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TRAIN Law Multiple Choice
- Effective January 1, 2018, the following income payments to self-employed individuals or professionals shall be subject to 5% or 10% expanded withholding tax (EWT) except?
a. Professional fees, talent fees or commissions etc., for services rendered by individuals b. Income distribution to partners of general professional partnership (GPP) c. Income payment to brokers and agents d. Payment of commission to independent and/or exclusive sales representatives, and marketing agents of companies e. None of the above
- Beginning January 1, 2018, coal produced under Coal Operating Contracts entered in by the Philippine government pursuant to Presidential Decree (PD) 972 as well as those exempted from excise tax on mineral products under other tax laws shall be subject to the following excise rates, except?
a. P50 per metric ton effective January 1, 2018 b. P100 per metric ton effective January 1, 2020 c. P150 per metric ton effective January 1, 2020 d. P150 per metric ton on January 1, 2021 e. P100 per metric ton effective January 1, 2019
- Starting January 1, 2018, locally extracted or produced non-metallic minerals and quarry resources shall be subject to excise tax at what rate?
a. Exempt b. Four percent (4%) based on the actual market value of the gross output thereof at the time of removal c. Four percent (4%) based on the fair market value of the gross sales thereof at the time of removal d. Four percent (4%) based on the value used by the Bureau of Customs (BoC) in determining tariff and customs duties, net of excise tax and value added tax (VAT) e. Six percent (6%) of the fair international market price
- Under the TRAIN Law, imported copper, gold, chromite and other metallic minerals shall be subject to excise tax at what rate?
a. Exempt b. Four percent (4%) based on the actual market value of the gross output thereof at the time of removal c. Four percent (4%) based on the fair market value of the gross sales thereof at the time of removal d. Four percent (4%) based on the value used by the Bureau of Customs (BoC) in determining tariff and customs duties, net of excise tax and value added tax (VAT) e. Ten percent (10%)
- Which of the following shall be subject to excise tax of 6% of the fair international market price on the first taxable sale, barter, exchange or such similar transaction, such tax to be paid by the buyer or the purchaser before removal from the place of production?
a. Locally extracted gold b. Locally extracted chromite c. Indigenous petroleum d. Metallic and non-metallic minerals e. None of the above
- There are petroleum products which became subject to excise tax rate of P8.00 per liter effective January 1, 2018. These are:
a. Lubricating oils and greases, locally produced or imported oils, waxes and petrolatum b. Denatured alcohol to be used for motive power, processed gas, kerosene c. Process gas, asphalts, naptha d. Unleaded premium gasoline, regular gasoline, lubricating oils e. Kerosene, gasoline, naptha
- Statement 1 - Diesel fuel oil, and on similar fuel oils having more or less the same generating power shall be subject to excise tax of P2.50 per liter of volume capacity under the TRAIN Law.
Statement 2 – Liquefied petroleum gas used for motive power shall be subject to excise tax of P2.50 per kilogram under the TRAIN Law.
Statement 3 – Petroleum coke shall be subject to excise tax of P2.50 per metric ton under the TRAIN Law.
a. Statement 1 is True; Statement 2 is True b. Statement 1 is True; Statement 2 is False c. Statement 1 is False; Statement 2 is True d. Statement 1 is False; Statement 2 is False e. 2 statements are true and 1 statement is false
- Statement 1 – Lubricating oils and greases produced from basestocks and additives on which excise tax has already been paid shall no longer be subject to excise tax.
Statement 2 – Any excess of excise tax paid on raw materials resulting from manufacturing, blending, processing, storage and handling losses shall not give rise to a tax refund or credit.
Statement 3 – For the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel shall be suspended when the average Dubai crude oil based on Mean of Platts Singapore (MOPS) for three (3) months prior to the schedule increase of the month reaches or exceed eighty dollars (US$80) per barrel.
a. Statement 1 is True; Statement 2 is True b. Statement 1 is True; Statement 2 is False c. Statement 1 is False; Statement 2 is True d. Statement 1 is False; Statement 2 is False e. 2 statements are true and 1 statement is false
- Statement 1 – Cigarettes packed by hand shall be subject to excise tax rate of P32.50 per pack effective January 1, 2018 until June 30, 2018 under the TRAIN Law.
a. Toyota Prius, a hybrid electric vehicle b. Tesla, a purely electric vehicle c. Mitsubishi Mirage, a compact car with a net manufacturer’s price of below Six hundred thousand pesos (P600,000) d. Ford Explorer, a sports utility vehicle (SUV) which functions like a pick up truck e. Aston Martin V8, a British sports car which was imported to the Philippines as a display unit and not for sale
- Ruth is a Certified Public Accountant (CPA) who works as a team leader in the Philippine office of one of the world’s biggest oil refineries, Zevron. Aside from her compensation as an employee, she receives, from time to time, commission from the sale of oil lubricants and die- cast car models. The commission is paid in cash to her, separate from her regular salary, by the Zevron’s cashier. For income tax purposes, Ruth is –
a. Mixed income earner b. Compensation income earner c. Professional d. Entrepreneur e. May opt to be subjected to 8% tax on gross revenues if her sales or revenues will not exceed Three Million pesos (P3,000,000) and she will not be VAT-registered
- Statement 1 – Gross receipts, for income tax purposes, refer to the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits and advance payments actually or constructively received during the taxable period for the services performed or to be performed for another person, except returnable security deposits.
