1.
Which of the following shall be subject to Value-
Added Tax? (A) Any person who, in the course of his
trade or business, sells, barters, exchanges or leases
goods or properties. (B) Any person who, in the
course of his trade or business, renders service. (C)
Any person who imports goods. (D) All of the above.
2. Which of the following is not a basic element in the
computation of net VAT payable? (A) VAT
registration fee. (B) Taxable base. (C) Input VAT. (D)
Output VAT.
3. In case the case of importation of taxable goods, who
shall be liable to VAT? (A) Importer, whether an
individual or corporation and whether or not made
in the course of his trade or business. (B) Importer if
made in the course of trade or business only. (C)
Importer if corporation and only when made in the
course of trade or business. (D) None of the choices.
4. Which of the following statements is most correct?
Statement 1. For VAT purposes, a taxable person is
any person liable to pay the VAT, whether registered
or registrable in accordance with the Tax Code.
Statement 2. The status of a “VAT-registered person”
as a VAT-registered person shall continue until the
cancellation of such registration. (A) Statement 1
only. (B) Statement 2 only. (C) Both statements. (D)
None of the above.
5. Who shall be statutorily liable to pay for the tax on
sale of goods or properties and sale of services and
lease of properties? (A) Buyer. (B) Seller. (C)
Consumer. (D) None of the above.
6. Which of the following statements is not correct? (A)
Under VAT, the consumption tax is borne by the
consumer. (B) Under VAT, the seller is merely serving
as tax collector. (C) Under VAT, the seller is claiming
the input VAT. (D) Under VAT, the final consumer is
claiming the input VAT as refund.
7. Which of the following statements is not correct? (A)
The payment of VAT is monthly. (B) A VAT-registered
taxpayer can pass on the VAT even to non-VAT
registered buyers. (C) Any business or businesses
pursued by an individual where the aggregate gross
sales or receipts do not exceed P100,000 during any
12-month period, shall be considered principally for
subsistence or livelihood and not in the course of
trade or business. (D) Non-stock, non-profit private
organizations are not subject to VAT if their income
from sales is used for non-profit purposes.
8. The Value-Added Tax is (A) A specific tax. (B) An
indirect tax. (C) A local tax. (D) None of the above.
9. Which of the following transactions is subject to
VAT? (A) Sale of personal property or lease of private
property during holiday seasons. (B) Sale of
agricultural, marine and food products in original
state. (C) Service of agri-contract grower. (D) Service
for a fee.
10. Which of the following statements is most correct?
Statement 1. Non-resident persons who perform
services in the Philippines are deemed to be making
sales in the course of trade or business, even if the
performance of service is not regular. Statement 2.
VAT is imposed and collected on every sale, barter,
or exchange, or transactions “deemed sale” of
taxable goods or properties at the rate of 12% of the
gross selling price or gross value in money of the
goods or properties sold, bartered, or exchanged, or
deemed sold in the Philippines. (A) Statement 1 only.
(B) Statement 2 only. (C) Both statements. (D) None
of the above.
11. Which of the following statements is correct? (A)
Service rendered in the Philippines by non-resident
foreign person is not subject to VAT. (B) Importation
of goods whether used or not in business is subject
to VAT. (C) Sales of goods to be consumed or sold
outside the Philippines are subject to VAT. (D)
Services of non-VAT person rendered to employer in
the Philippines are subject to VAT.
12. The term “in the course of trade or business” does
not include (A) Regular conduct or pursuit of a
commercial or economic activity. (B) Incidental
transactions. (C) Transactions by any person
regardless of whether or not the person engaged
therein is a non-stock, non-profit private
organization (irrespective of the disposition of its net
income and whether or not it sells exclusively to
members or their guests), or government entity. (D)
None of the above.
13. Which of the following transactions is not subject to
VAT? (A) Sale of services in the course of business.
(B) Earnings from services rendered to employer. (C)
Sale of goods in the course of business. (D)
Importation of goods which is not intended for sale.
14. Which of the following is not a proper inclusion for
the computation of VAT on imported items? (A)
Custom duties on importation. (B) Excise tax on
importation. (C) Purchase amount of the
importation. (D) Freight of goods from custom house
to place of business.
15. Which of the following shall not be included in the
term “goods or properties”? (A) Real properties not
held primarily for sale to customers or not held for
lease in the ordinary course of trade or business. (B)
The right or privilege to use patent, copyright,
design, or model, plan, secret formula or process,
goodwill, trademark, trade brand or other like
property rights. (C) The right or the privilege to use
any industrial, commercial or scientific equipment.
(D) The right or the privilege to use motion picture
film, films, tapes and discs.
16. The withholding agent of creditable value-added tax
is required to remit the amount of value-added tax
withheld within (A) Twenty five (25) days following
the end of the month the withholding was made. (B)
Twenty (20) days following the end of the month the
withholding was made. (C) Fifteen (15) days
following the end of the month the withholding was
made. (D) Ten (10) days following the end of the
month the withholding was made.
