Value Added Tax MCQs

Which of the following shall not be subject to VAT? I. MP Promotions, VAT registered, but gross sales for the year do not exceed P3,000,000 II. Ma...

MP Promotions and Mayweather Corporation
MP Promotions and Mailag Company
All of the above
None of the above

A lessor of residential units shall be exempt from VAT when: I. Annual gross receipts do not exceed P3,000,000 II. Monthly rental per unit does no...

I only
II only
Either I and II
Both I and II

A lessor of commercial units shall be exempt from VAT when: I. Annual gross receipts do not exceed P3,000,000 II. Monthly rental per unit does not...

I only
II only
Either I and II
Both I and II

Which of the following is subject to VAT?

Sale of vegetables in its original state
Sale of fruits in its original state
Sale of copra
Sale of olive oil

One of the following goods is not in its original state:

Salted eggs
Corn grits
Polished or husked rice
Refined brown sugar

One of the following is not a poultry for VAT purposes:

Duck
Fowl
Goose
Fighting cock

One of the following is not a livestock for VAT purposes:

Rabbit
Cow
sheep
Race horse

JJ owns a mango plantation. He sold his ripe mangoes to Paul, a fresh fruit vendor. Paul sold the ripe mangoes he bought from JJ to Francis. Who shall...

JJ
Paul
Francis
None of the above

Talion owns Eternal Gardens. He harvested fresh flowers and sold them to Joseph. Joseph sold the flowers in their original state to Alex. The sale of ...

Subject to VAT
Exempt from VAT
Exempt from VAT or subject to VAT depending on annual gross receipts of Pedro
Subject to VAT if Juan did not subsequently sell it.

Which of the following is the benefit of a VAT registered taxpayer if he is subject to zero percent (0%) VAT rate?

Exclusion from tax audit by tax examiner
Not required to file VAT return whether monthly or quarterly
He does not have any output tax although he may have an input tax credit which can be claimed for refund
He is entitled to tax discount equivalent to 20%

Which of the following transactions is subject to value-added-tax?

Services subject to other percentage tax
Educational services duly approved by DEP-ED, CHED, and TESDA or those operated by the government
Sale of coal and natural gas
None of the above

Which of the following shall be exempt from value-added-tax? I. Sales by agricultural cooperatives, duly registered with the Cooperative Department...

I and II only
I only
II and III only
I, II, and III

Which of the following transactions is exempt from VAT?

Sale of books, newspaper, and magazines
Sale of literary works
Sale of musical compositions
All of the above

All of the following except one, are subject to VAT?

Importation of radio and television equipment by broadcasting and television stations
Lease of cold storage rooms in ice plants and cold storage
Sale of paintings
None of the above

Which of the following transactions is exempt from VAT?

Medical services such as dental and veterinary services rendered by professionals
Legal services
Services arising from employee-employer relationship
Services rendered by domestic air transport companies

Which of the following is not subject to VAT?

Importation of goods in the ordinary course of business
Importation of items for personal use
Franchise grantees of radio broadcasting whose gross receipt for the preceding year was P9,000,000
VAT-registered person, whose annual gross receipt is less than P3,000,000

Which of the following is not correct?

Non-stock, non-profit private organizations are not subject to VAT if their income from sales is used for non-profit purposes.
A VAT registered taxpayer can pass on the VAT even to non-VAT registered buyers
Any business pursued by an individual where the aggregate gross sales or receipts do not exceed P100,000 during any 12-month period, shall be considered principally for subsistence or livelihood and not in the course of trade or business
None of the above

One of the following is not subject to VAT on importation:

Goods brought into the Philippines in the course of trade or business by VAT registered person
Goods brought into the Philippines in the course of trade or business by a person who is not VAT registered
Tax free goods imported by tax-exempt importer who transferred them to a person who does not enjoy exemption from VAT on importation
Goods exempt from customs duties classified as personal and household effects belonging to residents of the Philippines returning from abroad

Gross selling price includes all of the following, except

Total amount which the purchaser pays to the seller
Total amount which the purchaser is obligated to pay to the seller
Excise tax
Value-added tax

Villamin Grill, a VAT registered business in Cavite, has the following data (exclusive of VAT) for the third quarter of the current year. Sales, food...

