TAX.14 DIY Drill

Which of the following is subject to the 3% common carrier’s tax?

Choices:

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Jeepney owned by Mang June for the transport of passengers

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MJ Trucking services on their transport of goods or cargoes.

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Cebu airlines relative to its transport of passengers.

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Income by Nicanor, an owner of a Kalesa or a two wheeled horse-drawn carriage, from his transport of passengers.

Jeepney owned by Mang June for the transport of passengers

Nicanor signified his intention to be taxed at 8% income tax rate on gross sales in his 2019 1^st Quarter Income Tax Return. He has no other source of income. His total sales for the first three (3) quarters amounted to P3,000,000.00 with 4th quarter sales of P3,500,000.00. Other information was made available:

 

	1st Quarter (8%)	2nd Quarter (8%)	3rd Quarter (8%)	4th Quarter	TOTAL
Total sales	500,000.00	500,000.00	2,000,000.00	3,500,000.00	6,500,000.00
Less: COS	300,000.00	300,000.00	1,200,000.00	1,200,000.00	3,000,000.00
Gross income	200,000.00	200,000.00	800,000.00	2,300,000.00	3,500,000.00
Less: Opex	120,000.00	120,000.00	480,000.00	720,000.00	1,440,000.00
Taxable income	80,000.00	80,000.00	320,000.00	1,580,000.00	2,060,000.00

 How much is the percentage tax liability for 2019?

Choices:

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P 90,000

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P 60,000

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P 50,000

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d. P 30,000

Correct answer: P 90,000

Solution: P 3,000,000 x 3% = P 90,000
Basis: RR No. 8-2018

Nicanor sold his personal laptop to Michael for P 50,000 in 2022. Nicanor is liable to pay percentage tax in 2022.

Choices:

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True

-

False

Correct answer: False

Feedback: Reason: Isolated transactions are not subject to percentage tax.

Nicanor’s 2020 records show the following:

Quarters	Gross sales/receipts
1st Quarter	1,000,000
2nd Quarter	500,000
3rd Quarter	1,000,000
4th Quarter	500,000
Total	3,000,000

 How much is the annual total percentage tax liability for the year? Note: Consider impact of CREATE Law

Choices:

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P 90,000

-

P 60,000

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P 0

-

P 30,000

Correct answer: P 90,000

Feedback:

2020	1st and 2nd  Quarters	3rd and 4th  Quarters
Gross receipts	1,500,000	1,500,000
Rate	3%	1%
PT	45,000	15,000
Total	Php 60,000

Statement 1: Persons subject to VAT are likewise subject to percentage tax.
Statement 2: Persons exempted from VAT are likewise always exempted from other percentage tax.

Choices:

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Both of the statements are false.

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Only the first statement is true.

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Only the second statement is true.

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Both of the statements are true.

Correct answer: Both of the statements are false.

Statement 1: In general, a non-VAT registered taxpayer has the option to register under the VAT system which shall not be revoked for a period of three (3) years.
Statement 2: Percentage tax is imposed together with the excise tax.

Choices:

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Both of the statements are true.

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Only the first statement is true.

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Only the second statement is true.

-

Both of the statements are false.

Correct answer: Both of the statements are true.

In general, international air carrier doing business in the Philippines is liable to pay 3% Common Carrier’s Tax

Choices:

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True

-

False

Correct answer: True

Percentage tax is:
S1: A transfer tax
S2: A Progressive tax

Choices:

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a. Only S1 is true

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b. Only S2 is true

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c. Both are true

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d. Both are false

Correct answer: d. Both are false

Many is an operator of cockpit arena in Batangas. He also operates a restaurant and a convenience store inside the cockpit. Data for particular quarter follow:

Gross receipts:

Cockpit operations	P 5,000,000
Restaurant operations	300,000
Convenience store operations	125,000

Assume that the restaurant and convenience store are owned by another taxpayer, Jayvee, who is a non-VAT registered and whose annual gross receipt does not exceed the VAT threshold. The correct amusement tax due of Jayvee is:

Choices:

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P 0

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P 12,750

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P 54,000

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P 76,500

Correct answer: P 0

Boat Ferrari is a common carrier by sea. During a particular quarter, its receipts consist of the following (exclusive of taxes):

 

Transportation of passengers	P 2,000,000
Transportation of goods	3,000,000
Transportation of cargoes	1,500,000

 

The output VAT due is for the quarter is?

Choices:

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P 780,000

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P 0

-

P 240,000

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P 540,000

Correct answer: P 780,000

Feedback: (6.5M x 12% = P 780,000 VAT; 0 OPT) Exceeding VAT Threshold

A person whose business is to keep automobile for hire or keep them stored for use or order

Choices:

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a. Common carriers

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b. Keepers of garage

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c. Bus operators

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d. Taxicab operators

Correct answer: b. Keepers of garage

Feedback: Note: Keepers of garage is the more specific definition.

Which of the following is not subject to 3% percentage tax.

Choices:

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Germany airlines, an international air carrier doing business in the Philippines.

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JJ’s repair shops whose annual gross receipt amounts to P 2,000,000.

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MCWD, a franchise grantee of water utilities.

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None of the above.

Correct answer: MCWD, a franchise grantee of water utilities.

In general, holder of franchise for the supply of electricity is liable to pay other percentage taxes.

Choices:

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True

-

False

Correct answer: False

Percentage tax is:
S1: A business tax
S2: An ad valorem tax

Choices:

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a. Only S1 is true

-

b. Only S2 is true

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c. Both are true

-

d. Both are false

Correct answer: c. Both are true

Non-life insurance premiums are exempt from VAT.

Choices:

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True

-

False

Correct answer: False