17. Which of the following shall be subject to VAT? (A)
Sale of a residential house and lot. (B) Sale of
condominium units. (C) Sale of private car by its
owner. (D) All of the above.
18. It means the sale to a non-resident of goods, except
automobiles and non-essential goods, assembled or
manufactured in the Philippines for delivery to a
resident in the Philippines, paid for in acceptable
foreign currency and accounted for in accordance
with the rules and regulations of the BSP. (A) Export
sale. (B) Foreign currency denominated sale. (C)
 Effectively zero-rated sale. (D) Transaction deemed
sale.
19. Which of the following is not subject to value-added
tax? (A) Transmission of property to a trustee if the
property is to be merely held in trust for the trustor
and/or beneficiary. (B) Property transferred is one
for sale, lease or use in the ordinary course of trade
or business and the transfer constitutes a completed
gift. (C) A zero-rated sale of goods or properties by a
VAT-registered person. (D) None of the choices.
20. Which of the following sale of real property is subject
to VAT? (A) Sale not in the normal course of business.
(B) Sale for low cost housing with selling price of
P250,000. (C) Sale of house and lot in the course of
business for P750,000. (D) Sale by realtor P2,000,000
/unit residential dwellings.
21. Which of the following are allowed with installment
reporting of VAT on sale of real property? (A) Initial
payment is not more than 25% of contract price. (B)
Initial payment is less than 25% of down payment.
(C) Total collection in the year of sale is less than 25%
of selling price. (D) Total collections in the year of
sale are more than 25% of selling price.
22. Mr. Cruz, VAT-registered real estate dealer,
transferred a parcel of land held for sale to his son as
gift on account of his graduation. For VAT purposes,
the transfer is (A) Not subject to VAT because it is a
gift. (B) Subject to VAT because it is a deemed sale
transaction. (C) Not subject VAT because it is subject
to gift tax. (D) Subject to VAT because it is considered
an actual sale.
23. Which of the following services is subject to VAT? (A)
Rendered in the course of business in the Philippines
for a fee. (B) Rendered in the course of employment
in the Philippines. (C) Rendered in the Philippines for
free out of generosity. (D) Rendered in the
Philippines exempt under special law.
24. Which of the following is not allowed with
presumptive input VAT? (A) Non-VAT registered
processor of sardines. (B) Manufacturer of cooking
oil. (C) Manufacturer of refined sugar. (D) Public
work contractors.
25. Which of the following is not true? (A) VAT applies
on sale of goods in the course of business. (B) VAT
applies to transfer of goods deemed sale. (C) VAT
applies to importation of goods for personal use. (D)
None of the above.
26. Which of the following statements is not correct? (A)
Foreign currencies denominated export sales are
VAT exempt. (B) Zero rated sales are allowed with
input VAT credits. (C) Presumptive input VAT is
allowed only to VAT registered business. (D) The VAT
on goods purchased by VAT business is recorded as
purchases.
27. Which of the following is VAT exempt transaction?
(A) Sale of non-food agricultural products in their
original state. (B) Sale or importation of agricultural
and marine food products in their original state. (C)
Services of non-VAT person subject to percentage
tax. (D) All of the above.
28. Which of the following statements is not correct? (A)
Foreign currencies denominated export sales are
VAT exempt. (B) Zero rated sales are allowed with
input VAT credits. (C) Presumptive input VAT is
allowed only to VAT registered business. (D) The VAT
on goods purchased by VAT business is recorded as
purchases.
29. Which of the following statements is most correct?
Statement 1. Export sales by VAT-registered persons
are subject to Zero rate. The input VAT for its
purchases is available as tax credit. Statement 2:
Export sales by non-VAT-registered persons are
subject to VAT exempt rate. The VAT paid for its
purchases is refundable. Statement 2. Export sales by
non-VAT-registered persons are subject to VAT
exempt rate. The VAT paid for its purchases is
refundable. (A) Statement 1 only. (B) Statement 2
only. (C) Both statements. (D) None of the above.
30. Which of the following items is a transaction deemed
sale? (A) Goods for sale transferred, used or
consumed by the owner or investors. (B) Goods used
as payments to creditors. (C) Retirement of taxable
goods for merger. (D) All of the above.
31. Which of the following is not included in the term
“gross selling price”? (A) Total amount of money or
its equivalent paid by the purchaser. (B) Delivery,
freight and insurance paid by the purchaser. (C)
Value-added tax passed on by the seller to the buyer.
(D) Excise tax.
32. Which of the following circumstances shall give rise
to transactions “deemed sale”? Statement 1. Change
of ownership of the business. There is a change in the
ownership of the business when a single
proprietorship incorporates; or the proprietor of a
single proprietorship sells his entire business.