P201,340
P211,470
P221,480
P265,780

Hananiah Corporation has the following sales and purchases for the quarter ending December 31, 2018: October: Sales P50,000 Purchases 40,000 N...

P5,000
P3,500
(P2,400)
(P5,000)

Which of the following statements is correct?

Export sale by a VAT registered person is subject to 0% VAT
Export sale by a non-VAT registered person is subject to 3% percentage tax
Both a and b
Neither a nor b

Which of the following statements is correct?

Under RA 7916, while an economic zone registered under PEZA is geographically within the Philippines, it is deemed a separate customs territory and is regarded in law as foreign soil
Sales by suppliers from outside the borders of the economic zones to the entities within the separate customs territory are deemed as exports and treated as export sales
Both a and b
Neither a nor b

Which of the following statements is correct? I. Sale to export oriented enterprises is considered export sales under the tax code at the level of ...

I only
II only
Both I and II
Neither I nor II

Which among the following is subject to zero percent VAT?

Sale, importation or lease of passenger or cargo vessel and aircraft including engine, equipment and spare parts thereof for domestic or international transport operations
Importation of fuel, goods, and supplies by persons engaged in international shipping or transport operations
Transport of passenger and cargo by a domestic carrier (air or sea) from the Philippines to a foreign country.
All of these

One of the following is a zero-rated sale under the TRAIN Law

Export sale of a person who is VAT registered
Sale of nonfood agricultural products
Sale of gold to Bangko Sentral ng Pilipinas
Sale of cotton and cotton seeds

Under the TRAIN law, which of the following sales is not be zero-rated?

Export sales
Foreign currency denominated sales
Sale of goods to the Asian Development Bank
None of the above

In the lease contract, which of the advance payment by the lessee is subject to output VAT?

A loan to the lessor from the lessee
Prepaid rental
An option money for the property
A security deposit to insure the faithful performance of certain obligations of the lessee to the lessor

Which of the following shall be subject to VAT?

Sale of residential house and lot by the owners for P5,000,000
Sale of private car by its owner
Sale of commercial property by a real estate dealer for P1,500,000
All of the above

On January 1, 2018, Pedro purchased a condominium unit worth P2,000,000 from Maxima Realty Corporation. A month after, Pedro purchased the adjacent un...

Exempt from VAT
Subject to VAT
Subject to 0% VAT
None of the above

On January 1, 2018, Pedro purchased a condominium unit including a parking space worth P4,200,000 from Maxima Realty Corporation. The value of the con...

Exempt from VAT
Subject to VAT
Subject to 0% VAT
None of the above

Which statement is correct? Leasing of property shall be subject to value added tax on sale of services:

If the property is in the Philippines and the lease agreement was executed in the Philippines
If the property is in the Philippines and the lease agreement was executed outside the Philippines
If the property is in the Philippines and the lease agreement was executed within or outside the Philippines
All of the above

Which of the following receipts for 2018 current year from lease of residential units is subject to VAT? I. Monthly rental per unit-P14,000; Aggreg...

II and IV only
III and IV only
All of the above
None of the above

Which is true? On sale of service, the tax base in computing for the VAT is

Gross selling price
Gross receipts
Amount per invoice
Amount shown in the official receipt

In the VAT on sale of services, the output tax is computed:

On billings of the month
On collections of the month on all billings made
On the contract price of contracts completed during the taxable period
Only and strictly on labor performed under the contract for services

Which of the following statements is false?

Construction in progress is not depreciated until the asset is placed in service
For the purposes of claiming input tax, as a purchase of service, the value of which shall be determined based on the progress billing
The input tax credit on the labor contracted shall be recognized on the month the payment was made based on the progress billing
Once the input tax has already been claimed while the construction is still in progress, no additional input tax can be claimed upon completion of the asset when it has been reclassified as depreciable capital asset and depreciated

The following information and data (net of VAT) are from the records of Fantastic 4 Corporation, a VAT taxpayer in connection with its construction co...

