Exercises: Other Percentage Taxes (OPT) Sales of refined sugar 500,000

Sales of cooking oil 500,000

SEC. 116 of Tax Code – 3% OPT (General)

1. One of the following is subject to three percent Only 50% of the above sales were collected
(3%) percentage tax
a. Establishments whose annual gross sales or How much is the VAT or percentage tax for the
receipts exceed P 3,000,000 and who are VAT year 2018?
registered. a. P75,000 c. P30,000
b. Businesses whose annual gross sales or b. P45,000 d. P210,000
receipts exceed P3,000,000 and who are not
Solution:
VAT registered. Sale of refined sugar 500,000
c. VAT registered establishment whose annual Sale of cooking oil 500,000
gross sales or receipts do not exceed Total Sale 1,000,000
P3,000,000 and who are VAT registered. Tax due (1M x 3%) 30,000
d. Establishments whose annual gross sales or Items are VAT exempt except for refined sugar
receipts do not exceed P 3,000,000 and who and cooking oil because they are already
are not VAT registered. processed items.

VAT mandatory registration – annual sales or The taxpayer is non-VAT registered and its
receipts (actual or expected) exceeding 3M; sales, excluding VAT exempt sales, are not
exceeding P3M, hence, liable to OPT.
VAT optional registration – annual sales or receipts
(actual or expected) not exceeding P3M;
The business is a merchandising business;
One who registered under the VAT system (either hence, accrual method of accounting will
mandatory or optional) is liable to VAT; apply.

One who is not registered and annual sales or 4. Mahigos owns the following businesses:
receipts do not exceed P 3M, is not liable to VAT Annual Gross Annual Gross
but to 3% OPT. Receipts Sales

Restaurant 1,350,000 1,000,000

2. Which of the following is subject to 3%
Barbershop 625,000 600,000
percentage tax under Section 116 of the Tax
Seller of marine
Code?
Food products 1,875,000 2,000,000
I. Fruit dealer whose gross receipts for the year
amounted to P1,200,000 Purchases of goods from VAT supplier totaled
P 1,200,000 (related to VAT business if
II. An individual taxpayer whose gross sales for applicable).
the year amounted to P100,000
How much is the VAT payable or percentage
a. I only tax for the year?
b. II only a. P 93,000 c. P 318,000
c. Both I and II b. P 48,000 d. P108,000
d. Neither I nor II (No answer)

(a) VAT exempt; Solution:

