EASY

ROUND
TAXATION
1.What is the deadline for filing the new expanded withholding tax
(EWT) quarterly return (BIR From No. 1601-EQ)?

a. Thirty (30) days following the close of the quarter

b. Last day of the month following the close of the quarter
c. Fifteen (15) days following the close of the quarter
d. Ten (10) days following close of the quarter
 

10
TAXATION
1.What is the deadline for filing the new expanded withholding tax
(EWT) quarterly return (BIR From No. 1601-EQ)?

a. Thirty (30) days following the close of the quarter

b. Last day of the month following the close of the quarter
c. Fifteen (15) days following the close of the quarter
d. Ten (10) days following close of the quarter
 

10
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0
9
8
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5
4
3
2
TAXATION
ANSWER

B.
TAXATION
2. Miguelito, son of Esperanza and Juan Carlos, is getting married to
Juanita. For the wedding of their son, Esperanza and Juan Carlos gave
PhP 210,000 each to Miguelito as a wedding gift.
How much is the total donor's tax to be paid by Esperanza and Juan
Carlos, if any?

10
TAXATION
2. Miguelito, son of Esperanza and Juan Carlos, is getting married to
Juanita. For the wedding of their son, Esperanza and Juan Carlos gave
PhP 210,000 each to Miguelito as a wedding gift.
How much is the total donor's tax to be paid by Esperanza and Juan
Carlos, if any?

10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

•PhP 10,200
TAXATION
3. Nancy Momoland, an employee of Marupok Corporation, engaged Jhepoy Dizon for his services
as an actor for the TV commercial advertising the products of Marupok Corporation. The related
payment will be recorded as expense by Marupok Coporation.

• Based on the above scenario, who has the obligation to withhold EWT and at what rate?

• Nancy Momoland, 15%

• Marupok Corporation, 15%
• Nancy Momoland, 2%
• Nancy Momoland, 15%
• Jhepoy Dizon, 15%
• Jhepoy Dizon, 2%
• None
10
TAXATION
3. Nancy Momoland, an employee of Marupok Corporation, engaged Jhepoy Dizon for his services
as an actor for the TV commercial advertising the products of Marupok Corporation. The related
payment will be recorded as expense by Marupok Coporation.

• Based on the above scenario, who has the obligation to withhold EWT and at what rate?

• Nancy Momoland, 15%

• Marupok Corporation, 15%
• Nancy Momoland, 2%
• Nancy Momoland, 15%
• Jhepoy Dizon, 15%
• Jhepoy Dizon, 2%
• None
10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

II. Marupok Corporation, 15

TAXATION
4. Franco Corporation, a casino and hotel operator awarded the following
prizes to its local and non-resident patrons for the month of October 2018:

Name Country of Residence Prize Amount (net of FWT)

Brews Almighty Philippines Samsung Galaxy Tab PhP 14,500

120,000
Tina Go South Korea Vespa Scooter
75,000
Lino Co USA Iphone X

John Lemon Philippines Sony PS4 16,200

Lily Go Australia Hyundai Accent Sedan 636,000

Dina Virgin China Samsung Galaxy Tab 14,500

All non-resident alien patrons stayed in the Philippines for less than one hundred (100)
days.
How much is the final withholding tax (FWT) to be remitted by the Company on the
prizes awarded to Lily Go?
10
TAXATION
4. Franco Corporation, a casino and hotel operator awarded the
following prizes to its local and non-resident patrons for the month of
October 2018:

All non-resident alien patrons stayed in the Philippines for less than one hundred
(100) days.
How much is the final withholding tax (FWT) to be remitted by the Company on the 10
1
0
9
8
7
6
5
4
3
2
prizes awarded to Lily Go?
TAXATION
ANSWER

PhP 212,000
TAXATION
5. Which of the following tax/es is/are deductible for income tax
purposes?

I. The tax paid by Pharsa for her sale of milk tea inside the cockpit
which she owned.
II. The tax remitted by the employer for Gatot’s car privilege on
account of loyalty to the employer for three (3) years. The subject
car has a useful life of 3 years and was purchases on an installment
basis by the employer with ownership placed in the name of Gatot.
III. The foreign income tax paid by Angela claimed as tax credit.
IV. The tax paid by Rafaela for her cedula. 20
TAXATION
5. Which of the following tax/es is/are deductible for income tax
purposes?