P43,000
P51,600
P37,000
P82,500

GJ is a contractor. He entered into a contract on September 1, 2018 which was completed on September 30, 2018. On the same date, he received the total...

P150,000
P480,000
P400,000
P595,000

JJ Contractors entered into a contract on October 2017 to build a warehouse for Francis Corporation. The total contract price amounting to P10,000,000...

P360,000
P690,000
P684,000
P0

A merchant of stock or securities, whether individual, partnership, or corporation, with an established place of business, regularly engaged in the pu...

Dealer in securities
Stock brokers
Underwriters
Stock merchants

A dealer in securities has the following for the year 2018: Sales, shares held for sale in the ordinary course of trade or business P5,000,000 Sal...

P470,000
P324,000
P270,000
VAT exempt

Which of the following statement is correct? I. Certain transactions which are not actually sale because of the absence of actual exchange between ...

I only
II only
Both I and II
Neither I nor II

Which statement is correct? The output value added tax on goods or properties sold:

Is based on gross sales and not on net sales
Is not imposed on goods exported
Is imposed on actual sale only
May be due even in the absence of actual sale

Which of the following is not a sale and therefore is not subject to the value-added tax?

Transfer, use or consumption not in the ordinary course of business of goods or properties ordinarily intended for sale or use in the course of business.
Distribution or transfer to shareholders or investors of share in the profits of a VAT-registered person.
Distribution or transfer to creditors in payment of debt.
Consignment sales.

One of the following is a transaction deemed sale under value added tax.

Transfer, use or consumption in the course of business of goods or properties intended for sale or for use in the course of business.
Distribution or transfer to creditors in payment of debt.
Consignment of goods if actual sale is not made within forty (40) days from the date the goods were consigned.
Retirement from or cessation of business with respect to beginning inventories of taxable goods existing as of such retirement or cessation.

Deemed sale" for VAT purposes includes inventories of taxable goods existing at the time of:

Change of control of a corporation thru the acquisition of the controlling interest.
Change in the trade name or corporate name of the business.
Merger or consolidation.
Dissolution of a partnership and the creation of a new partnership.

Choose the correct statement(s) from the following:

A non-vat registered person could not claim the input vat on its purchases as tax credit against its business taxes.
In the books of a vat registered person, the input vat is an asset account.
Purchases on account from vat registered supplier is a source of creditable input vat.
All of the above

Which statement is not correct?

The excess input taxes of a taxable month arising from domestic sales may be carried over to the succeeding month.
The excess input taxes of a taxable quarter arising from domestic sales may be carried over to the succeeding quarter.
The excess input taxes of a taxable period arising from domestic sales may be refunded.
The excess input taxes of a payable period arising from exports sales may be refunded.

Serbesa Company is a manufacturer of local beer. During a particular quarter, it had the following transactions (net of VAT): Jan. 2: Consigned bee...

P48,000
P72,000
P120,000
P192,000

Which of the following importation is subject to value added tax?

Importation for personal use of the importer
Importation intended for resale
Importation of machinery for the importers factory
All of the above

Lester, not a vat registered taxpayer, was sent a package of goods by his friend, Clifford who was abroad. The package was claimed by Lester. The Bure...

Yes, because only vat registered importers should be subject to vat.
No, because importations, unless exempted, should be subject to vat.
Yes, because the package was intended for personal use, and therefore, he was not an importer.
No, because Lester may actually sell the package, depriving the BOC to collect the applicable input vat.

Which of the following statements is correct? I. An importation of goods by a non-profit charitable organization shall not be subject to the value ...

I only
I and Il only
III only
None of the above

Which statement is correct? Vat on importation

Should be paid by the tax exempt importer, if he subsequently sells the goods to a non-tax exempt purchaser.
Should be paid by the non-tax exempt purchaser to whom the tax exempt importer sells it.
Is a liability shall either of the tax exempt importer or the non-tax exempt purchaser.
Shall not pay the value added tax because the transaction was exempt at the point of importation.

One of the following is not subject to vat on importation

Goods brought into the Philippines in the course of trade or business by vat registered person.
Goods brought into the Philippines not in the course of trade or business by a person who is not vat registered.
Tax free goods imported by tax-exempt importer who transferred them to a person who does not enjoy exemption from importation tax.
Goods exempt from customs duties classified as personal and household effects belonging to residents of the Philippines returning from abroad.