(b) marginal income earners are not liable to Restaurant 1,000,000
Barbershop 625,000
business tax (VAT or OPT).
Total receipts 1,975,000
3. Mr. Ancho, not a Vat – registered person, has OPT (1,975,000 x 3%) 59,250
the following data for the year 2018:
Marine food products are VAT exempt items.
Sales of fresh fruits 500,000 Restaurant and Barbershop are service
business, so the basis of tax is the annual
Sales of fresh vegetables 500,000
Sales of dried fish 500,000
 receipts which do not exceed P 3M, hence Sec. 117 is ONLY applicable to transport of
subject to OPT. passengers by domestic land vehicles. Otherwise,
5. Ms. Jaysa, not VAT registered, has the other provisions of tax laws apply.
following data for the taxable year 2018:
Domestic carrier tax is 3% of annual receipts or the
Accounts Receivable, 12/31/2017, 500,000 minimum receipts as provided by law, whichever is
Accounts Receivable, 12/31/2018, 300,000 higher.
Sales 1,300,000 8. All of the following, except one, are not
subject to common carrier’s tax
If Ms. Jaysa is a seller of goods, how much is
the Percentage tax during the year? a. Owner of a parking lot/building
a. P45,000 c. P51,000 b. Rent-a-car companies
b. P39,000 d. nil c. Common carriers engaged in carriage of
Solution: 1.3M x 3% = 39,000 goods or cargo
d. Domestic airline companies
Jaysa is a seller of goods, hence, tax basis is
sales under accrual method. She is liable to Domestic carrier tax applies to companies who
OPT because her sales for the year do not transport passengers by land vehicles except the
exceed P 3M. owners of bancas and animals drawn two wheeled
vehicles (kalesa). It includes keeper of garage and
6. If Ms. Jaysa is a seller of services, how much is “angkas”.
the percentage tax during the year?
9. Masbate liner Co. is a common carrier with
a. P45,000 c. P51,000 passenger buses and cargo trucks. For the
b. P39,000 d. nil month, it had the following data on receipts,
taxes not included:
Solution: From transport of passengers 800,000
AR, beg. 500,00 From transport of cargoes 200,000
Sales 1,300,000 From bus rentals for school fieldtrips 400,000
AR, end (300,000)
Collection 1,500,000 Common carriers’ tax is:
OPT 45,000
a. P36,000 c. P24,000
Jaysa is a seller of services, a non-VAT b. P12,000 d. nil
registered and her collection do not exceed P Solution:
3M, hence, liable to 3% OPT.
Transport of Passengers 800,000
Bus rentals field trips 400,000
Total 1,200,000
Sec. 117 of Tax Code – Domestic (Common) Carrier Tax
OPT 36,000
7. Which of the following is subject to the 3%
common carrier’s tax? Cargoes are subject to ether Vat or 3% OPT (Sec.
116) depending on the annual gross sales or
a. Transportation contractors on their receipts.
transport of goods or cargoes.
10. Milagros Lines, VAT – registered person, has
b. Common carriers by air and sea relative to
the following gross receipts in February:
their transport of passengers
c. Owner of animal-drawn two-wheeled
Bus 1 (carriage of goods, P13,000) 100,000
vehicle.
Bus 2 (carriage of goods, P18,500) 165,000
d. Domestic carriers by land for the
Taxi 90,000
transport of passengers
Jeepney 35,500
Cargo truck 45,000
Sea vessel 250,000
 Additional Information: Sec. 118 of Tax Code – International Carrier Tax

Salaries of drivers and conductor 125,000 14. Determine the carrier that is subject to the
Cost of oil gasoline 75,000 percentage tax
a. Resident foreign corporation operating
International shipping carrier
During the month, Bus 1 was bumped by another
b. Non-resident foreign corporation
bus lines owned by Mandaton Lines and paid Milagros
operating as international air carrier
Lines P120,000 for the damage.
c. Domestic corporation with international
The common carrier percentage tax due on Milagros flights
Line in February is: d. Domestic corporation with international
voyages
a. P10,770 c. P11,715
b. P14,370 d.nil Sec. 118 applies only to a RESIDENT FOREIGN
CORPORATION engaged in international carrier (Ship
Solution:
or air).
Bus 1 (100,000 – 13,000) 87,000
International Carrier Tax is 3% based on annual gross
Bus 2 (165,000 – 18,500) 146,500
Taxi 90,000 receipts, transport of CARGO from the Philippines to
Jeepney 35,500 another country, in continuous and uninterrupted
Total 359,000 flight.
OPT 10,920
If the above requirements are not met, other
provisions of tax laws apply.
The next two (2) question are based on the following:

Siksikan Transport Company had the following gross 15. Which of the following carrier shall be subject
receipts for the month: to International Common Carrier’s Tax?

From transport of passengers P485,000 I. Air/sea carrier classified as Resident Foreign

From transport of cargo 220,000
Corporation, annual gross receipts is less than
From the rental of cargo trucks 33,000
P3,000,000.
From “rent a car” to balikbayans 30,000
II. Air/sea carrier classified as Resident Foreign
Payments to VAT registered persons during the month Corporation, annual gross receipts is more
amounted to P99,000. than P3,000,000.
III. Sea carrier classified as Domestic
11. The percentage tax due is: Corporation voyage is from Philippines to
a. P22,740 c. P7,590 Japan, annual gross receipts are P3,000,000.
b. P21,150 d. P15,450 a. I only c. III only
Solution: (485,000 + 30,000) x 3% = 15,450 b. I and II only d I, II and III

