Chapter 19: Returns and Payment of Percentage Taxes

7. Any person retiring from a business subject to percentage tax shall

notify the nearest internal revenue officer, file his return and pay the
tax due thereon within how many days after closing his business?
a. 10 days c. 20 days
b. 15 days d. 30 days
Answer: C
Reference: Section 128 (A) (2), NIRC, as amended
8. Any person, natural or juridical, with respect to his/its purchase in
the course of trade or business from a seller shall withhold at source
based on the payee's (seller's) sales or receipts:
I - 3% percentage tax under Sec. 116.
II - The seller files a "Notice of Availment of the Option to Pay
the Tax Through the Withholding Process."
a. Yes to both I and II c. Yes to I only
b. No to both I and II d. Yes to II only
Answer: A
9. The Commissioner of Internal Revenue may prescribe a minimum
amount of gross receipts under the following cases except when:
a. the taxpayer fails to issue receipts or invoices.
b. no return is filed.
c. the taxpayer is engaged in mixed transactions and files his
return not on the due date.
d. there is reason to believe that the books of accounts or other
records do not correctly reflect the declarations made or to be
made in the return.
Answer: C
Reference: Section 128 (A) (4), NIRC, as amended
10. A large taxpayer subject to percentage has its principal office in
Makati City. Its President and CEO lives in Quezon City. Its
warehouse is in Pasig City. Where will the taxpayer file its
consolidated monthly percentage tax return?
a. Authorized agent bank in Makati City
b. Revenue District Office in Quezon City
c. Office of the Collection Agent in Pasig City
d. Any of the above as long as the correct tax is paid
280
------ ------------
Chapter 19: Returns and Payment of Percentage Taxes
Answer: A
Reference: Section 128 (B), NIRC, as amended
Except as the Cormnissioner othenvise permits, every person liable
to the percentage tax under this Title may, at his option, file a
separate return for each branch or place of business, or a
consolidated return for all branches or places of business with the
authorized agent bank, Revenue District Officer, Collection Agent or
duly authorized T,easurer of the city or municipality where said
1business or principal place of business is located, as the case may
L be.
11. First statement: Bureaus, offices and instrumentalities of the
government, including government-owned or controlled
corporations as well as their subsidiaries, provinces, cities and
municipalities making any money payment to private individuals,
corporations, partnerships and/ or associations are required to
deduct and withhold the (percentage) taxes from the payees on
account of such money payments.
Second statement: No money payments shall be made by any
government office or agency unless the (percentage) taxes due
thereon shall have been deducted and withheld.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
Answer: A
Reference: Sec. 5.116 (A) and (B), Revenue Regulations No. 2-98
~ercentage taxes on gross money payments, to the following shall
I be subjected to withholding:
i (1) Persons exempt from value-added tax (Sec. 116);
' (2) Domestic carriers and keepers of garages (Sec. 117);
(3) International carriers (Sec. 7 18);
II
{4) Franchises (Sec. 119);
(5) Banks and other non-bank financial intermediaries
performing quasi-banking functions (Sec. 121 );
(6) Other non-bank financial intermediaries (Sec. 122);
(7) Life insurance premiums (Sec. 123);
(8) Agents offoreign insurance companies (Sec. 124);
(9) Amusements (Sec. 125);
I
I
(1 0) Sale, barter or exchange of shares of stock listed and traded
through the local stock exchange [Sec. 127 (A)j;
l__
(11) Shares of stock sold or exchanged through initial public
offering [Sec. 1 2 7 (B)).
281
Chapter 19: Returns and Payment of Percentage Taxes
12. First statement: Purchases of goods or payments for purchases of
services made in the course of trade or business (including exercise
of profession or calling) from a non-VAT person whose gross annual
sales or receipts do not exceed the threshold amount for VAT
purposes, shall be subject to a percentage tax withholding at
source at the rate of three percent (3%) based on the payee's gross
sales or receipts.
Second statement: The withholding of the three percent (3%)
percentage tax shall be made if the taxpayer-payee files a "Notice of
Availment of the Option to Pay the Tax through the Withholding
Process" thereby manifesting his option to remit his percentage tax
through the withholding and remittance of the same by the
withholding agent-payor.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
Answer: A.
Reference: Sec. 5.128 (A), Revenue Regulations No. 2-98
as amended by Revenue Regulations No. 142003
13. A person subject to percentage tax under Sec. 116 (Non-Vat person
whose gross annual sales or receipts do not exceed the threshold
amount for VAT) is qualified to substituted filing of percentage tax
return if:
282
I- the said income recipient-payee has only one payor from whom
he generates his income.
II - a "Notice of Availment of the Substituted Filing of Percentage
Tax Return" is filed with the Revenue District Office (RDO)
where the income recipient is registered or required to register.
a. Only I is correct c. Both I and II are correct
b. Only II is correct d. Neither I nor II is correct
Answer: C
Reference: Sec. 5.128 (A), Revenue Regulations No. 2-98
as amended by Revenue Regulations No. 14-2003
----- ------------ ------------