I. The tax paid by Pharsa for her sale of milk tea inside the cockpit
which she owned.
II. The tax remitted by the employer for Gatot’s car privilege on
account of loyalty to the employer for three (3) years. The subject
car has a useful life of 3 years and was purchases on an installment
basis by the employer with ownership placed in the name of Gatot.
III. The foreign income tax paid by Angela claimed as tax credit.
IV. The tax paid by Rafaela for her cedula. 20
19
18
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14
13
12
11
10
0
9
8
7
6
5
4
3
2
1
TAXATION
ANSWER

I and IV only
TAXATION
6. Chester Company, a lessor, has the following monthly residential
lease income:
Name of Space No. of Units Monthly Rental
Janine 5 PhP 12,000
Nicole 100 14,000
Nyce x 20,000

Compute the most number of units of Nyce Space which will make all
of his rental income exempt from the imposition of value-added tax
(VAT)?
10
TAXATION
6. Chester Company, a lessor, has the following monthly residential
lease income:

Compute the most number of units of Nyce Space which will make all
of his rental income exempt from the imposition of value-added tax
(VAT)?
10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

150 units
TAXATION
7. Marinara Inc. is not required to withhold expanded withholding tax (EWT) on the
following transactions with its suppliers except:

• Allowances paid to on the job trainees (without employer employee relationship

with the Company)
• Professional fees paid to general professional partnerships
• Customs duties paid to Bureau of Customs (BOC)
• Royalty fees paid to a non-resident foreign corporation

a) A and D
b) A only
c) D only
d) B and D 20
TAXATION
7. Marinara Inc. is not required to withhold expanded withholding tax (EWT) on the
following transactions with its suppliers except:

• Allowances paid to on the job trainees (without employer employee relationship

with the Company)
• Professional fees paid to general professional partnerships
• Customs duties paid to Bureau of Customs (BOC)
• Royalty fees paid to a non-resident foreign corporation

a) A and D
b) A only
c) D only
d) B and D 20
19
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17
16
15
14
13
12
11
10
0
9
8
7
6
5
4
3
2
1
TAXATION
ANSWER

B.
TAXATION
8. During the calendar year (CY) 2017, JMD Co. is
currently providing each employee a monthly
subsistence allowance of PhP 2,000 which comprises
uniform, laundry, and medical cash allowance for the
employees’ dependents. How much must the monthly
subsistence allowance be decreased for it to be within
the de minimis limit? (Round your answer to the
nearest peso.)

20
TAXATION
8. During the calendar year (CY) 2017, JMD Co. is
currently providing each employee a monthly
subsistence allowance of PhP 2,000 which comprises
uniform, laundry, and medical cash allowance for the
employees’ dependents. How much must the monthly
subsistence allowance be decreased for it to be within
the de minimis limit? (Round your answer to the
nearest peso.)

20
19
18
17
16
15
14
13
12
11
10
0
9
8
7
6
5
4
3
2
1
TAXATION
ANSWER

PhP 1,158
TAXATION
9. Being recently hired from an audit firm, your senior in charge asked you to
evaluate the propriety of the expanded withholding tax (EWT) treatment of
Moira Marcos Corporation on the following income payments:

• Payments for customized goods are subject to 1% EWT.

• Payments for car rentals with driver are subject to 5% EWT.

Given the following information, what will be your initial assessment?

a) With issue, Not an issue
b) Not an issue, Not an issue
c) Not an issue, With issue
d) With issue, With issue 10
TAXATION
9. Being recently hired from an audit firm, your senior in charge asked you to
evaluate the propriety of the expanded withholding tax (EWT) treatment of
Moira Marcos Corporation on the following income payments:

• Payments for customized goods are subject to 1% EWT.

• Payments for car rentals with driver are subject to 5% EWT.

Given the following information, what will be your initial assessment?

a) With issue, Not an issue
b) Not an issue, Not an issue
c) Not an issue, With issue
d) With issue, With issue 10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

D.
TAXATION
10. Beneva Corporation, a large taxpayer (TL) duly notified by the Bureau of
Internal revenue (BIR), has the following information for the calendar year (CY)
2018:

Particulars Amount

Interest income on local foreign currency deposits  PhP 41,625

Interest income on local peso deposits 62,800

Interest expense (already subjected to 2% EWT)  87,565

•
Beneva’s Company records interest income in the books at net of final
withholding tax (FWT). How much is the deductible interest expense for income
tax purposes? (Round your answer to the nearest peso.) 20
TAXATION
10. Beneva Corporation, a large taxpayer (TL) duly notified by the
Bureau of Internal revenue (BIR), has the following information for the
calendar year (CY) 2018:

Beneva’s Company records interest income in the books at net of

final withholding tax (FWT). How much is the deductible interest
expense for income tax purposes? (Round your answer to the nearest 20
19
18
17
16
15
14
13
12
11
10
0
9
8
7
6
5
4
3
2
1
peso.)
TAXATION
ANSWER

PhP 45,500
END OF EASY ROUND
AVERAGE
ROUND
TAXATION
1. Tax : Buwis

Bureau of Internal Revenue (BIR)

:__________________

10
TAXATION
1. Tax : Buwis

Bureau of Internal Revenue (BIR)

:__________________

10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

Kawanihan ng Rentas Internas
TAXATION
2. Assuming that Kagura Corporation has the following information for the calendar year (CY) ended
December 31, 2018
Expanded Withholding Taxes (EWTs) withheld by customers for sale of services by  PhP               47,140 
the Company (subject to 2% EWT)
41,195
EWTs withheld by customers for sale of goods by the Company (subject to 1% EWT)
Cost of Services 1,400,000
Cost of Goods Sold 2,500,000
Entertainment, amusement and representation (EAR) expenses related to sale of  25,000
services
EAR expenses related to sale of goods 20,000