12. Assuming that the amounts given do not Sec. 117 applies regardless of the VAT threshold.
include the tax, the value –added tax due is: III. Zero rated.
a. 23,000 c. 59,909
b. 18, 480 d. None 16. Statement 1: International air carriers and
international shipping carriers shall not be
Solution: (220,000 + 33,000) – 99,000 x 12% = 18,480 subject to 12% value added tax but to 3%
13. Which of the following transportation common carrier’s tax based on gross receipts
providers is not subject to percentage Tax? derived from their transport of passengers and
a. School bus operators goods from Philippines to other countries.
b. Cargo truck operators
c. Passenger Jeepney operators Statement 2: In cases where the Gross
d. Car rental business Philippines Billings Tax of 2.5% for
international carriers is not applicable (i.e., tax
exempt based on reciprocity or treaty), the
 common carrier’s tax under Sec. 118 of the Sec. 119 of Tax Code – Franchise Tax
NIRC as amended shall still apply.
A B C D
19. Water Gas Company, operators a gas and
Statement 1 True True False False
radio/television broadcasting franchise it has
Statement 2 True False True False
the following data for the year 2018:
Statement 1: False - correct is “cargo”
Gas franchise 2,000,000
Statement 2: True – 2.5% is an income tax
Radio franchise 10,000,000
while 3% OPT is a business tax.
Operating expenses (5,000,000)
Net Income 7,000,000
17. China Northern Airlines Inc., a resident foreign
corp. has the following Collections for the The total franchise tax is:
month of May 2018:
Passengers airfare from China to Philippines a. P 340,000 c. P40,000
1.800.00 b. P300,000 d. P190,000
Passenger airfare from Philippines to China Solution:
1,500,000
Airfare for cargoes from china to Philippines Gas franchise (2M x 2%) 40,000
700,000 Radio (10M x 3%) 300,000
Total 340,000
Airfare for cargoes from Philippines to China
1,300,00
20. Bulwagan ng katotohanan Broadcasting
Company, a non-VAT holder of a franchise to
How much is the International Common
operate a radio and television receipts (net of
Carrier Tax payable for the month?
any tax):
a. P60,000 c. P84,000
Year Gross Receipts
b. P39,000 d. P159,000
2017 P9,000,000
Solution: 1.3M x 3% = 39,000 2018 12,000,000

Sec. 117 applies to transport of cargo ONLY

The business tax liability is
from the Philippines to another country,
2017 2018
wherein flight must be continuous and
a. P270,000 P360,000
uninterrupted.
b. 1,080,000 1,440,000
18. The Republic of Korea, as an act of goodwill, c. 270,000 1,440,000
does not impose business taxes to Philippine d. 1,080,000 360,000
carriers. Korean Air is operating in the
Solution:
Philippines Having two flights a week. If you 2017 (9M x 3%) 270,000
were engaged by Korean air as its tax 2018 (12M x 3%) 360,000
consultant and asked you whether it is liable to
percentage tax, which of the following will be
your advice? For broadcasting company, the tax basis to determine
a. Korean Air is liable to percentage tax based whether to subject to Vat or OPT is the receipts from
on gross receipts from passengers, goods, the preceding year.
cargoes and mails. 21. AB-GMS radio and television broadcasting
b. Korean Air is liable to percentage tax based franchisee, recorded the following gross
on gross receipts from passenger only. receipts and expanses during the taxable year:
c. Korean air is liable to percentage tax
based on gross receipts from goods, Advertising revenue from:
cargoes and mails only
Television division P20,000,000
d. Korean air is not liable to percentage based
on the principle of reciprocity. Radio and division 5,000,000

Donation received for calamity victims

5,000,000
 Expenses: b. Amounts paid for messages transmitted by
an embassy and consular offices of a
Salary 8,000,00
foreign government is not subject to 10%
Other Operating expenses 7,840,000 including overseas communications tax.
VAT c. Overseas communications initiated by a
resident citizen not engaged in trade or
What is the amount of business tax advantages business is subject to overseas
(disadvantages) if AB-GMS is VAT registered? communication tax.
a. P840,000 d. None of the above
b. P1,699,200 Exception to communication tax is DING (See PPT).
c. (P2,250,000)
d. (P1,410,000)