Chapter 19: Returns and Payment of Percentage Taxes

14. Which of the following shall be stated in the "Notice of Availment of
the Substituted Filing of Percentage Tax Return"?
a. The income-recipient is a non-VAT taxpayer, having not opted
to be covered by the VAT system
b. The income-recipient's actual annual gross sales or receipts or
expected annual gross sales or receipts from one payor do not
exceed the threshold amount for VAT purposes
c. The income-recipient is opting to file under the substituted
filing of percentage tax return
d. All of the choices
Answer: D
Reference: Sec. 5.128 (A), Revenue Regulations No. 2-98
as amended by Revenue Regulations No. 14-2003
15. When shall a payee be required to file a regular percentage tax
return?
Case I - If the payee has more than one payor
Case II - In case the total amount of tax withheld by the payor.s
who are engaged in business is incorrect
Case III - If the payee has transactions with payors who are not
engaged in business and therefore not obliged to
withhold
a. In case I only c. In case II only
b. In cases I and III only d. In cases I, II and III
Answer: D
Reference: Sec. 5.128 (A), (D) and (E),
Revenue Regulations No. 2-98 as amended by
Revenue Regulations No. 14-2003
16. If done manually, the withholding 3% percentage tax shall be
remitted within:
a. 30 days following the end of the month the withholding was
made.
b. 20 days following the end of the month the withholding was
made.
c. l 0 days following the end of the month the withholding was
made.
d. 5 days follO\ving the end of the month the withholding was
made.
283
---~-----------------
Chapter 19: Returns and Payment of Percentage Taxes
Answer: C
References: Sec. 5.128 (C), Revenue Regulations No. 2-98
as amended by Revenue Regulations No. 14-2003
Section 2, Revenue Regulations No. 26-2002
For purposes of filing retums under the EFPS, however, the
taxpayers classified under the following business industries shall be
required to file Monthly Withholding Tax Retums, except withholding
of VAT, on or before the dates prescribed and presented below:
Monthly Percentage Tax Return I
Group A 15 days following end of the month
Group B I 14 days following end of the month --
Group C 13 days following end o_f the month
Group D 12 days following end ofthe month
GroupE I 1 days following end ofthe month
17. Sellers of services whose gross receipts have been subjected to the
withholding of the 3% percentage tax shall be exempt from the
obligation of issuing duly registered non-VAT receipts covering their
receipts of payments for services if they have:
284
I -just one payor.
II - several payors.
a. Yes to I only c. Yes to I and II
b. Yes to II only d. No to I and II
Answer: C
References: Sec. 5.128 (F), Revenue Regulations No. 2-98
as amended by Revenue Regulations No. 14-2003
Section 2, Revenue Regulations No. 26-2002
Business Industry
Group A
Insurance and Pension Funding
Activities Auxiliary to Financial Intermediation
Construction
Water Transport
Hotels and Restaurants
Land Transport
Period for
filing of
Monthly
Percentage
Tax Returns
25 days
following the
end of the
month
Chapter 19: Returns and Payment of Percentage Taxes
Business Industry
GroupB
Manufacture & Repair of Furniture
Manufacture of Basic Metals
Manufacture of Chemicals & Chemical Products
Manufacture of Coke, Refined Petroleum &
Fuel Products
Manufacture of Electrical Machinery &
Apparatus N.E.C.
Manufacture of Fabricated Metal Products
Manufacture of Food, Products & Beverages
Manufacture of Machinery & Equipment NEC
Manufacture of Medical, Precision, Optical
Instruments
Manufacture of Motor Vehicles, Trailers &
Semi-Trailers
Manufacture of Office, Accounting &
Computing Machinery
Manufacture of Other Non-Metallic Mineral
Products
Manufacture of Other Transport Equipment
Manufacture of Other Wearing Apparel
Manufacture of Paper and Paper Products
Manufacture of Radio, TV & Communication
Equipment/ Apparatus
Manufacture of Rubber & Plastic Products
Manufacture of Textiles
Manufacture of Tobacco Products
I
Manufacture of Wood & Wood Products
Manufacturing N.E.C.
I Metallic Ore Mining
Non-Metallic Mining & Quarrying
I Group C
, Retail Sale
/ Wholesale Trade and Commission Trade
I Sale, Maintenance, Repair of Motor Vehicle,
I
Sale of Automotive Fuel
Collection, Purification & Distribution of Water
Computer and Related Activities
II

