1) A partnership organized under Philippine law is a domestic corporation for purposes of taxation
Answer: True
2) The computation and the payment of MCIT shall likewise apply at the time of filing the quarterly
corporate income tax.
Answer: True
3) Temporary labor dispute is a valid ground for the suspension of MCIT.
Answer: False
4) The MCIT gross income includes only those arising from operation while the OSD gross income covers
all items of gross income subject to regular income tax.
False
5) The MCIT rules are applied on the cumulative balances of the RCIT and MCIT during the quarters of
the taxable year.
True
6) A non-profit hospital is an exempt corporation taxable only on income from unrelated activities.
True
7) The classification rule is applied to private schools and non-profit hospitals.
False
8) Corporations with income subject to special tax are mandatorily required to use the itemized
deductions.
True
9) A non-resident owner or lessor of vessel is subject to tax at 7.5% of the gross rental.
False
10) The expenses of exempt corporations from exempt operations are deductible to its income from
unrelated operations.
False
11) For purposes of the MCIT, cost of services includes all direct costs expenses incurred in acquiring or
manufacturing the goods.
False
12) MCIT excess can be deducted only against the excess of RCIT over the MCIT in any of the succeeding
three years.
True
13) The MCIT applies only when income is zero or when there is an operating loss.
True
14) Non-resident owners of vessels are treated as special corporations only from charters or leases of
the vessels to Filpino citizens or corporations approved by the Maritime Industry Authortiy.
True
15) All cooperatives, regardless of classification, are subject to income tax on their income from
unrelated activities.
True
16) The income of OBU from foreign sources is exempt from income tax.
True
17) BOI-registered enterprises enjoy income tax holiday for 20 years.
False
18) Partnership, no matter how created or organized are taxable as corporations for income tax
purposes.
True
19) A farmers' or fruit growers' association is exempt from income tax.
True
20) The gross income tax applies only to corporations subject to regular income tax.
False
21) The exemption of non-stock and non-profit corporations or associations shall commence when they
secure their exemption ruling.
True
22) MCIT can be suspended for a taxpayer suffering from prolonged labor dispute, force majeure, or
legitimate business reverses.
True
23) The 48-hour rule does not apply when another carrier continued the flight or voyage of transient
passengers.
True
24) Private educational corporations are subject to income tax based on the net income from sources
within the Philippines at the tax rate of 10%.
False
25) A corporation that is owned by a publicly listed corporation is a public corporation.
True
26) The unrelated income of non-profit corporations is exempt from income tax if the same is diverted
to its non-profit purpose.
True
27) Resident foreign corporations are subject to either gross income tax or regular corporate income
tax.
False
28) Corporations exempt from income tax are subject to income tax on incomes of whatever kind and
character from any of their properties (real or personal) or from any other activity conducted for profit,
regardless of the disposition of such income.
True
29) MCIT is computed as 2% of the gross income from operations.
False
30) Incomes of non-resident individuals and non-resident corporations from transactions with OBU are
tax exempt.
False
31) Minimum corporate income tax is not applicable to special corporations.
True
32) Exempt corporations and special corporations are mandated to use the itemized deductions.
True
33) The gross income tax cannot be applied if the gross profit rate falls below 45%.
True
34) A regional area headquarters is exempt from tax because it does not derive income.
True
35) A non-stock, non-profit entity is subject to tax on income from unrelated activities.
True
36) The excess MCIT of previous years can be deducted against RCIT of any quarter of the year if RCIT is
greater than MCIT.
False
37) FCDU and OBU are divisions of a foreign bank.
False
38) International air carrier may be exempt from income tax.
True
39) Exempt corporations are subject to MCIT with respect to their income subject to regular corporate
income tax.
True
40) The fact that any corporation is a mere holding company or investment company shall be prima facie
evidence of a purpose to avoid the tax upon its shareholders or members.
True
41) The 48-hour rule may be extended by force majeure.
True
42)Resident foreign corporations are subject to income tax based on net income from sources within the
Philippines.
True
43) A government school is exempt from income tax.
True
44) Refundable tickets and tickets of non-revenue passengers are excluded in the Gross Philippine
Billings.