Solution: 7,840,000/1.12 x 12% = 840,000 25. On the following statements is incorrect

a. Overseas communication tax is imposed
Being VAT registered, it can claim input taxes. on overseas communication originating
22. Meralco is a holder of franchise to sell from the Philippines.
electricity. It also leases its first-class b. The person liable to overseas
auditorium and theatre. In a particular month, communications tax may or may not be
its gross receipts form sale of electricity engaged in any trade business.
amounted to P10,000,000 The gross receipts c. The overseas communications tax is
from the lease of its auditorium and theatre imposed whether the overseas
amounted P2,000,000. How much is the communications are made in the course of
franchise tax due for the month? trade or business or not.
a. P1,440,000 c. P300,000 d. The overseas communications tax is
b. P1,200,000 d. Zero imposed on the owner of the
communications facilities used to make
Meralco consumption is subject to VAT, not overseas communications.
franchise tax.
26. Moon Telecom Inc. has the following
collections for the 2nd quarter of 2018.
Sec. 120 – Communication Tax

23. One of the following is subject to overseas Overseas call originating abroad P1, 120,000
communications tax:
a. Long distance call by a son from Manila to Overseas call originating in the
his father in Iloilo City. Philippines, P 880,000
b. Monthly telephone bill from Bayantel. Local calls 2,240,000
c. Telephone bill on a call by a mother in
Philippines to her son in London How much is the overseas communication tax to
d. Telephone call by Magda in Hongkong to be remitted by Moon for the 2nd quarter of 2018?
her friend in Manila. a. P220,000 c.200,000
Sec. 120 is applicable only to long distance calls b. P88,000 d. P80,000
origination from the Philippines to another country. Solution: 880,000/1.10 x 10% = 80,000
Otherwise, other provisions of tax laws apply.
Local calls are subject to VAT.
Tax is 10% of the annual receipts.
Calls originating from abroad are exempt.

24. Which of the following statements is false? 27. Based on the preceding number, how much is
a. BBC, an international news agency, is the output tax
required to pay 10% percentage tax from a. P240,000 c. P360,000
messages originating from the Philippines b. P454,286 d. P268,800
by telephone or telegraph
Solution: 2,240,000/ 1.12 x 12% = 240,000
Sec. 121 and 122 – Gross Receipts Tax on Banks, Non – March 80,000
Banks Performing Quasi Banking and Non - Banks
April 30,000
28. Piggy Bank has the following data for the
How much is the net trading gain subject to
month of January 2018:
gross receipts tax for the month of March?
Interest income, the remaining maturity of the
a. P130,000 c.P30,000
instrument is 5 years (net of 20% w/tax), 80,000
b. P80,000 d. Zero
Rentals (gross 5% expanded w/ tax), 50,000
Solution: (100,000) + 80,000 = (20,000)
Net trading loss, (10,000)
31. Based on the preceding, how much is the net
How much is the gross receipts tax on the trading gain subject to percentage tax for the
collections of Piggy for January 2018? month of April?
a. P60,000 c.P10,000
a. P5,000 c.P7,800
b. P30,000 d. Zero
b. P3,500 d.P8,500
Solution: 30,000 – 20,000 = 10.000
Solution:
32. Mr. D executed on January 1, 2009, a long-
Interest income (80,000/80% x 5%) 5,000
term loan form bank C In the amount of
Rentals (50,000 x 7%) 3,500
P6,000,000 payable within ten 10 years, with
Gross Receipts Tax 8,500
an annual interest of 2%. However, on January
Net trading loss is not taxable. But it may be 31, 2013 the loan was pre-terminated from
deducted against net trading gain within the 2009 to 2012 and the applicable gross receipts
taxable year. taxes were paid, how much gross receipts tax
should be paid for the year 2013?
29. In addition to the information in the preceding a. P100 c.P19,700
number, Piggy Bank has the following b. P24,500 d. P500
information for the month of February 2018:
Solution: Pre-termination Rule (See slide 15 of PPT)
Interest income, the remaining maturity of the
From January 1, 2009 to January 31, 2013 – 4 years
instrument is 6 years (net of 20%final withholding
and 1 month. Hence,
tax) P 80,000
Interest for 4 years (6M x 2% x 4) 480,000
Rentals (gross of 5 % expanded withholding tax) P
Int. for 1 month (6M x 2% x 1/12) 10,000
50,000 Total Interest 490,000
Net trading gain 20,000 Gross receipts tax (490,000 x 5%) 24,500
Tax paid (6M x 2% x 4 yrs. x 1%) (4,800)
How much is the gross receipts tax on the Tax still due 19,700
collections of Piggy Bank for February 2018?

