Which of the following statements is not correct? The net distributable net income of a taxable partnership shall include incomes which are subjected to final tax as well as those that are exempted from income tax. The answers to questions like these will be governed by the view we take of the function of the State. (B) Donation made to employees. (A) Statement 1 only. Statement 2. (D) A deduction for uncollectible account is available to a taxpayer whether he is on the cash or accrual method of accounting. (D) None of the above. Customer Code: Creating a Company Customers Love HubSpot. (B) Statement 2 only. Penalty: punishment for the commission of a crime 3. Statement 1. (D) None of the above. 41. (D) All of the above. (A) The deduction of an individual for contributions subject to limitation should not exceed ten percent (10%) of his taxable income from business, trade or practice of profession before deduction for contribution. 62. 61. PRIMARY: Revenue or fiscal purpose. An individualistic theory would lead, so to speak, to man having as little as possible to do with the State. Statement 1. 30. Governments at all levels (national, regional and local) need to raise revenue from a variety of sources to finance public-sector expenditures. (C) Nonresident foreign corporation. (C) Both statements. Statement 2. Tax structure of pakistan Abdul Basit. (D) Stock dividends from domestic corporations. Which of the following statements is most correct? Taxation is the earliest and most prevalent form of government inter­ference with the economic life of individuals and business enter­prises. Statement 1. (C) The interest is on indebtedness incurred between related parties. 37. 81. Which of the following statements is most correct? (C) Inventory is ordinary asset. We may consider it entirely from the point of view of equity or from that of the consumption, or of the production of wealth. (B) Sum of money and the fair market value of the property received. Which of the following is not allowed to avail of the Optional Standard Deduction? (A) Joint stock companies. As a preliminary to this it seems necessary to get rid of any sort of a priori reasons for an individualistic or a socialistic view of the functions of government; it may be argued that it is impossible to lay down any general principles which apply to every case of State interference. General Principles A. All foreign corporations are taxable only for income earned within the Philippines. (D) Joint ventures. Toll: amount charged for the cost and maintenance of the property used 2. (A) Statement 1 only. Such considerations as these have led men to think of a progressive or graduated form of distribution, in which the rate of taxation levied increases with the size of the income. 84. (C) Some of these items are just return of capital. (D) Fifteen percent (15%). (B) Statement 2 only. (A) Minimum corporate income tax. 21. (B) Statement 2 only. 27. Capital losses can be deducted only from capital gains. 32. (C) Associations. (A) Joint stock companies. (C) Four and one-half percent (4 ? (A) 30%. How to Get Taxpayer Identification Number (TIN). Thirdly, we come to a form of distribution which may be called a qualified proportional one. Chapter 4 will examine current changes in Ukrainian tax legislation and analyze A general co-partnership is a partnership wherein part or all of its income is derived from the conduct of trade or business and is subject to corporate income tax. For optional corporate income tax purposes, which of the following shall be included in cost of goods sold for a trading or merchandising concern? (D) Tax under Section 24 (A). A good tax system should be efficient in that it should be able to waste as little money and resources as possible. A tax imposed in the nature of a penalty to the corporation to deter tax avoidance of shareholders who avoid paying the dividends tax on the earnings distributed to them by the corporation. (B) The deduction of a corporation for contributions subject to limitation should not exceed five percent (5%) of its taxable income from business or trade before deduction for contribution. The right of the chief authority to collect taxes, and the general policy which determines who is to be taxed, how much the tax shall be, and for what purposes it shall be levied has always been a controversial issue. Statement 2. (A) Capital gains and losses of corporations are always considered at 100%, regardless of the length of the holding period of the asset. According to the theory, taxes should be based upon the amount of money people earn. This is, of course, the way in which our present income tax works, which allows "a personal allowance " of 135, or 225 " in the case of an individual whose wife is living with him/her to be free of income tax. (C) 15%. (B) Import duties. The term “reasonable needs of the business” are hereby construed to mean the immediate needs of the business, including reasonably anticipated needs. 