True
45) Cooperatives that transacts business with non-members are taxable on income allocated to interest
on members' capital when their accumulated reserve exceeds P10,000,000.
True
46) Local water districts are exempt from income tax.
True
47) The gross Philippine Billings of international carrier includes receipts from outgoing voyage or flights
which must be billed in the Philippines.
False
48) The certificate of exemption ruling is valid for one year and renewable every year thereafter.
False
49) An unused excess MCIT will expire on the fourth year of operation.
False
50) Exempt corporations are not required to file income tax returns because they do not pay tax.
False
2nd attempt:
50) Domestic film owners, lessors, or distributors shall be subject to 25% tax on gross income from all
sources within.
False
49)MCIT is applied on a quarterly, but not on an annual basis.
False
48) Corporations includes joint ventures, associations, and partnerships.
True
46) When there are several excess MCIT in prior years, the crediting of MCIT is made on a first-in first-
out (FIFO) basis.
True
45)Whenever MCIT is payable, there is a Net Operating Loss Carry-over.
False
43) A non-resident foreign corporations are subject to minimum corporate income tax.
False
42) Regional Headquarters are subject to 10% income tax on its net income derived from the
Philippines.
False
41) Immediacy test is a test used in determining the reasonable needs of business to justify the
accumulation of earnings which will exempt the corporation from paying improperly accumulated
earnings tax.
True
37) Exempt corporations are never subjected to corporate income tax.
False
31) A non-stock, non-profit institution must be organized for religious, charitable, scientific, athletic,
cultural or for the rehabilitation of veterans.
True
30) Cooperatives that transact business only with members will, in no case, be subject to income tax.
False
28) To be exempt, all of the income or assets of a non-profit corporation or association must be devoted
to its purposes, and no part of its net income or asset accrues to benefit any member or a specific
person.
True
25) A non-resident cinematographic film owner, lessor or distributor is subject to 25% tax on taxable
income.
False
20) Items of passive income subject to final tax and capital gains tax are included in the basis of the
MCIT.
False
19) Exempt corporations are subject to income tax on their income from unrelated activities.
True
18) Government-owned and controlled corporations are subject to corporate income tax.
True
17) A domestic carrier is subject to 30% tax on Philippine taxable income.
False
16) A corporation which is not domestic may be a resident (engaged in business in the Philippines) or
non-resident corporation (not engaged in business in the Philippines).
True
13) Domestic corporations under the gross income tax, including REIT's, are exempt from MCIT.
True
12) Domestic corporations are subject to either gross income tax or regular income tax.
True
11) Both the regular corporate income tax and gross income tax are subject to the minimum corporate
income tax.
False
7) MCIT does not apply to foreign corporations.
False
6) Persons and service establishments inside an ECOZONE are subject to the regular tax.
True
3) When the income from related activities constitutes at least 50% of total income, private schools are
subject to tax at 10% of taxable income from related and unrelated activities.
True
2) Exempt corporations filing BIR Form 1702-EX will not pay tax as a rule.
False
1. A non-resident owner or lessor of aircraft, machineries and other equipment is subject to tax at
4.5% of gross rental
- False
2. When the income from unrelated activities exceeds 50% of total income, only the income from
unrelated activities of private schools and non-profit hospitals is subject to 30% tax.
- False
3. The gross receipts from transient passengers are excluded from the Gross Philippine Billings if
they depart from the Philippines through the same carrier within 48 hours from their arrival
- True
4. PEZA-registered enterprises are exempt from tax
- False
5. Corporations subject to a rate of below 30% are referred to as special corporation.
- True
6. The FCDUs, OBUs, and EFCUs are never subject to regular income tax
- False
7. Exempt corporations who filed late are not subject to penalties because they have no tax due
- False
8. Corporations exempt from income tax are not subject to income tax on incomes received which
are incidental or necessarily connected with the purposes for which they were organized and
operating
- True
9. MCIT shall be imposed whenever such corporation has zero or negative taxable, or when the
amount of MCIT is greater than normal income tax due from such corporation
- True
10. A minimum corporate income tax (MCIT) of 2% of gross income as of the end of the taxable year
is imposed upon any domestic corporation beginning the 4 th taxable year immediately following
the taxable year which such corporation commenced its business operations.
- True