a. P5,200 c.P9,200 Sec. 123 - Life Insurance Premiums Tax

b. P5,900 d.P9,900

Solution: 33. Rose Insurance Co. furnished us its data shown

Interest income (80,000/80% x 1%) 1,000 below:
Rentals (50,000 x 7%) 3,500
Net trading gain (20T – 10T) x 7% 700 Insurance Premiums collectible is P3,750,000
Total 5,200
The breakdown of the above premiums is as
30. The following selected financial data were follows:
provided by Banco de Oro: Life Insurance premiums 75%
Trading Gain (Loss) Non –life insurance premiums 25%

January P50,000
During the month of, life insurance premium
February (100,000) collected represents 70%
 From services rendered in February P
The Life Insurance Premiums Tax Payable is: 600,000
From services rendered to be performed in
a. P94,437.50 c.P78,750.00 March P 20,000
b. P39,375.00 d.P196,875.00
How much is the amusement tax for the
Solution: month?
a. P 216,000 c. P 108,000
Life: 3,750,000 x 75% x 70% x 2% = 39,375 b. P 72,000 d. P 129,600

Solution: 100,000 + 600,000 + 20,000 = 720,000 x 18%

Sec. 124 – Non-life Insurance Premiums Tax = 129,600

Cabaret is a service business; hence, tax basis is base

34. Paelo wants to procure fire insurance from his on the when the cash sis received.
mansion in Dasmarinas Village from ABC
Insurance Co., a non-resident foreign 38. Based on the preceding number, if it is a
corporation through its agent in the racetrack, how much is the amusement tax for
Philippines, Mr. Webner. He paid premiums in the month?
2018 amounting to P 5M. How much is the a. P 216,000 c. P 108,000
premiums tax payable on the transactions? b. P 72,000 d. P 129,600

a. P 500,000 c. P 100,000 Solution: 720,000 x 30% = 216,000

b. P 250,000 d. P 200,000
39. Ka Emong operates a cockpit in Bacolod City.
Solution: 5M x 4% = 200,000 Inside the cockpit is a restaurant which he also
operates. The data during the month are
35. Using the same information above, assuming presented below.
Paelo directly obtained the insurance policy Receipts from Entrance Fee P 780,000
from ABC Insurance Co., how much is the Gross receipts from restaurant
premiums tax payable on the transactions? Sale of food and beverages 42,000
a. P 250,000 c. P 100,000 Sale of wines and liquor 66,000
b. P 220,000 d. P 200,000 Expenses 444,000
a. P 79,920 c. P 143,640
Solution: 5M x 5% = 250,000 b. 159,840 d. P 79,920

Solution:
Sec. 125 – Amusement Tax
Entrance Fee 780,000
36. One of the following is subject to amusement Receipts, Restaurant 108,000
tax on gross receipts Total 888,000 x 18%
a. Owners of the winning horses Amusement Tax 159,840
b. Proprietors of Karaoke KTV houses
c. Owners of winning cocks in the cockpits See slide 23 of PPT
d. Lessees of bowling alleys
40. Based on the preceding number, suppose the
Amusement Tax applies to proprietors, owners or restaurant is owned and operated by Rico, a
lessor of the amusement place. non-VAT registered person, the percentage tax
payable by Rico is:
37. Sinner Corp, a cabaret, had the following data a. P 3,240 c. P 19,440
during the month of February: b. P 159,840 d. P 79,920