Statement 2. Dissolution of a partnership and
creation of a new partnership which takes over the
business. (A) Statement 1 only. (B) Statement 2 only.
(C) Both statements. (D) None of the above.
33. Transfer, use or consumption not in the course of
business of goods or properties originally intended
for sale or for use in the course of business is an
example of (A) Actual sale of goods or properties. (B)
Effectively zero-rated sale of goods or properties. (C)
Deemed sale of goods or properties. (D) None of the
above.
34. Who of the following shall be considered an
imported for Value-Added Tax purposes? 1. Any
person who brings goods into the Philippine,
whether or not made in the course of his trade or
business. 2. Non-exempt persons or entities who
acquire tax-free imported goods from exempt
persons, entities or agencies. (A) Statement 1 only.
(B) Statement 2 only. (C) Both statements. (D) None
of the above.
35. Which of the following stateement is most correct?
Statement 1. The estate tax is a privilege tax imposed
on the transmission of private or public properties to
shift the economic benefits and enjoyment of
property from the dead to the living. Statement 2.
The right and transfer of the properties of the
decedent to his heirs take effect at the moment of
death without any interruption. (A) Statement 1
only. (B) Statement 2 only. (C) Both statements. (D)
Both statements are not correct.
36. Which of the following statements is most correct?
Statement 1. If a person dies having properties
valued at more than P20,000, the heirs must file with
 the BIR a notice of death within 60 days from the
date of death. Statement 2. If a person dies with
estate worth less than P20,000, the heirs need not to
file a notice of death to the BIR, even if the estates
include registrable properties. (A) Statement 1 only.
(B) Statement 2 only. (C) Both statements. (D) Both
statements are not correct.
37. Which of the following statements is most correct?
Statement 1. The estate tax return shall be filed by
the executor, administrator or any legal heirs with
the BIR within 6 months from the date of death. A
reasonable extension for filing may be granted by the
BIR not more than 30 days. Statement 2. The estate
tax shall be paid at the time the return is filed, but
the BIR Commissioner may extend the time of
payment within 5 years in case of judicial settlement
or 2 years in case the estate is extra-judicially settled.
(A) Statement 1 only. (B) Only statement 2 only. (C)
Both statements. (D) Both statements are not
correct.
38. Which of the following statements is most correct?
Statement 1. The taxpayer in the estate taxation is
the decedent person represented by the
administrator, executor or legal heirs. Statement 2.
The Tax Code releases the heirs from the obligation
to pay claims against the estate once the properties
have been transferred to them in contemplation of
death. (A) Statement 1 only. (B) Statement 2 only.
(C) Both statements. (D) Both statements are not
correct.
39. Which of the following statements is most correct?
Statement 1. Natural and juridical persons are
subject to estate tax while only natural persons are
subject to donor’s tax. Statement 2. To be valid, form
is an essential legal requirement for a donation of an
immovable property. (A) Statement 1 only. (B)
Statement 2 only. (C) Both statements. (D) Both
statements are not correct.
40. The following examples of transferring properties do
not describe transfers made in contemplation of
death, except (A) To protect the family from hazards
of business operations. (B) To provide independent
income for dependents. (C) To see the children enjoy
the property while the donor is still alive. (D) To
assure properties are properly apportioned before
the death of the living owner.
41. Which of the following statements is most correct?
Statement 1: Donation mortis causa is not a
revocable transfer if the interest over the property is
not retained to the decedent while still living.
Statement 2. If the decedent’s power could be
exercised only with the consent of all parties having
an interest in the transferred property, and if the
power does to affect the rights of all the parties, the
property transferred would not be included as a
revocable transfer. (A) Statement 1 only. (B) Only
statement 2 only. (C) Both statements. (D) Both
statements are not correct.
42. Which of the following proceeds of life insurance is
subject to estate tax? (A) The proceeds of life
insurance are designated to an irrevocable
beneficiary. (B) The proceeds or benefits are derived
from SSS or GSIS. (C) The proceeds of life insurance
are taken from group life insurance paid by employer
where the beneficiary is the spouse of the insured
person. (D) The proceeds of life insurance are taken
out by the decedent without a stated beneficiary.
43. Which of the following statements is most correct?
Statement 1. All proceeds of life insurance for the life
of the decedent are to be classified as
conjugal/communal property whether the source of
payments for its premium is taken from his exclusive
funds or conjugal/communal funds. Statement 2.
The rule of reciprocity is applicable only to the
intangible properties owned by a nonresident alien if
the said properties are situated outside the
Philippines. (A) Only statement 1 is correct. (B) Only
statement 2 is correct. (C) Both statements are
correct. (D) Both statements are not correct.
