Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao

Since 1977

TAX.3609-2 NARANJO/SIAPIAN/WONG/CRUZ/GUDANI
TAXATION OF NON-INDIVIDUAL TAXPAYERS MAY 2024

DISCUSSION QUESTIONS
1. Which is TRUE? ABC College, an educational institution:
S1 – is exempt from income tax if it is a non-stock, non-profit educational institution
S2 - is subject to regular tax if it operates without accreditation or permit from DepEd, CHEd or TESDA
S3 – is subject to preferential tax if with permit from DepEd, CHEd or TESDA and income from related
activity is higher than unrelated activity
a. S1 and S2
b. S1 and S3
c. S2 and S3
d. All are true
2. Which is FALSE? A proprietary education institution is subject to:
a. 25% regular rate if income from unrelated activity is higher than related activity
b. 10% rate if it is a non-stock corporation with duly issued permit from DepEd, CHEd or TESDA
c. 10% if taxpayer is an individual
d. 25% on the portion of the revenue of a non-stock, non-profit educational institution not used
directly and exclusively for educational purpose
3. Which is TRUE? In ordinary partnership is:
S1 - Distribution of income to partners are deemed dividends subject to 10% final tax
S2 - Share in net income are required to be reported by the partners in their individual and separate
capacity
S3 - The partnership is subject to regular corporate income tax of 25% or 20%
a. S1 only
b. S2 only
c. S2 and S3 only
d. S1 and S3 only
4. In the deadline of filing of 2021 Annual Income Tax Returns, which is TRUE?
S1 – ABC Corp. employing fiscal year ending January 31, the deadline is May 15 of the same year
S2 – ABC Corp. employing fiscal year ending June 30, the deadline is October 15 of the same year
S3 – ABC Corp. employing fiscal year ending October 31, the deadline is February 15, 2022
S4 – ABC Corp. employing calendar, the deadline is April 15, 2022
a. S1 and S2
b. S2 and S3
c. S1, S2 and S4
d. All are true
5. ABC College, a non-stock, non-profit educational institution, operates a canteen, bookstore, and
dormitory inside its campus which are commercial in nature. The income from the sale of goods and/or
services by the canteen, bookstore, and dormitory inside the campus are actually, directly, and
exclusively used for educational purposes. Using the data provided, which is FALSE?
S1 - Income from related activity is exempt from taxation
S2 - Income from unrelated activity is subject to regular tax
S3 - Income from unrelated activity is exempt from income tax
a. S1
b. S2
c. S3
d. All are true
6. Which is TRUE?
a. Hospitals for profit are subject to preferential tax of 10%
b. Offshore banking units are subject to 10% preferential tax
c. Regional area headquarters are subject to 10% preferential tax
d. Regional operating headquarters are subject to 25% regular tax
7. S1 - The MCIT is imposed beginning on the fourth taxable year immediately following the year in which
such corporation commenced its business operations
S2 - When the minimum corporate income tax is higher than the regular corporate income tax during
the period, the minimum corporate income tax shall be payable
S3 - Excess of minimum corporate income tax can be carried over and credited to the regular income
tax for the next three immediately succeeding taxable years
S4 - MCIT applies on quarterly Income Tax Returns
Which is TRUE?

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EXCEL PROFESSIONAL SERVICES, INC.

a. S1 and S3
b. S1 and S2 only
c. S1, S2 and S3 only
d. All are true
8. S1: For income tax purposes, domestic corporations shall account separately in their Annual Financial
Statements (AFS) the cost of the land on which the particular business entity’s office, plant and
equipment are situated, and shall not lump the same in one account title nor consolidate its cost with
fixed asset account.
S2: GOCC’s, agencies and instrumentalities, except the GSIS, the SSS, the HDMIF, the PHIC, and the
local water districts, shall pay such rate of tax upon their taxable income as are upon corporations or
association engaged in a similar business, industry, or activity.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
9. S1: Income derived by an international air carrier is always subject to 2.5% Gross Philippine Billings
tax.
S2: International air carrier may be exempted from income tax.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false

Comprehensive Problem
A non-individual taxpayer made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets 20,000,000 Gross receipts 5,000,000
Liabilities 15,000,000 Cost of service 3,000,000
Stockholders’ Equity 5,000,000 Gross profit 2,000,000
Expenses 1,000,000
Net income 1,000,000

10. Assuming the taxpayer is a domestic corporation, the income tax due is?
a. Php 0
b. Php 200,000
c. Php 250,000
d. Php 300,000
11. Assuming the taxpayer is a resident foreign corporation, the income tax due is?
a. Php 0
b. Php 200,000
c. Php 250,000
d. Php 300,000
12. Assuming the taxpayer is a regional operating headquarter of a multi-national company, the income
tax due is?
a. Php 100,000
b. Php 200,000
c. Php 250,000
d. Php 300,000

A domestic corporation made available the following financial information covering TY 2021:

Statement of Financial Position Statement of Comprehensive Income

Assets: Gross receipts 5,000,000
Current 120,000,000 Cost of service 3,000,000
Non-current 80,000,000 Gross profit 2,000,000
(land/bldg)
Liabilities 150,000,000 Expenses 1,000,000
Stockholders’ Equity 50,000,000 Net income 1,000,000
13. The income tax due is?
a. Php 0
b. Php 200,000
c. Php 250,000
d. Php 300,000

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EXCEL PROFESSIONAL SERVICES, INC.

