter fees from leases or charters to Filipino citizens or corporations, as approved by the MARINA.

Statement 3: Rentals, charters and other fees derived by a nonresident lessor of aircraft, machineries and other equipment shall be subject to a tax of 4.5% of gross rentals or fees.

A. Statements 1, 2, and 3 are false.

B. Statements 1, 2, and 3 are true.

C. Only Statement 1 is false.

D. Only Statement 2 is false.

E. Only Statement 3 is false.

a

26. Statement 1: If the amount to be distributed to a partner of a GPP is more than P720,000, the income payment is subject to a 15% creditable withholding tax.

Statement 2: The share of an individual partner in a GPP is subject to a final withholding tax of 10% if the amount is below P720,000.

Statement 3. The distributive share of a partner in a commercial partnership is subject to a final tax of 10%.

A. Statements 1, 2, and 3 are false.

B. Statements 1, 2, and 3 are true.

C. Only Statement 1 is false.

D. Only Statement 2 is false.

E. Only Statement 3 is false.

d

27. Statement 1. The share of a partner in the distributable net income of a commercial partnership is not returnable in the partner’s income tax return.

Statement 2. The share of a partner in the distributable net income of a general professional partnership is returnable in the partner’s income tax return.

Statement 3. The applicable CWT which will be withheld by the general professional partnership on the share of a partner from the distributable net income may be deducted from the income tax due of the general professional partnership.

A. Statements 1, 2, and 3 are false.

B. Statements 1, 2, and 3 are true.

C. Only Statement 1 is false.

D. Only Statement 2 is false.

E. Only Statement 3 is false.

e

28. Tiffany is a partner in a general professional partnership. She also earns income from her personal business. For the year 2026, the general professional partnership used the Optional Standard Deduction. May Tiffany also use the Optional Standard Deduction?

A. Yes, but only as against her income from her separate business.

B. Yes, for his income from her separate business plus her share in the distributable income of the partnership.

C. No, because the partnership already used the Optional Standard Deduction.

D. No, because partners in a general professional partnership are not allowed to use the Optional Standard Deduction.

E. None of the statements are correct.

a

29. Which of the following joint ventures may be exempt from income tax?

A. A Construction Corp., an accredited PCAB contractor, forms a joint venture with X, a resident citizen landowner, for purposes of constructing a housing project. The joint venture itself is duly licensed by the PCAB.

B. B Construction Corp. forms a joint venture with C Construction Corp. to undertake construction projects. Both joint venturers are accredited by the PCAB. However, they forgot to secure a PCAB construction license for their joint venture.

C. X, a landowner forms a joint venture with D Corporation, a hotel operator, to build a new hotel. Neither the parties nor the joint venture are contractors licensed by the PCAB.

D. E Construction Corp. forms a joint venture with F Construction Corp. to build a 50-storey condominium project. The joint venturers are licensed as general contractors by the PCAB. The joint venture project itself is also duly licensed by the PCAB.

E. None of the choices.

d

30. Which of the following is incorrect pertaining to estates and trusts?

A. Estates and trusts are treated as separate taxable entities.

B. Estates and trusts need to secure a separate Tax Identification Number separate from the decedent or trustor/grantor.

C. The graduated tax rates prescribed under the Tax Code for individuals shall be used in computing the income tax of estates and trusts.

D. The taxable income of estates and trusts shall be determined in the same manner and basis as a tax-exempt partnership.

E. All statements are incorrect.

d

31. Which of the following statements is correct on the distribution of income of estates and trusts?

A. If the estate or trust uses the optional standard deduction, the distribution of income to the beneficiary can no longer be claimed as a special deduction.

B. The distribution of income shall be deductible on the part of the estate or trust and is subject to creditable withholding tax of 10% if the income payment does not exceed P720,000, and 15% if the income payment exceeds P720,000.

C. The distribution of income shall be taxable on the part of the executor/administrator in case of estates, and the fiduciary or trustee in case of trusts.

D. The distribution of income shall be returnable on the personal income tax return of the beneficiary who received the income.