Assuming the total amount of EWT withheld by the customers are reflective of the total sales of the Company for the CY,
compute for the deductible EAR expense for income tax purposes.

a) PhP 45,000
b) PhP 43,57a0
c) PhP 44,167
d) PhP 47,570 10
TAXATION
2. Assuming that Kagura Corporation has the following information for the calendar year (CY) ended
December 31, 2018

Assuming the total amount of EWT withheld by the customers are reflective of the total sales of the Company for the
CY, compute for the deductible EAR expense for income tax purposes.

a) PhP 45,000
b) PhP 43,57a0
c) PhP 44,167
d) PhP 47,570 10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

B. 
TAXATION
3. Jason Corporation incurred/recorded the following expenses for the fiscal year (FY) ended May
31, 2018:
Donations to Mocha Uson, a running candidate as senator of the Philippines PhP         125,000 
75,000
Donations to Aboitiz Foundation, Inc., an organization accredited by Philippine Council for 
NGO Certification (PCNC)*
250,000
Building rental based on Philippine Accounting Standards (PAS) 17 straight line recording 
of rental expenses
Interest expense on loans to RIP Corporation 112,000
Write-off of receivables supported by Board Resolution 87,000
76,000
Write-off of inventories supported by Bureau of Internal Revenue (BIR) Certificate of 
Physical Destruction
 
*A notice of donation was sent to the BIR ten (10) days after the receipt of the Certificate of Donation.

Jason Corporation claimed the amount of PhP 517,000 as ordinary allowable itemized deductions in
the filed annual Income Tax Return (ITR). Assuming that Jason Corporation duly complied with the

45
requirements of the BIR for the deductibility of expenses and claimed the correct amounts of
expenses in the annual ITR, determine the actual rental payments of the Company during FY ended
2018?
TAXATION
3. Jason Corporation incurred/recorded the following expenses for the fiscal year (FY) ended May 31,
2018:

Jason Corporation claimed the amount of PhP 517,000 as ordinary allowable itemized deductions in
the filed annual Income Tax Return (ITR). Assuming that Jason Corporation duly complied with the
requirements of the BIR for the deductibility of expenses and claimed the correct amounts of expenses
in the annual ITR, determine the actual rental payments of the Company during FY ended 2018?
45
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40
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37
36
35
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31
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20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
TAXATION
ANSWER

PhP 254,000
TAXATION
4. Carson, after realizing that her bestfriend will never fall in love with her even after seven
(7) years of putting him above anyone else including herself, focused on running the “I’m
Drunk, ILY” Liquor Shop as sole proprietor. Tired of being an option, Carson chose itemized
deduction instead of Optional Standard Deduction (OSD) method for the deductions she
successfully claimed in her filed first and second quarter Income Tax Returns (ITRs) of
calendar year (CY) 2018. At the end of third quarter, the projected annual income of I’m
Drunk, ILY for CY 2018 will be PhP 300,000. Assuming that neither Carson nor the shop is VAT-
registered and Carson wants to invoke her rights under Republic Act (RA) No. 10963, what tax
rate is applicable to the income of I’m Drunk, ILY Liquor Shop if Carson’s projected annual
taxable income for CY 2018 is PhP 350,000?

a. 30% or 2%, whichever is applicable

b. None, since it does not exceed the threshold set by RA No. 10693
c. Based on the graduated income tax rates for individual taxpayers
d. 8% 10
TAXATION
4. Carson, after realizing that her bestfriend will never fall in love with her even after seven
(7) years of putting him above anyone else including herself, focused on running the “I’m
Drunk, ILY” Liquor Shop as sole proprietor. Tired of being an option, Carson chose itemized
deduction instead of Optional Standard Deduction (OSD) method for the deductions she
successfully claimed in her filed first and second quarter Income Tax Returns (ITRs) of
calendar year (CY) 2018. At the end of third quarter, the projected annual income of I’m
Drunk, ILY for CY 2018 will be PhP 300,000. Assuming that neither Carson nor the shop is VAT-
registered and Carson wants to invoke her rights under Republic Act (RA) No. 10963, what tax
rate is applicable to the income of I’m Drunk, ILY Liquor Shop if Carson’s projected annual
taxable income for CY 2018 is PhP 350,000?

a. 30% or 2%, whichever is applicable

b. None, since it does not exceed the threshold set by RA No. 10693
c. Based on the graduated income tax rates for individual taxpayers
d. 8% 10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