1. If this is so, we have a plain case that equity requires a graduated rate of taxation; many higher incomes (and the so-called “unearned” incomes) are obtained as the result of particular privileges particularly that of inheritance and this legal or social privilege enjoyed in the production of an individual's income increases its " ability to pay." (D) The interest is paid or accrued during the taxable year. (B) Declining-balance method. 72. In the case of corporations adopting the fiscal-year accounting period, the taxable income shall be computed without regard of the specific date when specific sales, purchases and other transactions occur. Statement 2. (B) Statement 2 only. (A) Statement 1 only. (C) Fair market value of the property received. (D) Capital gains tax. SAMPLE. Theories of Taxation Classical Taxation Theory. (B) The corporations’ income and expenses for the fiscal shall be deemed to have been earned and spent equally for each month of the period. (C) Both statements are correct. Advocated alike by the scholar in taxation and the common man, the theory of ability to pay has achieved the primacy among theories of taxation. (C) Two percent (2%) on its Gross Philippine Billings. If we consider only real property, it may be that the cost of protecting it does not increase proportionately with the amount and, at any rate, “if security is to be sold like an ordinary commodity, there ought, on the strictest commercial principles, to be some allowance made to the purchaser of a large quantity." Provided that the sole aim in imposing taxation is to obtain revenue, then a reasonable distribution of taxation could surely be based upon the citizens' ‘abilities to pay’. (B) Net operating loss. Statement 2. (C) Freight in transporting the goods to the place where the goods are actually sold. For a long time, the classical taxation theory was of most importance. %) on its gross receipts. (B) Statement 2 only. 12. Here, once again taking income as the standard, "equality of sacrifice" can be obtained (it is said) by exempting a certain amount of income and levying a uniform or possibly a slightly graduated rate of tax on any income above that limit. (D) None of the above. 47. (B) Statement 2 only. Which of the following statements is most correct? (C) Both statements are correct. Before you can become a taxpayer in the Philippines, you need to register with the Bureau of Internal Revenue (BIR) which will then assign you a permanent, system-generated Taxpayer Identification Number or TIN. Statement 1. (C) Both statements are correct. together, the taxation of wealth transfers under any guise is qualitatively distinct from the taxation of wealth holdings, the latter having been examined in subsection 9.B.2 as a species of capital income taxation.2 1 On the use of such tax base defi nitions as if they were normative principles, see sec-tion 15.F. (A) Resident foreign corporation. 22. Statement 2. (C) Both statements. (A) Statement 1 only. 683 the Treasury in Manila, to ascertain and verify the few facts in regard to the provisions of the revenue laws which are stated in the following brief sketch. An accumulation of earnings or profits (including undistributed earnings or profits of prior years) is unreasonable if it is not necessary of for the purpose of the business, considering all the circumstances of the case. Compromise Penalty: amount collected in lieu of criminal prosecution in cases of tax violations 4. All joint ventures regardless of the purpose these are created are exempt from income taxation. The two central principles of taxation relate to the impact of tax on efficiency concerned with the allocation of resources) and equity (concerned with the distribution of income). Research and development costs may be outright deduction or deferred expense. (A) When related to the acquisition and/or improvement of land and building, must be capitalized. (B) Resident corporation. (B) Resident foreign corporation. (A) Statement 1 only. %) of gross rentals or fees. 25. On the other hand, a State can be considered as the most definite institution in society; and, further, since from one point of view wealth has no meaning except in a society, the part played by that society in the production of wealth may be looked upon as making the State "the residual owner of all income which exceeds the requirements of maintenance and normal growth”. (B) 25%. So, in view of the growing tax burden and the increasing use of taxes as a tool for social and fiscal control, let us further review the new theories and modern prob­lems of taxation. When dealing with taxation, it is unavoidable to have important and complicated questions popping up into our heads. However, such a view was evidenced to lead to absurd conclusions. Constitutional Limitations - (Naaayon sa ating saligang batas) Due process and equal protection clause (C) There is no deduction for bad debt when there is a surety for the debtor against whom collection may be enforced. (B) The corporate income tax shall be applied on the amount computed by multiplying the number of months covered by the new rate within the fiscal year by the taxable income of the corporation for the period, divided by twelve. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it (CIR v. 65. 67. But another aspect of the matter can well be brought in here. 33. (B) 2007. (A) Domestic corporation. (A) Domestic corporation. 6. Situs or territoriality - As a rule, the taxing power cannot go beyond the territorial limit of the taxing authority. It should be noticed that although income and inheritance taxes are the particular ones to which graduation is most easily applicable, yet progression can also be realized to a certain extent by levying heavy taxes on luxuries and the better kinds of a number of articles. If this be the case, we reach the faculty or ability theory of taxation. Which of the following statements is most correct? (D) 2%. This video features and discusses the general principles of taxation in the Philippines. Statement 2. The term “domestic”, when applied to corporation, means created or organized in the Philippines or under the laws of a foreign country as long as it maintains a Philippine Branch. (C) A corporation is not exempt simply and only because it is primarily not organized and operated for profit. national law: National Internal Revenue Code—enacted as Republic Act … In the case of exchange, the selling price shall be the (A) Total consideration per deed of sale. Statement 1. (B) Joint accounts or cuentas en participacion. The rival theories, cost-of-service and benefit-of-service, though recognized as of some usefulness, are now mentioned chiefly for their defects as in-clusive principles. HAVEN’T FOUND ESSAY YOU WANT? A cinematographic film owner, lessor, or distributor shall pay a tax of (A) Twenty-five percent (25%) of its gross income from all sources within the Philippine. These three relate to the cost of operation of the tax system, to its flexibility and certainty. (D) The term gross income derived from business shall be equivalent to gross sales less sales returns, discounts and allowances and cost of goods sold. The requirement that everybody share an equal amount of revenue is equally absurd. (A) Expanded withholding income tax. as well as discuss the impact of taxation system on small and medium enterprises development. Capital losses are deductible from (A) Ordinary gains only. Income payments to partners of a general professional partnership amounting to P720,000 or less are subject to (A) Creditable withholding tax of 15%. An international air carrier doing business in the Philippines shall pay a tax of (A) Three percent (3%) on its gross receipts. Taxation is very important for the government to exist. 31. (B) Be subject to 15% final tax. (B) Withholding income tax on passive income. (A) Statement 1 only. 70. Taxation has a key role in a modern economy. Which of the following statements is most correct? (D) None of the above. (A) Statement 1 only. In tax parlance, situs refers to the place of taxation. It is intended to make the teaching and learning process a more inter-active and productive endeavor. They include all organizations with substantially all the salient features of a corporation and are taxable as a “corporation”. All foreign corporations are taxable only for income earned within the Philippines. (B) Statement 2 only. 54. 75. The allowance for deduction of net operating loss carry over (NOLCO) shall be limited only to net operating losses accumulated beginning (A) January 1, 1998. Academic Content. Administrative costs are the costs to the government (and ultimately to the taxpayer) of collecting tax revenue. (B) Insurance companies. 18. (B) 32%. (A) Statement 1 only. (B) Joint accounts or cuentas en participacion. Working 24/7, 100% Purchase The following are passive income, except: (A) Royalties, Prices and Winnings more than P10,000. 79. 24. Statement 1. (A) Statement 1 only. (C) Both statements are correct. To provide funds or property with which to promote general welfare and protection of its citizens. The MCIT shall be imposed upon a domestic corporation or a resident foreign corporation whenever such corporation has a zero or negative taxable income. (C) Interest expense between a corporation and the controlling individual. (B) Income from a taxable partnership is constructively received by a partner in the same taxable year that the partnership determined its net income after tax. A further extension of the same idea would be for the State to attempt to level the existing large inequalities in the incomes of its individual members by a heavily graduated tax. (B) 10%. 