Net Income during the month P 80,000 Solution: 108,000 x 3% = 3,240

Collections during the month:
From services rendered in January P
100,000
 41. Continuing number 40, the percentage tax due c. Oriental championship match in the
on Ka emong is Philippines between a Filipino and Mexican
a. P 79,920 c. P 143,640 promoted by Bob Arum.
b. P 159,840 d. P 140,400 d. Winnings from horse races by a horse
owner.
Solution: 780,000 x 18% = 140,400
The tax on winnings of the bettor in horse race
42. Golden Boy is the operator of Golden depends on the type of winnings (regular, double,
Coliseum. During the month had the following trifecta, and quinella.)
gross receipts from various activities:
Concert by Pedro P 1,170,000 46. A race rack bettor won the following bets:
Professional basketball game P 1,240,000
Boxing Exhibition 1,780,000 a. On double, a bet of P 200 and dividend of P 200
per P 20 ticket.
Note: The boxing exhibition is a world b. On winner take all, a bet of P 500 and a dividend
championship fight between March weather of P 1,000 per P 50 ticket.
and Chavez, American and Mexican. The fight c. On forecast, a bet of P 1,000 and dividend of P
is promoted by Chris, a Filipino citizen. 100 per P 20 ticket.

How much is the amusement tax? The total percentage tax due from the winnings is:
a. P 186,000 c. P 178,000 a. P 682 c. P 1,280
b. P 364,000 d. nil b. P 1,182 d. P 1,530

Solution: Solution:
Basketball (1,240,000 x 15%) 186,000 P 200/20 x P 200 = 2,000 – 200 = 1800 x 4% = 72
Boxing (1,780,000 x 10%) 178,000 P 500/50 x P 1,000 = 10,000 – 500 = 9,500 x 10% = 950
Amusement tax 364,000 P 1000/20 x P 100 = 5,000 – 1,000 = 4,000 x 4% = 160
Total taxes = 72+950+196 = 1,218
43. Based on the preceding number, if Chavez is a
Filipino, how much is the amusement tax Tax base of the bettor must be net of the cost of the
payable? tickets.
a. P 186,000 c. P 178,000 Tax base of the winner of the horse race is the amount
b. P 364,000 d. nil of winnings.

Only basketball is subject to OPT. The boxing exhibition 47. Hinete has the following winnings (losses)
is exempt because requirements for exemption are during the year:
met. See slide 24 of PPT.
Cockfighting P 90,000
Sec. 126 - Tax on Winnings Philippine charity sweepstakes 2,000,000
Lotto (PAGCOR) 1,000,000
44. The percentage tax on winnings is imposed on Horse race winnings 100,000
the winnings of bettors in: Cost of tickets, P 1,000 pertains to winning
a. cockfighting tickets P (30,000)
b. horse racing Billiards losses (400,000)
c. Jai alai Casino losses (300,000)
d. Boxing
The business tax on winnings is:
Sec. 126 is applicable ONLY to winner, either a bettor a. P 9,900 c. P 249,000
of the horse race or the owner of the horse. Take note b. P 18,900 d. P 319,000
– HORSE RACE ONLY.
Solution:
45. The following shall always be subject to 10% 100,000 – 1,000 = 99,000 x 10% = 9,900
percentage tax, except?
a. overseas call made by Mr. X, resident of 48. Mang Jose had the following records of his
Manila, to his mother in Libya horse races in the month of May of 2018:
b. Winnings from horse races by a bettor
Horse Type of Gross Cost of
 Winnings Winnings Winnings Of the 100,000,000 authorized shares, 25,000,000
Vice Trifecta P 90,000 P 40,000 thereof is subscribed and fully paid up by the following
Anne Ordinary 250,000 50,000 stockholders:
John Double 60,000 10,000 Mr. Cajucom 5,000,000
Angelica Ordinary 175,000 25,000 Mrs. Clavaton 5,000,000
Mr. Felipe 5,000,000
How much is the business tax on winnings? Mr. Pua 5,000,000
a. P 45,000 c. P 39,000 Mr. Ty 5,000,000
b. P 48,500 d. P 57,500 Shares outstanding 25,000,000
Solution:
90,000 + 250,000 + 60,000 + 175,000 = On March of this year, Valdez Realty Corp. finally
575,000 x 10% = 57,500 decides to conduct an IPO and initially offers
25,000,000 of its unissued shares to the investing
49. Using the same information above, assuming public for P 1.50 per share.
that Mang Jose is a bettor, how much
percentage tax was withheld from him? At the IPO, one of its existing stockholders, Mrs.
a. P 45,000 c. P 39,000 Clavaton has likewise decided to sell her entire
b. P 485,00 d. P 57,500 5,000,000 shares to the public for P 1.50 per share.
Solution:
90,000 – 40,000 = 50,000 x 4% = 2,000 52. How much is the percentage tax due on the
250,000 – 50,000 = 200,000 x 10% = 20,000 primary offering?
60,000 – 10,000 = 50,000 x 4% = 2,000 a. P 375,000 c. P 750,000
175,000 – 25,000 = 150,000 x 10% = 15,000 b. P 1,500,000 d. P nil
Solution:
50. Which of the following is not subjected to ten 25M shares x 1.50 = 37,500,000 x 1% = 375,000
percent (10%) percentage tax? Outstanding shares after listing
I. Overseas dispatch, message or conversation 25M/ 50M = 50%
originating from the Philippines
II. Agents of foreign insurance companies; 53. How much is the percentage tax due on the
III. Owner of wining race horses secondary offering?
IV. Life insurance premiums a. P 75,000 c. P 150,000
b. P 300,000 d. nil
a. II only c. I and III only Solution:
b. II and IV only d. I, II, II, IV only 5M shares x P 1.50 = 7,500,000 x 4% = 300,000
Outstanding shares after listing:
Sec. 127 – Stocks Transactions Tax (STT) 5M/ 25M shares = 20%

