VALUE ADDED TAX (VAT)

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MULTIPLE CHOICE EXERCISES 1. Statement 1: For a person to be subjected to VAT, it is necessary that he is regularly engaged in the conduct or pursuit of an economic activity. Statement 2: A non-re ... sident foreign person performing isolated service in the Philippines shall be liable to VAT. A. B. C. D. Statement 1 True True False False Statement 2 True False True False 2. Statement 1: Nonstock and nonprofit private organizations which sell exclusively to their members in the regular conduct or pursuit of commercial or economic activity are exempt from value-added tax. Statement 2: Government entities engaged in commercial or economic activity are generally exempt from value-added tax a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second state statement is correct. 3. Which is incorrect? a. A taxpayer whose annual gross receipts or sales exceed P3,000,000 shall pay VAT even if not VAT registered. b. A taxpayer whose annual receipts or sales do not exceed P3,000,000 but who is VAT registered shall pay VAT. c. The A non-resident lessor or foreign licensor who is not VAT-registered is subject to vat. d. An individual taxpayer whose gross sales or receipts do not exceed P100,000 is exempt from VAT provided he pays the 3% other percentage tax. 4. In 2018, Mr. Uro’s gross receipts from his practice of profession is P2,600,000 while his wife has gross sales of P2,200,000 derived from her trading business. Assuming they are not vat registered, will they be subject to vat? a. Yes, because their aggregate gross receipts/sales exceeded the vat threshold of P3,000,000. b. No, because for purposes of vat threshold, husband and wife shall be considered as separate taxpayers. c. Yes, because their gross receipts/sales are not specifically exempt from vat as provided in the Tax Code. d. None of the above 5. In 2018, the following gross receipts/sales were recorded by Apol B: Gross receipts from practice of profession P1,850,000 Gross receipts from transport of goods and cargoes 1,450,000 Gross sales from trading activities 675,000 Assuming Apol B is non-vat registered, will he be subject to vat? a. No, because his gross receipts/sales in each business do not exceed the vat threshold of P3,000,000. b. Yes, because if a professional, aside from the practice of his profession also derives revenue from other lines of business which are otherwise subject to VAT, the same shall be combined for purposes of determining whether the threshold has been exceeded. c. No, because he is not vat registered d. None of the above 6. LBJ made the following sales during the 12-month period: Sales, VAT taxable transactions P2,500,000 Sales, VAT zero-rated transactions 400,000 Sales, VAT exempt transactions 100,000 Total P3,000,000 Which of the following statements is correct? a. LBJ may not register under the VAT system because his sales from VAT taxable transactions did not exceed P3,000,000. b. LBJ may not register under the VAT system because his sales from VAT taxable and zero-rated transactions did not exceed P3,000,000. c. LBJ is required to register because his total 12- month sales exceeded P3,000,000. d. None of the foregoing. 7. Taxpayers who are qualified to optionally register may apply for vat registration not later than how many days before the beginning of the calendar quarter? a. 10 days c. 25 days b. 20 days d. 30 days 8. If a radio and/or television broadcasting company who is not mandatorily required to register under the VAT system chose to be a VAT taxpayer. Its choice is: a. Revocable after 2 years b. Revocable after 3 years c. Revocable after 5 years d. Irrevocable Use the following data for the next two (2) questions: In 2018, Pedro signified his intention to be taxed at 8% income tax rate on gross sales in his 1st quarter income tax return. His total gross sales during the year exceeded the vat threshold of P3M. The following quarterly data were provided by Pedro: Q1 Q2 Q3 Q4/Annual Sales P500,000 P500,000 P2,000,000 P3,500,000 Cost of sales (300,000) (300,000) (1,200,000) (1,200,000) Gross Income 200,000 200,000 800,000 2,300,000 Operating expenses (120,000) (120,000) (480,000) (720,000) Net taxable income P80,000 P80,000 P320,000 P1,580,000 9. How much is Pedro’s total business tax due for the year? [Show More]

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