60. Statement 1. Yohannes Mesfin and Sisay Bogale, Insurance, Banking and Negotiable Instrument Law, Codes, Commentaries and Explanatory notes, Introduction to Fiscal Federalism and Division of Revenues under the Ethiopian Constitution ». On general rules on capital gains and losses, which statement is not correct? All Filipino citizens are taxable for their income earned within and outside the Philippines. Taxation Rishabh Sharma. If the gross income from unrelated trade, business or other activity exceeds fifty percent (50%) of the gross income derived by such educational institutions or hospitals from all sources, what tax rate shall be imposed on the entire taxable income starting January 1, 2009? (B) Statement 2 only. But he/she is considering only the consumption aspect of income. (B) The law or treaty provides that they are not taxable. Which of the following statement is most correct? Statement 1. These compliance costs include not only the money that people spend on accountants, tax preparers and/or tax lawyers, but also the time spent in filing tax returns and keeping records. Taxable partnerships are required to file cumulative quarterly declarations and a final return because they are taxed as corporations. Thus, the socialistic ideal is widely different from the individualistic one. Taxation in the Philippines CheryLanne Demafiles. 16. (B) An asset used in business which is subject to amortization is an ordinary asset. What to Upload to SlideShare SlideShare. the process … Statement 2. Statement 1. (D) All costs of production of finished goods. 13. (B) Seven and one-half percent (7 ? (C) Four and one-half percent (4 ? The term “capital assets” includes (A) Stock in trade or other property included in the taxpayer’s inventory. The ability-to-pay principle holds the idea that the amount of taxes that people pay should be based on their ability to pay. (D) The debt must actually be ascertained worthless and uncollectible as of the end of the taxable year. Statement 2. “In estimating a man's faculty or ability to pay we must not alone think of the burden imposed on him in parting with his property or income, but we must also consider the opportunities he has enjoyed in securing that property or income. Which of the following is exempt from income tax? (C) Both statements are correct. Theories and Basis of Taxation 1. (D) Two and one-half (2? (A) The option to be taxed based on gross income shall be available only to firms whose ratio of cost of sales to gross sales or receipts from all sources does not exceed fifty-five percent. (B) Final withholding tax of 10%. However, a foreign corporation, whether engaged or not in trade or business in the Philippines, is taxable only on Philippine-sourced income. A corporation which is included in exempt corporations under Section 30 of the NIRC (e. g. , organized and operated for charitable purposes) which did not file its articles of incorporation and by-laws with the BIR (A) Is required to file an income tax return and pay the income tax. (D) None of the above. Several theories of taxation exist in public economics.Governments at all levels (national, regional and local) need to raise revenue from a variety of sources to finance public-sector expenditures.. Adam Smith in The Wealth of Nations (1776) wrote: "Such things as defending the country and maintaining the institutions of good government are of general benefit to the public. (D) None of the above. (D) None of the above. (B) Cost of goods sold shall include all business expenses whether directly or not directly incurred to produce the merchandise to bring them to their present location and use. (B) Any corporation, firm or association, no matter how created or organized, or what the purpose of its organization may be, is subject to tax. (D) Five percent (5%). (C) Both statements. Expenditures of private educational institutions for expansion of school facilities may be outright deductions, or capitalized. (A) Banks and other non-bank financial intermediaries. Efficiency can be measured against three standpoints: administrative costs, compliance costs and excess costs. (C) Both statements are correct. Which of the following statements is not correct? 15. (A) Statement 1 only. can send it to you via email. (A) Joint stock companies. 