A domestic corporation made available the following financial information covering TY 2021:

Statement of Financial Position Statement of Comprehensive Income

Assets: Gross receipts 15,000,000
Current 100,000,000 Cost of service 5,000,000
Non-current 50,000,000 Gross profit 10,000,000
(land/bldg)
Liabilities 90,000,000 Expenses 5,000,000
Stockholders’ Equity 60,000,000 Net income 5,000,000
14. The income tax due is?
a. Php 1,000,000
b. Php 1,250,000
c. Php 1,500,000
d. Php 2,000,000

ABC College Foundation, a non-stock, non-profit entity, made available the following financial information
covering TY 2021:

Statement of Financial Position Statement of Comprehensive Income

Assets: Gross receipts 15,000,000
Current 120,000,000 Cost of service 5,000,000
Non-current 80,000,000 Gross profit 10,000,000
(land/bldg)
Liabilities 150,000,000 Expenses 4,000,000
Stockholders’ Equity 50,000,000 Net income 6,000,000

15. The income tax due is?

a. Php 0
b. Php 1,200,000
c. Php 1,500,000
d. Php 1,800,000

ABC Corp. an Offshore Gaming licensee of PAGCOR made available the following financial information:

• Actual gross gaming revenues - Php 100,000,000

• Agreed pre-determined minimum revenue with PAGCOR from gaming operations – Php
200,000,000
• Costs and expenses from gaming revenues – Php 50,000,000
• Gross Revenues from non-gaming operations – Php 50,000,000
• Costs and expenses from non-gaming revenues – Php 30,000,000

16. The tax due on gaming operations is?

a. Php 10,000,000
b. Php 12,500,000
c. Php 37,500,000
d. Php 5,000,000
17. The tax due on non-gaming operations is?
a. Php 1,000,000
b. Php 2,500,000
c. Php 5,000,000
d. Php 10,000,000

Comprehensive Problem
The following can be found in ABC Corp.’s (domestic corporation) 2022 financial records:
Quarterly Income Statement:
Quarters 1st 2nd 3rd 4th
Gross sales 5,000,000 4,000,000 3,000,000 6,000,000
Cost of sales 4,000,000 3,000,000 2,000,000 4,000,000
(purchase of
goods)
Gross income 1,000,000 1,000,000 1,000,000 2,000,000
Deductions 500,000 200,000 1,100,000 500,000

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EXCEL PROFESSIONAL SERVICES, INC.

Taxable income 500,000 800,000 (100,000) 1,500,000

(loss)
In addition to the above, a review of the Balance Sheet Accounts (Statement of Financial Position)
showed the balances of Asset and Liability in the amounts of Php 10,000,000 and Php 6,000,000,
respectively.
18. How much is the income tax payable for the 1st Quarter Income Tax Return?
a. Php 10,000.00
b. Php 20,000.00
c. Php 100,000.00
d. Php 125,000.00
19. How much is the income tax payable for the 2nd Quarter Income Tax Return?
a. Php 20,000.00
b. Php 160,000.00
c. Php 200,000.00
d. Php 260,000.00
20. How much is the income tax payable (overpayment) for the 3rd Quarter Income Tax Return?
a. (Php 20,000.00)
b. Php 0
c. Php 10,000.00
d. Php 30,000.00
21. How much is the income tax payable for the 4th Quarter Income Tax Return?
a. Php 0
b. Php 20,000.00
c. Php 150,000.00
d. Php 300,000.00
Explanation: No 4th quarter filing
22. How much is the income tax payable (overpayment) in its Annual ITR?
a. Php 280,000.00
b. Php 330,000.00
c. Php 540,000.00
d. Php 675,000.00

Comprehensive Problem
Consider the information answering the following questions:

A taxpayer’s financial records for the taxable year 2022 are as follows:

Source: Philippines Canada* (translated to peso)

Gross income 5,000,000 10,000,000
Allowable deductions 3,000,000 5,000,000
Interest income from lending 1,000,000 1,000,000
Interest income from bank deposits 1,000,000 1,000,000
Dividends 1,000,000 1,000,000
Passive Royalty 1,000,000 1,000,000

23. Assuming the taxpayer is a domestic corporation, how much is the taxable income subject to regular
tax?
a. Php 12,000,000
b. Php 13,000,000
c. Php 14,000,000
d. Php 15,000,000
24. Assuming the taxpayer is a domestic corporation, how much is the income exempt from taxation?
a. Php 0
b. Php 1,000,000
c. Php 2,000,000
d. Php 3,000,000
25. Assuming the taxpayer is a resident foreign corporation, how much is the income exempt from
taxation?
a. Php 10,000,000
b. Php 11,000,000
c. Php 12,000,000
d. Php 13,000,000

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EXCEL PROFESSIONAL SERVICES, INC.

26. Assuming the taxpayer is a non-resident foreign corporation, how much is the income exempt from
gross income/final tax?
a. Php 9,000,000
b. Php 10,000,000
c. Php 11,000,000
d. Php 12,000,000

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