E. All statements are correct.

d

32. Which of the following multiple trusts may be subject to consolidation?

A. Trust A and Trust B, created by Alan, for the benefit of his siblings Pia and Lino, respectively.

B. Trust C and Trust D, created by Jinggoy, for the benefit of his brother, JV. Jinggoy appointed separate trustees for each of the trusts.

C. Trust E, created by Mark, and Trust F, created by Camille, for the benefit of their mother, Cynthia. Mark and Camille designated Manuel as the trustee for the two trusts.

D. Trust G and Trust F, created by Bongbong, for the benefit of his sister, Imee. However, the agreement stipulated that Bongbong has the option to revoke the trust at any time.

E. None of the choices.

b

33. Under the Tax Code, how should the income of revocable trusts be taxed?

A. Included in computing the taxable income of the trustee.

B. Included in computing the taxable income of the beneficiary.

C. Included in computing the taxable income of the grantor.

D. Exempt from income tax.

E. None of the choices.

c

Mallorca Manufacturing, Inc. has VAT liability of P1,200,000 for the quarter ended September 30, 2024. It is not under the electronic filing and payment system (eFPS) of the BIR. How should it file its VAT return and pay its related tax?

• a. It should file its VAT return using eBIR form and pay its tax either electronically or manually.

• b. It should file its VAT return and pay its tax manually.

• c. It should file its VAT return using eBIR form and pay its tax electronically.

• d. It should file its VAT return either using eBIR form or manually, and pay its tax either electronically or manually.

a

On February 14, 2024, Florianopolis Corporation obtained a P10,000,000 loan from Choupinette Banking Corporation. It mortgaged its land with fair market value of P15,000,000. What should be done to reduce DST liability on this transaction?

• a. Execute separately the loan agreement and the mortgage agreement so that only DST on the mortgage agreement will be paid.

• b. Execute a loan agreement but not the mortgage agreement so that only the DST on the loan agreement will be paid.

• c. Execute one agreement covering both the loan agreement and the mortgage agreement so that only DST on the loan agreement will be paid.

• d. Execute one agreement covering both the loan agreement and the mortgage agreement so that only DST on the mortgage agreement will be paid.

d

The following corporations are taxable only on their income within the Philippines, except:

• a. Domestic corporation engaged in trading with branch in Switzerland.

• b. Non-resident foreign corporation deriving royalties for the use of brand in the Philipp

• c. Philippine branch of a Spanish company engaged in the manufacture of semi-condu

• d. Regional operating headquarters of a Vietnamese company in the Philippines.

a

When is the deadline for filing the second quarter income tax return of a corporation for the fiscal year ended March 31, 2024?

(Disregard holidays, weekend and leap year).

• a. December 30, 2023.

• b. August 29, 2023.

• c. November 29, 2023.

• d. March 1, 2024.

c

Which of the following statements is not correct?

• a. Declaration of property dividend out of merchandise inventories is subject to VAT.

• b. Sale of agricultural food products in their original state is exempt from VAT.

• c. Rental of real property is exempt from VAT.

• d. Royalties and license fees are subject to VAT.

c

Under the EOPT Act, the VAT on export sales of professional services shall be based on:

• a. Gross sales.

• b. Gross receipts.

• c. Either gross sales or receipts, depending on the option of the taxpayer.

• d. Neither gross sales or receipts, since export sales are zero-rated.

a

Which of the following sales transactions of non-residents may not be subject to VAT on digital services?

• a. Online advertising.

• b. E-books.

• c. Use of artificial intelligence.

• d. Online purchases of clothes.

d

Bayonne Corporation had excessive accumulated earnings for the years ended December 31, 2019, 2020, 2021 and 2022. For what taxable years will Bayonne be liable to improperly accumulated earnings tax (IAET)?

• a. 2019, 2020, 2021 and 2022.

• b. 2019, 2020 and 2021.

• c. 2019 and 2020.

• d. 2019.

c

Which of the following returns may not be filed for a period less than 12 months?

• a. Return of a newly organized corporation.

• b. Final or adjustment returns for short period resulting from change in accounting period of a corporation.

• c. Return of a corporation which purchased common shares of a domestic corporation.