C.
TAXATION
5. Which among the comments (i.e., I to IV) of a tax student on the below events is/are correct
• First Event
A citizen almost died from a surprise attack but he explained, “Malakas ang guardian angel ko sa
likod. Ginaya pa niya si Battousai. Baliktad iyong talim.”
Student:
I. The maximum rate for estate tax is 6% the after effectivity of the Tax Reform for Acceleration and Inclusion
(TRAIn) Law.
II. In addition, there will be no more standard deduction for estate tax.
• Second Event
A citizen was enraged and exclaimed, “Walang bayad-bayad, kaibigan ko ‘yon. Gusto ko kalbo kaso ‘di
marunong iyong naggupit.”
Student:
III. Before the effectivity of the TRAIn Law, the tax payable by the donee shall be thirty percent
(30%) of the net gifts received from his friend.
IV. Nevertheless, after the effectivity of (TRAIn) Law, the donor’s tax for each calendar year (CY)
shall be six percent (6%) computed on the basis of the total gifts made during the CY. 10
TAXATION
5. Which among the comments (i.e., I to IV) of a tax student on the below events is/are correct
• First Event
A citizen almost died from a surprise attack but he explained, “Malakas ang guardian angel ko sa
likod. Ginaya pa niya si Battousai. Baliktad iyong talim.”
Student:
I. The maximum rate for estate tax is 6% the after effectivity of the Tax Reform for Acceleration and Inclusion
(TRAIn) Law.
II. In addition, there will be no more standard deduction for estate tax.
• Second Event
A citizen was enraged and exclaimed, “Walang bayad-bayad, kaibigan ko ‘yon. Gusto ko kalbo kaso ‘di
marunong iyong naggupit.”
Student:
III. Before the effectivity of the TRAIn Law, the tax payable by the donee shall be thirty percent
(30%) of the net gifts received from his friend.
IV. Nevertheless, after the effectivity of (TRAIn) Law, the donor’s tax for each calendar year (CY)
shall be six percent (6%) computed on the basis of the total gifts made during the CY. 10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

I only
TAXATION
6. The following taxpayers have interest income from expanded foreign
currency deposit units (FCDUs) for the month of August 2018:
Interest income at net 
Taxpayer
of FWT
Peter Stark, a resident and citizen of the Philippines PhP 102,000
Tony Parker Corporation, a domestic corporation 280,500
Hulk Industries, a resident foreign corporation 462,500
Captain Widow Inc., a non-resident foreign corporation 230,000

How much is the total FWT that the BIR can collect from the following
taxpayers for the month of August 2018?

45
TAXATION
6. The following taxpayers have interest income from expanded foreign
currency deposit units (FCDUs) for the month of August 2018:

How much is the total FWT that the BIR can collect from the following
taxpayers for the month of August 2018?

45
44
43
42
41
40
39
38
37
36
35
34
33
32
31
30
29
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27
26
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22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
TAXATION
ANSWER

PhP 105,000
TAXATION
7. The following statement/s is/are not incorrect regarding Barangay Micro
Business Enterprises (BMBEs), except:

I. Total net assets exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than
Three Million Pesos (PhP 3,000,000.00)
II. BMBEs shall be exempt from VAT on primary operations of the enterprise.
III. The BMBEs shall be exempt from the coverage of the Minimum Wage Law
provided that all employees shall be entitled to the same benefits given to
any regular employee such as social security and healthcare benefits.
IV. The Certificate of Authority shall be effective for a period of two (2) years,
renewable for a period of two (2) years for every renewal. 10
TAXATION
7. The following statement/s is/are not incorrect regarding Barangay Micro
Business Enterprises (BMBEs), except:

I. Total net assets exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than
Three Million Pesos (PhP 3,000,000.00)
II. BMBEs shall be exempt from VAT on primary operations of the enterprise.
III. The BMBEs shall be exempt from the coverage of the Minimum Wage Law
provided that all employees shall be entitled to the same benefits given to
any regular employee such as social security and healthcare benefits.
IV. The Certificate of Authority shall be effective for a period of two (2) years,
renewable for a period of two (2) years for every renewal. 10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

I and II
 TAXATION
8. Johnny Parker has the following annual data for the calendar year (CY)
ended December 31, 2018:
Benefits Amount/Equivalent
Basic Pay PhP 540,000
13th Month Pay 45,000
14th Month Pay 45,000
Dinorado Rice (60kg) ?
Jackets and polo shirt allowance (this will serve as his  8,500
uniform)
Medical cash allowance provided to Johnny Parker's girlfriend 7,000
Employee achievement awards:
 Gold Watch 7,500
 Cash 11,000
Other Information:
Benefits in excess over the de minimis limit PhP 14,500
Total de minimis benefits provided to Johnny Parker  52,000
Taxable Income 565,500

How much is the dinorado rice provided to Johnny Parker? 45

TAXATION
8. Johnny Parker has the following annual data for the calendar year (CY)
ended December 31, 2018:

How much is the dinorado rice provided to Johnny Parker? 45

44
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38
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36
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19
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17
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13
12
11
10
9
8
7
6
5
4
3
2
1
0
TAXATION
ANSWER

PhP 36,000
TAXATION
9. As of today, which of the following statement/s hold/s true:

I. Input tax on purchases of capital goods with monthly aggregate

amount exceeding PhP 1,000,000 shall be amortized for a period of
sixty (60) months or the estimated useful life of the asset
II. The filing of the VAT return shall only be done on a quarterly basis
starting 2019
III. Sale of drugs and medicines prescribed for high cholesterol in
Watsons stores nationwide shall be subject to 0% VAT
IV. Sales to government shall be subject to 12% VAT
10
TAXATION
9. As of today, which of the following statement/s hold/s true:

I. Input tax on purchases of capital goods with monthly aggregate

amount exceeding PhP 1,000,000 shall be amortized for a period of
sixty (60) months or the estimated useful life of the asset
II. The filing of the VAT return shall only be done on a quarterly basis
starting 2019
III. Sale of drugs and medicines prescribed for high cholesterol in
Watsons stores nationwide shall be subject to 0% VAT
IV. Sales to government shall be subject to 12% VAT
10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

IV
TAXATION
10. Statement I – During June 25, 2018, you were notified by the Bureau of Internal Revenue (BIR)
as a large taxpayer. However, you failed to update the RDO in the filed July 2018 EWT return. As
such, you are liable to pay an administrative penalty amounting to PhP 2,000.
Statement II – Upon the tax health check review of your external auditor, they noted that there is
an underdeclaration of income in the annual income tax return (ITR) for the calendar year (CY)
2017. In this regard, you amended the filed annual ITR today and paid the additional income tax
payable.
Statement III – In relation to Statement II, the external auditor also noted that your disposal of
ordinary assets were not subjected to VAT during the 2 nd quarter of CY 2018. You decided to amend
the filed quarterly VAT return for such quarter. Since your company just started its business
operations, you have been in excess tax credits position for VAT purposes.
Statement IV – You were assessed by the BIR for failure to transmit sales data from the electronic
sales reporting system on 1/10 of 1% of your annual net income reflected in the audited financial
statements (AFS) for CY 2018.

Which of the following statement/s is/are true? 10

TAXATION
10.  Statement I – During June 25, 2018, you were notified by the Bureau of Internal Revenue (BIR) as
a large taxpayer. However, you failed to update the RDO in the filed July 2018 EWT return. As such,
you are liable to pay an administrative penalty amounting to PhP 2,000.
Statement II – Upon the tax health check review of your external auditor, they noted that there is an
underdeclaration of income in the annual income tax return (ITR) for the calendar year (CY) 2017. In
this regard, you amended the filed annual ITR today and paid the additional income tax payable.
Statement III – In relation to Statement II, the external auditor also noted that your disposal of
ordinary assets were not subjected to VAT during the 2nd quarter of CY 2018. You decided to amend
the filed quarterly VAT return for such quarter. Since your company just started its business
operations, you have been in excess tax credits position for VAT purposes.
Statement IV – You were assessed by the BIR for failure to transmit sales data from the electronic
sales reporting system on 1/10 of 1% of your annual net income reflected in the audited financial
statements (AFS) for CY 2018.

Which of the following statement/s is/are true?

10
1
0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

III only
END OF AVERAGE ROUND
DIFFICULT
ROUND
TAXATION
1. You were referred to a businessman who is seeking clarifications if the following items still hold
true following the implementation of the Tax Reform for Acceleration and Inclusion (TRAIn) Law:
• An MWE is exempt from income tax.
• As an individual taxpayer qualified of the 8% income tax rate, the latter can still be availed
without the need to signify this selection.
• An individual under a contract of service or job arrangements is considered self-employed
and exempt from income tax under the TRAIn law.
• The Affidavit of Declaration of Gross Income is still required under the existing rules and
regulations.
• The retention period of the books of accounts of the taxpayers was amended under the
TRAIn Law.

a) No, Yes, No, Yes, Yes

b) No, No, No, Yes, Yes
c) No, No, Yes, No, Yes 10
d) No, No, No, Yes, No
TAXATION
1. You were referred to a businessman who is seeking clarifications if the following items still hold true
following the implementation of the Tax Reform for Acceleration and Inclusion (TRAIn) Law:
• An MWE is exempt from income tax.
• As an individual taxpayer qualified of the 8% income tax rate, the latter can still be availed without
the need to signify this selection.
• An individual under a contract of service or job arrangements is considered self-employed and
exempt from income tax under the TRAIn law.
• The Affidavit of Declaration of Gross Income is still required under the existing rules and regulations.
• The retention period of the books of accounts of the taxpayers was amended under the TRAIn Law.

a) No, Yes, No, Yes, Yes

b) No, No, No, Yes, Yes
c) No, No, Yes, No, Yes
d) No, No, No, Yes, No

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8
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2
TAXATION
ANSWER