Which of the following is not a proper inclusion for the computation of VAT on imported items?

Custom duties on importation
Excise tax on importation
Invoice price of the imported items
Facilitation expense

Input vat on purchases of capital assets shall be spread (amortized over 60 months or useful lives of the capital assets if shorter than 60 months) wh...

Capital assets have been acquired from enterprises registered with and located at the export processing zones
Value of asset, excluding VAT, exceeds P1,000,000
Aggregate monthly purchases of capital assets, excluding VAT, exceeds P1,000,000
VAT taxpayer has secured prior approval for him to amortized input tax on purchases of capital assets.

Statement 1: The input value-added-tax on purchase of capital goods valued at P1,000,000 shall be spread over 60 months if the life of property is equ...

Statements 1 & 2 are false
Statement 1 is true but statement 2 is false
Statement 1 is false but statement 2 is true
Statements 1 and 2 are true

For purposes of claiming input vat on depreciable assets, the aggregate acquisition cost of a depreciable asset in any calendar month refers to the:

Total price agreed upon for one or more assets acquired during the calendar month.
Payments actually made during the calendar month.
Total price agreed upon for one asset only acquired during the calendar month.
Initial payments made if purchased on installment plan.

A taxpayer has excess credit as a result of input taxes paid on purchases of capital goods. He may:

Have his excess tax credit refunded to a VAT registered person.
Make his application for refund in the subsequent period following the period during which the purchases were made.
Carry-over and apply his excess tax credit against output taxes in the subsequent period or periods.
Use it in payment of any internal revenue tax of a VAT registered person.

If the depreciable capital good is sold or transferred within a period of 5 years or prior to the exhaustion of the amortizable input tax thereon, the...

Claimed as input tax credit in its entirety during the month or quarter when the sale or transfer was made.
Amortized over the remaining life of the capital good.
Claimed as input tax credit in its entirety or amortized over the remaining life of the capital good at the option of the taxpayer.
Expensed outright in the month or quarter the sale or transfer was made.

Persons or firms engaged in the processing of sardines, mackerel and milk, and in manufacturing refined sugar and cooking oil shall be allowed. I. ...

I only
I and Il only
I, Il and Ill only
1, 11, 111 and IV

Which of the following businesses is allowed a presumptive input vat?

Manufacturer of canned goods.
Manufacturer of packed noodles
Manufacturer of packed juices
Manufacturer of dried fish

Who may claim transitional input tax as tax credit against output tax?

Processor or manufacturer of cooking oil or refined sugar.
Those whose transaction is subject to zero percent VAT.
VAT taxpayer from being VAT exempt or non-VAT taxpayer.
Those who sell goods or services to persons or entities whose exemption from tax is provided by special law or by international agreement to which the Philippines is a signatory.

One of the following shall not be entitled to transitional input tax

Taxpayers who become liable to vat for the first time under a new legislation.
Taxpayers who are already vat registered person and also deal in goods or property, the sale of which is exempt but becomes vatable transaction under a new amendatory law.
Taxpayers whose taxable transactions exceeded the vat registration threshold of P3,000,000
Taxpayers who elect to revert to being a vat exempt from being vat subject.

Once optionally registered as a vat person, the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the

First day of the month following the registration
First day of the month following the close of the first quarter after registration.
Tenth day of the month following the close of the first quarter after registration.
Twenty fifth day following the close of the quarter.

A Vat taxpayer had the following data on its operations for the month of January: Sales, total invoice price P592,480 Purchases of goods, Vat not ...

P24,800
P20,400
P19,200
P19,650

A Vat taxpayer had the following data on its operations for the month of January: Sales, total invoice price P592,480 Purchases of goods, Vat not ...

P43,830
P44,280
P46,680
P59,248

Statement 1: The government or any of its political subdivisions instrumentalities or agencies, including government-owned or controlled corporations ...

Statements 1 & 2 are false
Statement 1 is true but statement 2 is false
Statement 1 is false but statement 2 is true
Statements 1 and 2 are true

Empleo Construction Company entered into a contract with the government to. construct an edifice for a total contract price of 25,000,000. During the ...