35. (D) An asset held in business as investment is ordinary asset. The term applies to a foreign corporation not engaged in trade or business within the Philippines. (D) Nonresident corporation. Thus the intrinsic value of goods is shadowed by the taxes which are imposed on the goods. A partnership formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business. (D) None of the above. (B) Twenty-five percent (25%). Computation of income tax Marvin Morales. Which of the following statement is most correct? Statement 2. (D) Joint accounts. (B) Fifteen percent (15%). A verification code will be sent to you. A gain from a sale of shares of a domestic corporation shall be considered derived from the Philippines regardless of where the shares are sold. It is also defined as the act of levying a tax, i.e. Which of the following is not subject to tax as a corporation? One source of much confusion of ideas was the inextricable intermingling of church funds with state and public funds. This principle implies two things: Horizontal Equity: People in equal positions should be made to pay the same amount of taxes. Situs of taxation is the State or country which has jurisdiction to tax a person, property or interest. The Improperly Accumulated Earnings Tax (IAET) shall not apply to which of the following corporations? PURPOSES OF TAXATION. The MCIT shall be imposed upon a domestic corporation or a resident corporation when the amount of minimum corporation income tax is greater that the normal income tax due from such corporation. 71. What is the minimum corporation income tax (MCIT) rate imposed upon any domestic corporation on its gross income within and without the Philippines? (D) All of the above. (C) Both statements are correct. (C) Capital gains tax. Which of the following statements is not correct? Which of the following statements is not correct? Effective January 1, 2009, the rate of corporate income tax shall be (A) 35%. Learn more about taxation in … (C) Both ordinary and capital gains. Statement 1. The other major principle of taxation is that the burden of tax should be distributed fairly.Accordingly, equity or fairness is further highlighted by two principles: the ability-to-pay principle and the benefits principle. (C) Both statements. All these costs are those that are incurred by the government to administer the tax system. (B) The interest is legally due and interest payment must be in writing. (C) Adjusted basis for computing the loss on the sale of property. Statement 2. (A) Statement 1 only. (D) Private educational corporations are subject to income tax based on the net income from sources within the Philippines at the tax rate of 10%. (D) None of the above. (B) Statement 2 only. (D) Capital gains tax. Listed below are the ways in which governments can use taxation in a modern economy:- Revenue generation: – Taxation is used by the government to raise revenues for its operations, infrastructure, … Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well. (D) None of the above. PRINCIPLES AND THEORIES OF TAXATION The Equal Distribution Principle. (A) Statement 1 only. Which of the following corporations shall pay a tax equal to thirty-five percent (35%), now thirty percent (30%), of the gross income received during the each taxable year from all sources within the Philippines? (B) Fair market value of the property. (B) Earnings reserved for definite corporate expansion projects or programs requiring considerable capital expenditures as approved by the Board of Directors or equivalent body. 58. Hi there, would you like to get such a paper? Experience the magic of Misty Woods Retreat! (B) A corporation or association organized exclusively for holding title to property, collecting income therefrom, and turning the entire amount thereof, less expenses, to an organization which itself is exempt from income tax. A gain from a sale of shares of a foreign corporation shall be considered derived from the country where the corporation was created or organized. When we take the revenue obtained by taxation, how ought the burden to be distributed? 1. 34. (A) Net capital loss. (C) Means gross profit from sales, or gross receipts or revenues less direct cost of services, plus all other items of gross income. 66. 42. (D) None of the above. This term shall mean the excess of allowable deductions over gross income of the business in a taxable year. The tremendous increases in public spending accompanying recent depressions and war periods have brought the question of taxation to the mind of each and every citizen. 83. 29. The policy of taxation in the Philippines is governed chiefly by the Constitution of the Philippines and three Republic Acts. Rentals, charters and other fees derived by a nonresident lessor of aircraft, machineries and other equipment shall be subject to a tax of (A) Twenty-five percent (25%) of its gross income from all sources within the Philippine. Thus, people who earn more should pay more than those people who make less than them. Which of the following statements is most correct? (C) Shares of individual partners in the net profits of taxable partnerships. (D) All of the choices. (C) January 1, 2009. As a result, taxation... Keynesian Taxation Theory. Which of the following statement is most correct? 9. (B) Seven and one-half percent (7 ? Which of the following statements is not a requisite for deduction of bad debts? Bad debt is a deduction from the gross income when the account is written off. theory of taxation philippines 73. (D) None of the above. 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