D.
TAXATION
2. During fiscal year (FY) 2018, Miya Company made the following
reconciling items in the filed annual income tax return (ITR):
Reconciling Items Add/(Deduct)
Non-deductible Write-off of Bad Debts PhP 13,074,007.47
Provision for Bad Debts 29,559,355.07
Provision for Retirement Expense 8,072,248.00
Provision for Performance Bonus 11,517,230.00
Provision for Restricted Stock Grants 476,346.94
Accrued Expense 889,950.60
Non-deductible Interest Expense 266,143.96
Non-deductible Penalties 1,247,525.93
Non-deductible Loss from Asset Retirement 342,426.17
Unrealized Foreign Exchange Loss - 2018 14,734,306.56
Non-deductible Write-off of Input Value-Added Tax (VAT) 6,761,624.58
Recovery of Bad Debts Written-Off (7,163,023.59)
Reversal of Provision for Bad Debts (16,788,277.91)
Reversal of Provision for Performance Bonus (1,295,371.07)
Reversal of Accrual for Vacation Leave (VL) Credits (1,178,204.50)
Philippine Accounting Standards (PAS) 17 Adjustment (1,193,378.37)
Interest Income subjected to Final Tax
Unrealized Foreign Exchange Loss - 2017
(645,197.47)
(23,708,034.68) 60
TAXATION
• As of the end of the FY, the Company applied the remaining excess minimum
corporate income tax (MCIT) from the previous years, as follows:

• FY 2015 – PhP 1,528,098

• FY 2016 – PhP 13,596,303

For FY 2017, it has overpayment of income tax amounting to PhP 30,188,232

which was chosen to be carried over as tax credit in the filed annual ITR of the
same year.
Finally, the Company obtained creditable withholding tax (CWT) certificates (BIR
Form No. 2307) from its customers during the year amounting to PhP
19,546,326.80. As a result, the Company is still in excess tax credits position
amounting to PhP 31,700,734.14 for the FY 2018.
Based on the information above, determine the net income or net loss per books
of the Company during the year. 60
TAXATION
• As of the end of the FY, the Company applied the remaining excess minimum corporate
income tax (MCIT) from the previous years, as follows:

• FY 2015 – PhP 1,528,098

• FY 2016 – PhP 13,596,303

For FY 2017, it has overpayment of income tax amounting to PhP 30,188,232 which was
chosen to be carried over as tax credit in the filed annual ITR of the same year.
Finally, the Company obtained creditable withholding tax (CWT) certificates (BIR Form No.
2307) from its customers during the year amounting to PhP 19,546,326.80. As a result, the
Company is still in excess tax credits position amounting to PhP 31,700,734.14 for the FY
2018.
Based on the information above, determine the net income or net loss per books of the
Company during the year. 60
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56
55
54
53
52
51
50
49
48
47
46
45
44
43
42
41
40
39
38
37
36
35
34
33
32
31
30
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
TAXATION
ANSWER

PhP 75,557,741.18
TAXATION
3. A duly accredited Microfinance non-government organization (NGO)
has the following streams of income for the taxable year:
Receipts from:  
 Interest income PhP 250,567
 Penalties 15,675
 Surcharge 5,000

Given the above data, compute for the total tax liability (national tax)
of the accredited Microfinance NGO (round to the nearest peso)

60
TAXATION
3. A duly accredited Microfinance non-government organization (NGO)
has the following streams of income for the taxable year:

Given the above data, compute for the total tax liability (national tax)
of the accredited Microfinance NGO (round to the nearest peso)

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54
53
52
51
50
49
48
47
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44
43
42
41
40
39
38
37
36
35
34
33
32
31
30
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
TAXATION
ANSWER

PhP 5,425
TAXATION
4. The following is/are true regarding the new procedures for claiming tax treaty privileges of non-
resident income earners:
I. Tax Treaty Relief Applications (TTRAs) are no longer required to be filed with the International
Tax Affairs Division (ITAD) for dividends, interest and royalties only.
II. The newly created Certificate of Residence for Tax Treaty Relief (CORTT) shall be used in lieu of
the 1901 Forms for TTRA. The non-resident income recipient shall submit a duly accomplished
CORTT Form to the Philippine income payor/withholding agent before income is paid or
credited. Among others, the non-resident income recipient shall have Part I signed by the
Competent Authority (Tax Office) of his country of residence certifying that the income recipient
is a tax resident of said country. If there is a prescribed certificate of tax residency in the home
country, the same shall be attached to the CORR form in lieu of signature required in Part I. The
authorized representative of the non-resident income recipient shall also sign both Part I and II
of the form.
III. The new form shall be valid for two (2) years upon issuance or following the date of validity
indicated in the Certificate of Residency, if any, whichever comes earlier.
10
TAXATION
IV. Withholding agents shall apply the reduced treaty rate or exemption upon
receipt of the CORTT form, remit the withholding tax using BIR Form No. 1601-F
and file 1604-CF at year-end. For failure to submit the form, regular withholding tax
rates will be applied.
V. The Philippine income payor/withholding agent shall submit an original copy of
the CORTT Form to the ITAD and Revenue District Office (RDO) No. 39 within thirty
(30) days after payment of withholding taxes due on the interest, dividend or
royalties.
VI. In case there is another dividend payment within the period of validity of the
CORTT, and in case of staggered payment of interest and royalties, the withholding
agent only needs to submit an updated Part II within thirty (30) days from payment
of withholding taxes.