51. A stockbroker remitted 11,250 to the BIR 54. In its June of this year, Valdez Realty Corp.
representing collection of tax withheld from decides to increase capitalization by offering
clients. The peso volume of his stock another 30,000,000 of unissued shares to the
transaction from which the tax withheld was: public at P 2.00 per share, how much is the
percentage tax due?
a. P 1,875,000 c. P 225,000 c. P 600,000 c. P 2,400,000
b. P 112,500 d. P 2,250,000 d. P 1,200,000 d. nil

Solution: Stock transaction tax = SP x .006 55. If in July of this year, Mr. Cajucom decides to
11,250 = SP x .006 sell his entire stock ownership to the public at
SP = 11,250/.006 = 1,875,000 P 2.00 per share, how much is the percentage
tax due?
Questions 52 to 55 are based on the following data: e. P 60,000 c. 400,000
f. P 200,000 d. P nil
Valdez Realty Corp. a closely held corporation, has an Solution: 5M shares x 2.00 = 10M x .006 =
authorized capital stock of 100,000,000 shares with par 60,000
value of P 1.00 per share.
56. Virgin Corporation, a closely held corporation
offered for the first time its own shares of stock
at par of P 20 per share. The corporation’s
 authorized capital stock is P 5,000,000 with a P b. The tax paid on sale of shares through
2,000,000 outstanding capital stock before the local stock exchange and initial public
IPO. The gross receipts at its public offering offering (IPO) and secondary offering
was P 600,000. The percentage tax for the shall not be allowable deductions for
initial public offering is: income tax purposes.
g. P 9,900 c. P 24,000 c. The 6/10 of 1% stock transaction tax
h. P 31,000 d. P 18,900 is a final withholding tax on income.
Solution: d. The 6/10 of 1% stock transaction tax is
Outstanding shares: 600,000/ 2,600,000 = 23.08% collected whether there is an income
IPO Tax = 600,000 x 4% = 24,000 or a loss and is a percentage tax.