P0
P150,000
P850,000
P1,000,000

Statement 1: On a sale of real property on installments by a real estate dealer, the seller shall be subject to VAT on the installment payment receive...

Statements 1 & 2 are false
Statement 1 is true but statement 2 is false
Statement 1 is false but statement 2 is true
Statements 1 and 2 are true

Statement 1: In the case of sale on deferred payment basis not qualifying under the installment plan, the transaction shall be treated as cash sale an...

Statements 1 & 2 are false
Statement 1 is true but statement 2 is false
Statement 1 is false but statement 2 is true
Statements 1 and 2 are true

Ivan, vat registered real estate dealer sold a residential lot on October 2018. The following information was made available on the terms of the sale...

P360,000
P300,000
P108,000
P0

Ivan, vat registered real estate dealer sold a residential lot on October 2018. The following information was made available on the terms of the sale...

P360,000
P300,000
P108,000
P0

Lady sells real property in the course of its business. During the last quarter of 2018, it had sold a parcel of land under the following terms (vat i...

P12,000
P24,000
P26,000
P0

Alex is in the course of trade selling real property. During the month of February, it had the following data (per sales document, inclusive of vat) ...

P84,000
P96,000
P108,000
P112,320

Which of the following is not correct pertaining to the transactions of a business which is engaged in Vat and non-Vat transactions?

Vat invoice shall be issued for vat transactions.
Non-Vat invoice shall be issued to Non-Vat transactions.
Separate Vat invoice for the taxable transactions and Non-vat invoice for the Vat exempt transactions.
Only one invoice for both Vat and non-Vat transactions shall be issued.

Which of the following statements is wrong? When a purchase from a VAT-registered person is for use both in the VAT and Non-VAT business of purchaser...

May be debited at the time of purchase to the Input Taxes account.
May be debited at the time of purchase to the Purchases account.
Must be allocated immediately and at the time of purchases between the VAT and Non-VAT business.
Must be allocated between the VAT and Non-VAT business at the end of the taxable period.

A VAT-registered person is engaged in the sale of VAT taxable goods and at the same time is also engaged in non-VAT business, in the same business est...

P6,000
P5,000
P1,200
P4,320

A VAT-registered person is engaged in the sale of VAT taxable goods and at the same time is also engaged in non-VAT business, in the same business est...

P25,000
P30,000
P31,680
P34,800

Data for a trader with one line of business subject to value added tax and another line of business not subject to value added tax: Sales, vat bus...

P59,808
P62,208
P82,608
P86,208

The following data during the month relates to William Company, a VAT registered person: Domestic sales, invoice amount P330,OOO Domestic sales to...

P20,650
P40,350
P54,350
P69,948

The following data during the month relates to William Company, a VAT registered person: Domestic sales, invoice amount P330,OOO Domestic sales to...

(P5,127)
P4,350
P19,446
P20,650

A VAT-registered person has the following data: Export sales, total invoice amount P400,000 Domestic sales, total invoice amount 672,000 Purchase...

P50,400
P57,600
P144,000
P86,400

In order that an invoice will qualify as a VAT invoice or receipt for purposes of claiming tax credit for input tax, it must contain: I. The vat re...

Only II
Neither I nor II
Both I and II
only I

Quarterly VAT return is filed on or before the:

15th day from the end of each quarter
20th day from the end of each quarter
25th day from the end of each quarter
30th day from the end of each quarter

Mr. Juan Dela Cruz, VAT-exempt, issued VAT invoice to Pedro, VAT registered trader. As a consequence, Mr. Juan Dela Cruz would:

Be liable to VAT without the benefit of input tax credit;
Not be liable to Vat because he is VAT- exempt;
Be liable to percentage tax, VAT, and a surcharge of 50%
Not be liable to any business tax but may be liable to income tax.

Statement 1: If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VATexempt, the in...

Statements 1 & 2 are false
Statement 1 is true but statement 2 is false
Statement 1 is false but statement 2 is true
Statements 1 and 2 are true

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Value Added Tax MCQs