44. Which of the following statements is most correct?
Statement 1. The compensation of a trustee earned
to manage the properties for the benefits of the
heirs, not in the administration of the estate, is not a
deductible judicial expense. Statement 2. The
standard deduction of P1,000,000 is deductible only
from resident and nonresident Filipino decedent. (A)
Statement 1 only. (B) Statement 2 only. (C) Both
statements. (D) Both statements are not correct.
45. The following transfers are subject to donor’s tax,
except (A) Cancellation of debt. (B) Creation of an
irrevocable trust. (C) Sale of real property for
insufficient consideration. (D) Renunciation of
inheritance in favor of specific heir(s).
46. Which of the following statements is most correct?
Statement 1. The dowry deductions of P10,000 is
granted to all kinds of donors as long as the gift is
intended for the marriage of their child made the
celebration of marriage or within one year
thereafter. Statement 2. The donor’s tax return shall
be filed within 30 days after the date of gift. If the
donor has no legal residence in the Philippines,
he/she should file the donor’s tax return to the Office
of the BIR Commissioner. (A) Statement 1 only. (B)
Statement 2 only. (C) Both statements. (D) Both
statements are not correct.
47. Which of the following statements is most correct?
Statement 1. Payments made to a dissatisfied heir
who has no legally enforceable rights may constitute
donation. Statement 2. A donation of a corporation
of its own shares of stock to its current employee as
a reward of competent service is subject to donor’s
tax. (A) Statement 1 only. (B) Statement 2 only. (C)
Both statements. (D) Both statements are not
correct.
48. Which of the following is not an encumbrance
assumed by the donee to the property donated? (A)
Unpaid mortgage attached to the property. (B)
Accrued and unpaid real property taxes. (C) Share of
the government on the property donated. (D)
Unpaid installment of the property’s purchase price.
49. Which of the following is subject to transfer tax? (A)
Gift to a relative. (B) Dissimilar exchange. (C) Casual
sale of real property (capital asset). (D) Sale of real
property (inventory).
50. Which of the following statements is most correct?
Statement 1. Both income earned by resident alien
within and outside the Philippines are subject to
Philippine income tax. Statement 2. Casual transfer
 of property of non-resident citizen located within
and outside the Philippines are subject to transfer
taxes. (A) Statement 1 only. (B) Statement 2 only. (C)
Both statements. (D) Both statements are not
correct.
51. All of the following are taxable with Philippine
transfer tax for their gifts within and outside the
Philippines except (A) Gift of resident citizen to
stranger. (B) Donation of non-resident citizen to a
relative in the Philippines. (C) Donation of resident
alien to a stranger. (D) Gift of non-resident alien to a
Filipino citizen.
52. Donor’s tax is a (A) Personal tax. (B) Property tax. (C)
Tax on right. (D) Business tax.
53. Which of the following gifts is taxed at 30%? (A) Gift
to spouse. (B) Gift to a sister. (C) Gift to a niece. (D)
Gift to in-laws.
54. The maximum donor’s tax rate for gifts to relatives is
(A) 12%. (B) 15%. (C) 18%. (D) 20%.
55. Which statement is wrong? (A) The percentage taxes
are basically on sales of services. (B) The percentage
taxes are paid monthly. (C) The percentage taxes are
not allowed by law to be shifted to the customers or
clients. (D) An isolated transaction not in the course
of business will not result in a liability for a
percentage tax.
56. Which of the following is not true? The percentage
tax: (A) Is a tax on a sale of services. (B) May be
imposed on a sale of goods. (C) May be imposed
together with the value-added tax. (D) May be
imposed together with the excise tax.
57. Which of the following statements is most correct?
Statement 1. Banks are subject to the Value-Added
Tax. Statement 2. Banks are subject to the gross
receipts tax, which is a Percentage Tax. (A)
Statement 1 only. (B) Statement 2 only. (C) Both
statements. (D) Both statements are wrong.
58. Which of the following statements is most correct?
Statement 1. The Community Tax is a national tax;
Statement 2. The Community Tax is a local tax. (A)
Statements 1 only. (B) Statement 2 only. (C) Both
statements. (D) Both statements are not correct.
59. One of the following is not a requirement on an
individual in order to be subject to the community
tax (A) An inhabitant of the Philippines. (B) Eighteen
years of age and above. (C) Regularly employed on a
wage or salary basis for at least thirty consecutive
working days during any calendar year. (D) Is a head
of the family.
60. One of the following is not required to pay the
community taxes, identify? (A) A domestic
corporation engaged or doing business in the
Philippines. (B) A resident foreign corporation
engaged or doing business in the Philippines. (C)
General professional partnerships in the Philippines.
(D) An estate or trust with income from the
Philippines.
61. Which of the following statements is not correct in
considering the additional community tax of the
individual (Class B)? (A) Data of the preceding year.
(B) Data in the Philippines. (C) Income from business,
the practice of profession or pursuit of an
occupation. (D) Assessed value of real property.