BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 115

SUGGESTED ANSWERS
Chapter 15: EXCISE TAXES

CHAPTER 15

EXCISE TAXES
Problem 15 1
1. False excise tax is also imposed on luxurious goods and mineral products.
2. False excise tax imposed to vehicles is based on the value of the vehicles, hence, an example of advalorem tax.
3. True
4. False The primary purpose of excise tax is for regulation and protection.
5. True
6. False P1 per kilo
7. False 20% of the wholesale price.
8. True It is the same as distilled spirits.
9. False Excise tax is a business tax.
10. False Excise tax is an indirect tax.
11. True
12. False P10 per ton means based on measure, hence, specific excise tax.
13. False subject to excise tax of P0.79 per kilo.
Problem 15 2
1. True
2. False Excise tax is also imposed on imported goods.
3. False Excise tax is paid upon transfer or release from the Bureau of Customs.
4. True
5. False net retail price or retail price basically excludes VAT and excise tax.
6. False LPG is a separate and distinct product from processed gas.
7. True
8. False Alcohol products for medicinal purposes are exempt from excise tax.
9. False The excise taxes imposed on imported articles are paid to the Bureau of Customs.
10. False Subject to excise tax upon production or importation.
11. True
12. True
Problem 15 3
1. D
2. D
3. B
4. B
5. D

6. A
7. D
8. A
9. D
10. D

11. C
12. B
13. C
14. B

Problem 15 4
C
Total sales
Divided by net retail price per cigar
Number of cigar sold at P600 each
Multiplied by excise tax on cigar sold at P600 each [P50 + (15% x 100)]
Total excise tax
Problem 15 5
1. Not in the choices
Total sales excluding VAT (P159,500/1.12)
Divided by net retail price per liter
Number of liters produced
Multiplied by applicable excise tax per liter
Excise tax
2. Not in the choices

P 1,200,000
600
2,000
65
P 130,000

P142,411
14.50
9,821
P 12.30
P120,798

Total sales including VAT

Add: Excise tax
Total amount of sales including VAT and excise tax
Problem 15 6
A
Excise tax (P11.65 x 200)
Problem 15 7
Tax-exempt

P159,500
120,798
P280,298
P 2,330

Problem 15 8
A
Excise tax per proof liter
Multiplied by proof liters (200 x 12 x 750/1,000)
Excise tax payable
Problem 15 9
B
First P2,100,000
Excess (P1,900,000 x 60%)
Excise tax

P 11.65
1,800
P20,970
P 512,000
1,140,000
P1,652,000

Problem 15 10
A
Exempt from excise tax, hence, P 0.
Problem 15 11
B
Local wholesale price
Multiplied by percent of excise tax
Excise tax
Problem 15 12
None

P150,000
20%
P 30,000

Problem 15 13
B
Excise tax on:
Bunker oils (20,000 liters x P0.30)
Grease (2,000 x P4.50)
Lubricating oil (8,000 x P4.50)
Total
Less: Creditable excise tax on bunker oils
Excise tax

P 6,000
9,000
36,000
P51,000
6,000
P45,000

Problem 15 14 A
Zero
Problem 15 15
Excise tax per metric ton of coal
Multiplied by metric tons of coal produced
Excise tax

10
1,000
P10,000

Problem 15 16
Excise taxes:
For year 2005 and 2006: (100 x 50 x 10 x P25)

P1,250,000

For year 2007 and 2008: (100 x 50 x 10 x P26.06)

P1,303,000

For year 2009 and 2010: (100 x 50 x 10 x P27.16)

P1,358,000

For year 2011: (100 x 50 x 10 x P28.30)

P1,415,000

Problem 15 17
Excise tax:
(1,000 x 12 x .750 x P11.65)
(1,000 x 12 x 1 x P252)

P 104,850
3,024,000
P3,128,850

Problem 15 18
a. (15,000,000/1,000) x P1
b. (1,000,000 x P0.79)
c. (50,000 x P2)
d. (100,000 x P6.35)
e. (5,000 x 500 x 10%)
Total excise tax

P 15,000
790,000
100,000
635,000
250,000
P1,790,000

Problem 15 19
First P600,000
Excess (P200,00 x 20%)
Excise tax

P 12,000
40,000
P 52,000

Problem 15 20
Purchase price per car
Custom duties
Mark-up (P2,100,000 x 30%)
Total
Add: Excise tax on P2,100,000
Excess (P630,000 x 60%)
Total sales price inclusive of excise tax and VAT

P1,500,000
600,000
630,000
P2,730,000
P512,000
378,000

890,000
P3,620,000

Problem 15 21
Total kilograms of copper (1,000 tons x 25% x 1,000 kg.)
Multiply by world price per kilogram
Total in US dollars
Multiply by exchange rate of peso per dollar
Total
Multiply by excise tax rate
Excise tax

250,000
$0.60
$ 150,000
P50
P 7,500,000
2%
P 150,000

Problem 15 22
Quantity (tons of concentrate)
Multiplied by kilogram per ton
Total kilogram
Multiplied by gram per kilogram
Total grams
Multiplied by percent of metal content
Actual grams of metals
Multiplied by market price per gram
Total in dollars
Multiplied by peso rate per dollar
Totals in pesos
Multiplied by applicable excise tax rate
Excise tax

Gold
100
1,000
100,000
1,000
100,000,000
0.02%
20,000
$8
$160,000
P60
P9,600,000
2%
P192,000

Copper
100
1,000
100,000
1,000
100,000,000
3.00%
3,000,000
$0.01
$30,000
P60
P1,800,000
1%
P18,000

Total

P210,000