57. A domestic corporation paid P 80,000 stock 61. Shares of stock held as investment when sold
transaction tax on IPO of 500,000 shares. After not through the local stock exchange shall be
the IPO, there were 800,000 shares subject to:
outstanding. The selling price of IPO per share i. Percentage tax – 6/10 of 1% based on
was GSP or gross value in money.
a. P 20 c. P 8 j. Valued added tax – 10% based on
b. P 16 d. P 6 gross income.
Solution: k. Capital gains tax – 15% of net trading
500,000 shares/800,000 = 62.5% gain.
80,000/1% = 8,000,000/500,000 shares = P 16 l. Percentage on IPO – 4%, 2%, 1% based
on GSP or gross value in money.
58. The following data in the current month
belongs to Avenue Corporation. 62. 1st statement: Sale by a stock dealer of shares
• Sales of shares of stock during initial public of stocks through the local stock exchange is
offering, Gross sales P 375,000 subject to the stock transaction tax.
Ratio of sold outstanding shares not over 25% 2nd statement: Sale by a stock dealer of shares
• Sales of shares stock through local stock of stock directly to the buyer is subject to VAT.
exchange a. Both statements are correct.
o Cost P 316,000 b. Both statements are incorrect.
o Sales 245,000 c. Only the first statement is correct.
o Shares sold 400 d. Only the second statement is correct

How much is the percentage tax due? 63. TWG Corporation issued 10,000 shares with
a. P 15,000 c. P 22,500 par value of P 100 per share, to Mr. de Leon for
b. P 16,470 d. P 16,225 P 150 per share. The transaction did not pass
through the PSE. How much is the capital gains
Solution: tax on the sale?
375,000 x 4% = 15,000 m. P 45,000
245,000 x .006 = 1,470 n. P 25,000
Total = 16,470 o. P 50,000
p. Zero
59. All of the following are liable to 6/10 of 1%
stock transaction tax. Which one is not? 64. Which of the following transactions will not
a. Individual taxpayers, whether citizens result to payment of stock transaction tax?
or alien. q. Sale of unissued shares during an IPO
b. Corporate taxpayers, whether by a closely held corporation.
domestic or foreign. r. Sale of outstanding shares during an
c. Estates and trust IPO by a shareholder.
d. Dealers in securities s. Sale of unissued shares subsequent to
IPO by a closely held corporation.
60. One of the following statements is incorrect. t. Sale of outstanding shares subsequent
a. The 6/10 of 1% tax shall be collected to IPO by a shareholder.
by the broker who made the sale and
shall be remitted within 5 banking days 65. The following may be subject to stock
from the date of collection. transaction tax of 4%, 2%, 1% except?
a. Primary offering
 b. Secondary offering The filing of OPT is quarterly. Due date is within 25
c. Follow on follow-through offering of days after the taxable quarter except for the ff:
shares. 1. Amusement tax
d. All of the choices 2. Communication tax
3. Tax on Winnings
66. Statement 1: The buyer of shares under 4. Stock Transactions Tax
primary offering shall be one liable for the
payment of stock transaction tax to be 1 – 3 shall be paid within days after the taxable
withheld and remitted by the stock broker. quarter.
Statement 2: The seller shall be the one liable 4 has its own date of filing.
for the stock transaction tax of shares sold
under secondary offering. 70. In the case of a person whose VAT registration
A B C D is cancelled and who becomes liable to 3% tax
Statement 1 True True False False on VAT exempt person under Sec. 116 of the
Statement 2 True False True False tax code, the tax shall accrue from the date of
cancellation and shall be paid within
67. Which of the following percentage taxes is paid a. 10 days after the end of each taxable
on a quarterly basis but the due date is within quarter
20 days after the end of the taxable quarter? b. 15 days after the end of each taxable
quarter
I. Tax on overseas dispatch, message, or c. 20 days after the end of each taxable
conversation originating from the Philippines. quarter
II. Amusement taxes d. 30 days after the end of each taxable
III. Stock transaction tax quarter
IV. Percentage tax on international carriers
a. I and II only c. I, II, and III only
b. III and IV only d. I, II, III and IV only

68. Statement 1: Payment of stock transaction tax

of 6/10 of 1% is within 5 banking days from the
date withheld by the broker.
Statement 2: Payment of stock transaction tax
of 4%, 2%, 1% on primary offering should be
within thirty (30) days from the date of listing
in the local stock exchange.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct

69. The following percentage taxes are paid on a

monthly basis, except?
I. Franchise tax
II. Tax on winnings
III. Percentage tax on international
carrier
IV. Overseas communication tax
V. Percentage tax on banks and
nonbank financial intermediaries.
a. I and II only
b. II and IV only
c. I, II and III only
d. All of the above

To be deleted.