Professional Documents
Culture Documents
QUESTIONS ANSWER
III. Mr. Alas sells shoes in Makati through a retail store. He (A) Yes, there is double taxation and it is oppressive.
pays the VAT on his gross sales to the BIR and the municipal (B) The City of Makati does not have this power.
license tax based on the same gross sales to the City of (C) Yes, there is double taxation and this is illegal m the
Makati. He comes to you for advice because he thinks he is Philippines.
being subjected to double taxation. What advice will you give (D) Double taxation is allowed where one tax is
him? (1%) imposed by the national government and the other by
the local government.
IV. Congress passed a sin tax law that increased the tax rates (A) wrong because taxes are the lifeblood of the
on cigarettes by 1,000%. The law was thought to be sufficient government
to drive many cigarette companies out of business, and was (B) wrong because the law recognizes that the power
questioned in court by a cigarette company that would go out to tax is the power to destroy
of business because it would not be able to pay the increased (C) correct because no government can deprive a person
tax. The cigarette company is __________ (1%) of his livelihood
(D) correct because Congress, in this case, exceeded its
power to tax
VII. The municipality of San Isidro passed an ordinance (A) It is unconstitutional because it clearly discriminates
imposing a tax on installation managers. At that time, there against this person.
was only one installation manager in the municipality; thus, (B) It is unconstitutional for lack of legal basis.
only he would be liable for the tax. Is the law constitutional? (C) It is constitutional as it applies to all persons in
(1%) that class.
(D) It is constitutional because the power to tax is the
power to destroy.
2013 INCOME TAX
QUESTIONS ANSWER
Q: In 2010, Mr. Platon sent his sister Helen $1, 000 via a A: (B) Yes, income is income regardless of the source.
telegraphic transfer through the Bank of PI. The bank's Section 32 of the NIRC defines gross income as all
remittance clerk made a mistake and credited Helen with income derived from whatever source. Consequently, the
$1,000,000 which she promptly withdrew. The bank demanded flow of wealth, without any distinction as to the lawfulness
the return of the mistakenly credited excess, but Helen of its source, is subject to income tax. In other words, the
refused. The BIR entered the picture and investigated Helen. phrase “income from whatever source” discloses a
Would the BIR be correct if it determines that Helen earned legislative policy to include all income not expressly
taxable income under these facts? (2013 Bar) exempted within the class of taxable income under the law
(A) What is the nature of the real properties exchanged for tax
purposes - capital asset or ordinary asset? Explain. (3%)
John McDonald, a U.S. citizen residing in Makati City, bought SUGGESTED ANSWER: Yes, He is liable for a final
shares of stock of a domestic corporation whose shares are income tax of 5% on first P100,000 net capital gain, and
listed and traded in the Philippine Stock Exchange at the price 10% for any amount in excess of P100,000 net capital
of P2 million. Yesterday, he sold the shares of stock through gain (Sec.24[C] NIRC).True or False. An individual
his favorite Makati stockbroker at a gain of P200,000. taxpayer can adopt either the calendar or fiscal period for
purposes of filing his income tax return. (1%)True or
(B) If John McDonald directly sold the shares to his best friend, False. An individual taxpayer can adopt either the
who is another U.S. citizen residing in Makati, at a gain of calendar or fiscal period for purposes of filing his income
P200,000, is he liable for Philippine income tax? If so, what is tax return. (1%)True or False. An individual taxpayer can
the tax base and rate? (3%) adopt either the calendar or fiscal period for purposes of
filing his income tax return. (1%)
(A) What are BIR rulings? SUGGESTED ANSWER: A BIR ruling of first impression
(B) What is required to make a BIR ruling or first impression a to be valid must not be against the law and it must be
valid one? issued only by the Commissioner of Internal Revenue.
C) Does a BIR ruling have a retroactive effect, considering the (Philippine Bank of Communications v. CIR, 302 SCRA
principle that tax exemptions should be interpreted strictly 241 [1999]; Section 7, NIRC).
against the taxpayer?
SUGGESTED ANSWER: No. A BIR ruling cannot be
given retroactive effect if its retroactive application is
prejudicial to the taxpayer. (Section 246, NIRC; CIR v.
Court of Appeals et. Al. 267 SCRA 557 [1997]).
What kind of taxes, fees and charges are considered as SUGGESTED ANSWER: The following taxes, fees and
National Internal Revenue Taxes under the National Internal charges are considered to be National Internal Revenue
Revenue Code (NIRC)? (5%) Taxes under the National Internal Revenue Code: (A)
Income tax; (B) Estate and donor’s taxes; (C) Value-
added tax; (D) Other percentage taxes; (E) Excise taxes;
(F) Documentary stamp taxes; and Such other taxes as
are or hereafter may be imposed and collected by the
Bureau of Internal Revenue. (Section 21, NIRC)