• d. Return of a taxpayer whose taxable period is terminated by the Commissioner of Internal Revenue by authority of law.

c

Which of the following inventory methods is not allowable for income tax purposes?

• a. FIFO.

• b. LIFO.

• c. Weighted average.

• d. Moving average.

b

The following transactions in 2025 are subject to 0% VAT, except:

• a. Local sale of raw materials to an enterprise registered with the Philippine Economic Zone Authority (PEZA).

• b. Repacking of goods for a non-resident buyer outside the Philippines where these goods are subsequently exported.

• c. Sales of prescription drugs for tuberculosis.

• d. Export sales of consumer products.

c

Before the enactment of the EOPT Act, the company is allowed to claim input tax credits on the following purchases, except:

• a. Purchases of supplies supported by VAT invoice issued in the name of the company.

• b. Purchases of janitorial services supported by VAT OR issued in the name of the company.

• c. Telephone charges supported by VAT OR issued in the name of the company.

• d. Imported raw materials supported by invoice issued by a non-resident seller.

d

Rio de Janeiro Corporation was incorporated on December 20, 2023 adopting the calendar year accounting period. It registered with the BIR on January 15, 2024. When will Rio de Janeiro's imposition of minimum corporate income tax (MCIT) commence?

• a. January 1, 2028.

• b. January 1, 2027.

• c. December 20, 2028.

• d. December 20, 2027.

a

A domestic corporation's interest income on peso bank deposit in a regular banking unit of a bank is:

• a. Subject to 20%/25% regular corporate income tax or 1%/2% minimum corporate income tax, whichever is higher.

• b. Subject to 20% final withholding tax.

• c. Subject to 10% final withholding tax.

• d. Subject to 15% final withholding tax.

b

Which of the following is not correct about shares that are listed in the Philippine Stock Exchange?

• a. The sale of these shares through the local stock exchange is subject to the 6/10 of 1% stock transaction tax.

• b. The sale of these shares through the local stock exchange is exempt from income tax.

• c. The sale of these shares over-the-counter is subject to the 6/10 of 1% stock transaction tax.

• d. The sale of these shares over-the-counter is subject to the 15% CGT.

c

 The following will form part of cost of goods sold for minimum corporate income tax (MCIT) purposes, except:

• a. Depreciation of production facilities.

• b. Freight out incurred for the delivery of finished goods to customers.

• c. Salaries and wages of production employees.

• d. Raw materials used in production.

b

Which of the following income payments is not subject to expanded withholding tax (EWT)?

• a. Rental payments.

• b. Professional fees.

• c. Commission payments to brokers.

• d. Royalties considered as passive income of recipient.

d

For the year ended December 31, 2024, a private non-profit hospital is:

• a. Exempt from income tax.

• b. Subject to 10% income tax based on taxable income.

• c. Subject to 15% income tax based on gross income.

• d. Subject to 20%/25% regular corporate income tax or 2% minimum corporate income tax, whichever is higher.

b

A domestic company had royalty payments to a non-resident foreign corporation. Which of the following statements is correct?

• a. The royalties are subject to 25% final withholding tax if the related know-how or technology is used in the Philippines regardless of where the services are rendered.

• b. The royalties are subject to 25% final withholding tax regardless of whether the related know-how or technology is used in the Philippines.

• c. The royalties are subject to 25% final withholding tax if the related know-how or technology is used in the Philippines and the services are rendered within the Philippines.

• d. The royalties are subject to 25% final withholding tax regardless of whether the related know-how or technology is used in the Philippines provided that the services are rendered within the Philippines.

a

For the year ended December 31, 2024, proprietary educational institutions are subject to the:

• a. 20%/25% regular corporate income tax or 2% minimum corporate income tax, whichever is higher.

• b. 10% corporate income tax.

• c. 15% corporate income tax.

• d. 25% regular corporate income tax or 2% minimum corporate income tax, whichever is higher.

b

Which of the following is exempt from Philippine income tax?

• a. Non-resident cinematographic film owners.

• b. Offshore banking units.

• c. Regional or area headquarters.

• d. Offshore gaming licensees.

c