10
TAXATION
IV. Withholding agents shall apply the reduced treaty rate or exemption upon
receipt of the CORTT form, remit the withholding tax using BIR Form No. 1601-F
and file 1604-CF at year-end. For failure to submit the form, regular withholding tax
rates will be applied.
V. The Philippine income payor/withholding agent shall submit an original copy of
the CORTT Form to the ITAD and Revenue District Office (RDO) No. 39 within thirty
(30) days after payment of withholding taxes due on the interest, dividend or
royalties.
VI. In case there is another dividend payment within the period of validity of the
CORTT, and in case of staggered payment of interest and royalties, the withholding
agent only needs to submit an updated Part II within thirty (30) days from payment
of withholding taxes.

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0
9
8
7
6
5
4
3
2
TAXATION
ANSWER

All of the above
TAXATION
5. Under Revenue Regulations (RR) No. 11-18, which of the following
taxpayers are included among the Top Withholding Agents (TWAs)?

I. Large taxpayers
II. Top 20,000 private corporations
III. Top 5,000 individuals
IV. Medium taxpayers
V. Taxpayers under Taxpayer Account Management Program (TAMP)

10
TAXATION
5. Under Revenue Regulations (RR) No. 11-18, which of the following
taxpayers are included among the Top Withholding Agents (TWAs)?

I. Large taxpayers
II. Top 20,000 private corporations
III. Top 5,000 individuals
IV. Medium taxpayers
V. Taxpayers under Taxpayer Account Management Program (TAMP)

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9
8
7
6
5
4
3
2
TAXATION
ANSWER

All of the above
TAXATION
6. Odette Lancelot, a rank and file employee of Bang Bang Corporation,
has the following remuneration for the calendar year (CY) ended
December 31, 2018:
• Annual Remuneration and Benefits provided:
Benefits/Remunerations Amount (annual)
Basic Salary PhP 198,000
Overtime Pay 225,000
13th Month Pay 22,500
14th Month Pay 22,500
15th Month Pay 22,500
Christmas Bonus 16,500
Rice Allowance 30,000
Uniform and clothing allowance 7,500
Bereavement Assistance 15,000
Employee achievement award (in cash) 8,000
Medical cash allowance to employee’s dependents 2,500
TOTAL PhP 519,000

60
TAXATION
Moreover, the Company already remitted to the Bureau of Internal Revenue (BIR)
the withheld tax on compensation for the first eleven (11) months amounting to
PhP 22,525.
Applying the new provisions of Republic Act (RA) No. 10963 on compensation and
benefits and using the below revised withholding tax table and revised de minimis
limits, compute the remaining withholding tax on compensation that Bang Bang
Corporation should remit to the BIR on Odette’s compensation. Please refer to the
withholding tax table below

Annual Income Bracket Tax Rate
Not Over P250,000 0%
Over 250,000 – 400,000 20% of the excess over 250,000
Over 400,000 – 800,000 30,000 + 25% of the excess over 400,000
Over 800,000 – 2,000,000 130,000 + 30% of the excess over 800,000
Over 2,000,000 – 8,000,000 490,000 + 32% of the excess over 2,000,000
Over 8,000,000 2,410,000 + 35% of the excess over 8,000,000

60
TAXATION
Moreover, the Company already remitted to the Bureau of Internal Revenue (BIR)
the withheld tax on compensation for the first eleven (11) months amounting to
PhP 22,525.
Applying the new provisions of Republic Act (RA) No. 10963 on compensation and
benefits and using the below revised withholding tax table and revised de minimis
limits, compute the remaining withholding tax on compensation that Bang Bang
Corporation should remit to the BIR on Odette’s compensation. Please refer to the
withholding tax table below

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23
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17
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14
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12
11
10
9
8
7
6
5
4
3
2
1
TAXATION
ANSWER

PhP 19,350
TAXATION
7. Ged Corporation, a resident foreign corporation, was in its fifteenth year of
operations. It had a retained earnings at the beginning of 2015 of PhP 3,000,000 (in
profits in 2014), even as there was a net loss in 2014 of PhP 200,000. The Bureau of
Internal Revenue (BIR), under its current rules and regulations, imposes improperly
accumulated earnings tax on the accumulation of profits. The paid-up capital at the
end of 2015 was PhP 3,500,000. For 2015, Ged Corporation had:
Net Sales PhP         4,200,000
Cost of Sales 1,200,000
Business Expenses 1,000,000
Dividends from domestic corporation 200,000
Quarterly income tax paid (for the 1st-3rd Quarters) 510,000
Income Tax Due, end of the year 90,000
Dividend declared in 2014 (paid in 2015) 500,000

One of the Company’s existing stockholder is an entity publicly-listed on Barcelona