Real Estate Activities

Period for
filing of
Monthly
Percentage
Tax Returns
24 days
following the
end of the
month
23 days
following the
end of the
month
Chapter 19: Returns and Payment of Percentage Taxes
~--~-
1

I
I

Business Industry
Group D
Air Transport
Electricity, Gas, Steam & Hot Water Supply
Postal & Telecommunications
Publishing, Printing & Reproduction of
Recorded Media i
I
Recreational, Cultural & Sporting Activities
Recycling
1Renting of Goods & Equipment .
I Supporting & Auxiliarv Trans_2S)rt Activities
GroupE
1

Activities of Membership Organizations lnc.

1 Health and Social Work
1Public Admin & Defense Compulsory Social
1 Security
Research and Development
1

I
Agricultural, Hunting, and Forestry
Farming of Animals
i Fishing
1 Other Service Activities
I Miscellaneous Business Activities
~ Unclassified
-----------------
Period for
filing of
Monthly
Percentage
Tax Returns i

~
22 days
following the
end of the
month
21 days
I
following the I
end of the
1

month
I
I

_j
Large taxpayers under Section 5, revenue regulations no. 17-2010
5.1 As to tax payments
a. Value-added tax At least P200,000 per qu~rter (preceding yearl_j
b. Excise tax At least Pl,OOO,OOO (preceding year) I
c. Income tax Atleast Pl,OOO,o6o (pr~ceding year) ----~
d. Withholding tax At least Pl,OOO,OOO from all types (annual) ! rz-P~nt~ tax At least_ P20_0,000 per
_I

quarter (preced~g-;~ea~fj
[~Doc. stamp tax _ At l~a~t P1 ,OOO,OOQ (aggregate annual) _j
5.2 As to financial condition and results of operation
a. Gr9s~sale_sl!~~pts I At least Pl,OOO,OOO,_()_QQJpreceding yearl__ __ ~
b. Net worth --t-At least P300,000,0QO (close of each year) !
c. Gross urchases 1 At least P800,000,000 (preceding year) i
d. Top corporate. -lUsted and published by the Securities andl
L__ taxpayers ~~change Commissi_c~_JI__(SEC_) _______ ___j
286
-------- ----------------