Stock Exchange. 60
TAXATION
7. Ged Corporation, a resident foreign corporation, was in its fifteenth year of
operations. It had a retained earnings at the beginning of 2015 of PhP 3,000,000 (in
profits in 2014), even as there was a net loss in 2014 of PhP 200,000. The Bureau of
Internal Revenue (BIR), under its current rules and regulations, imposes improperly
accumulated earnings tax on the accumulation of profits. The paid-up capital at the
end of 2015 was PhP 3,500,000. For 2015, Ged Corporation had:

One of the Company’s existing stockholder is an entity publicly-listed on Barcelona

Stock Exchange. 60
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1
TAXATION
ANSWER

PhP 0
TAXATION
8. Which is of the following is not false?
a. The reconveyance by Company A of several assets previously purchased from Company B does
not constitute a transaction deemed sale.
b. Company C, a domestic corporation, can claim for refund for its sales of services to Company D,
a corporation organized under the laws of Spain. In addition, Company C was appointed by
Company D as the sole distributor in the Philippines.
c. E Foundation is not exempt from VAT on gross receipts from rendering educational services to a
corporation that operates as a social welfare and development agency implementing
community-based programs and services for children with special needs. It is duly recognized
by the then DECS [now Department of Education (DepEd)] to operate a Complete Elementary
Course for Special Children.
d. The deadline for the processing of all pending VAT claims filed prior to the effectivity of RMC
No. 54-2014 which summarizes the rules on filing and processing of applications for VAT
refund/tax credit has been moved from June 30, 2018 to December 31, 2018 .

10
TAXATION
8. Which is of the following is not false?
a. The reconveyance by Company A of several assets previously purchased from Company
B does not constitute a transaction deemed sale.
b. Company C, a domestic corporation, can claim for refund for its sales of services to
Company D, a corporation organized under the laws of Spain. In addition, Company C
was appointed by Company D as the sole distributor in the Philippines.
c. E Foundation is not exempt from VAT on gross receipts from rendering educational
services to a corporation that operates as a social welfare and development agency
implementing community-based programs and services for children with special needs.
It is duly recognized by the then DECS [now Department of Education (DepEd)] to
operate a Complete Elementary Course for Special Children.
d. The deadline for the processing of all pending VAT claims filed prior to the effectivity of
RMC No. 54-2014 which summarizes the rules on filing and processing of applications
for VAT refund/tax credit has been moved from June 30, 2018 to December 31, 2018.
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TAXATION
ANSWER

A.
TAXATION
9. Mr. A has been assessed deficiency income tax of PhP 1,000,000,
exclusive of interest and surcharge, for taxable year 2018. The tax
liability has remained unpaid despite the lapse of June 30, 2020, the
deadline for payment stated in the notice and demand issued by the
Commissioner. Payment was made by the taxpayer on February 10,
2021.
Applying the provisions of Revenue Regulations (RR) No. 21-18 on
interest, compute for the following (use exact number of days and
round off to the nearest peso):
• Deficiency interest
• Deliquency interest
• Surcharge on late payment
60
TAXATION
9. Mr. A has been assessed deficiency income tax of PhP 1,000,000,
exclusive of interest and surcharge, for taxable year 2018. The tax
liability has remained unpaid despite the lapse of June 30, 2020, the
deadline for payment stated in the notice and demand issued by the
Commissioner. Payment was made by the taxpayer on February 10,
2021.
Applying the provisions of Revenue Regulations (RR) No. 21-18 on
interest, compute for the following (use exact number of days and
round off to the nearest peso):
• Deficiency interest
• Deliquency interest
• Surcharge on late payment
60
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55
54
53
52
51
50
49
48
47
46
45
44
43
42
41
40
39
38
37
36
35
34
33
32
31
30
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
TAXATION
ANSWER

PhP 145,315, PhP 103,215, PhP 250,000
TAXATION
10. The following are the revised list of documents needed to be submitted upon
application for Tax Identification Number (TIN) of new employees under Revenue
Regulations (RR) No. 11-18 as amended by RR No. 14-18, except for:

I. Duly accomplished BIR Form No. 1902

II. Any identification issued by an authorized government body (e.g., birth
certificate, passport, driver’s licenses) that shows the name, address, and
birthdate of the applicant
III. Copy of marriage certificate, if married
IV. Other documentary evidence to support employee’s identification where the
above documents are not available
V. Birth Certificate of each qualified dependent child(ren)
VI. Sworn Declaration and waiver of right to claim exemptions
10
TAXATION
10. The following are the revised list of documents needed to be submitted upon
application for Tax Identification Number (TIN) of new employees under Revenue
Regulations (RR) No. 11-18 as amended by RR No. 14-18, except for:

I. Duly accomplished BIR Form No. 1902

II. Any identification issued by an authorized government body (e.g., birth
certificate, passport, driver’s licenses) that shows the name, address, and
birthdate of the applicant
III. Copy of marriage certificate, if married
IV. Other documentary evidence to support employee’s identification where the
above documents are not available
V. Birth Certificate of each qualified dependent child(ren)
VI. Sworn Declaration and waiver of right to claim exemptions
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TAXATION
ANSWER

I, II, III and IV only 
END OF DIFFICULT ROUND