Statement 2 – Gross sales subject to the 8% income tax rate option shall refer to the total sales transactions, net of VAT, if applicable, reported during the period, without any other deduction.
Statement 3 – Discounts determined, granted and properly documented, the amount thereof forming part of the gross sales duly recorded in the books of accounts may be excluded from the gross sales for purposes of applying the 8% income tax option.
a. Statement 1 is True; Statement 2 is True b. Statement 1 is True; Statement 2 is False c. Statement 1 is False; Statement 2 is True d. Statement 1 is False; Statement 2 is False e. 2 statements are true and 1 statement is false
- Igiboy, an employee of Fiji Camera Corporation of Japan, opened a self-service laundry shop on February 1, 2018. Based on the projected revenue prepared by his accountant, the laundry shop will achieve sales amounting to P3.5 million before November 30, 2018. Which of the following is true regarding Igiboy’s tax position in 2018?
a. Igiboy’s taxable income for income tax purposes is composed of compensation income from Fiji and business income from laundry shop if he will not register for VAT purposes. b. Igiboy can apply the 8% income tax rate option tax on his taxable income if he will not reach the projected P3.5 million revenues in 2018. c. Igiboy is required to file two (2) tax returns, one for the compensation income and another one for the business income.
d. Igiboy is required to register as a VAT-taxpayer even if he is an employee of Fiji Camera Corporation of Japan. e. Igiboy is required to consolidate the compensation income and business income when he files the annual income tax return. He is also required to pay percentage tax on business income.
- Which of the following statements is true regarding the application of income tax rules under the TRAIN law?
a. The election of 8% income tax rate shall be revocable and no amendment of option shall be made for the said taxable year. b. The taxpayer can signify the intention to elect the 8% income tax rate in the 1st^ Quarter Percentage and/or Income Tax Return, or on the initial quarter return of the taxable year after the commencement of a new business/practice of profession. c. Minimum wage earners shall be exempt from the payment of income tax based on their statutory minimum wage rates. The holiday pay, overtime pay, night shift differential, and home leave pay received by such earner are likewise exempt. d. Taxable income for compensation earners is the gross compensation income less non- taxable income/benefits such as but not limited to 13th^ month pay and other benefits, de minimis benefits, and the employer’s share in the SSS, GSIS, PHIC, Pag-ibig contributions and union dues. e. Taxable income for individuals earning income from self-employment/practice of profession shall be gross income, if the taxpayer opted to be taxed at graduated rates or has failed to signify the chosen option.
- Which of the following statements is false regarding the application of 8% income tax rate?
a. The option to be taxes at 8% income tax rate is not available to a VAT-registered taxpayer, regardless of the amount of gross sales/receipts. b. Partners of a GPP by virtue of their distributive share from GPP which is already net of cost and expenses cannot avail of the 8% income tax rate option. c. A taxpayer who signifies the intention to avail of the 8% income tax rate option, and is conclusively qualified for said option shall compute the final annual income tax due based on actual annual gross sales/receipts and other non-operating income. d. A taxpayer who availed of the 8% income tax rate option is not required to attach financial statement in filing the final income tax return. However, existing rules and regulations on bookkeeping shall still apply. e. A taxpayer may be subject to the graduated income tax rates even if the flat 8% income tax rate option is initially selected, when the taxpayer’s gross sales/receipts and other non- operating income exceeded the VAT threshold during the taxable year.
- The following are the income tax rates on passive income received by Marga, a Filipino citizen after the effectivity of TRAIN law, except:
a. Winnings (except Philippine Charity sweepstakes and lotto winnings amounting to P10, or less) – 20% b. Cash and property dividends from a domestic corporation – 10% c. Prizes – 20% d. Royalties (except royalties on books, other literary works and musical compositions – 20% e. Royalties on books and other literary works and musical compositions – 10%
- Which of the following situations represent the proper application of income tax rules after the effectivity of TRAIN law?
issuance of a notice and demand by the Commissioner or its authorized representative, whichever comes first.
Statement 3 – Upon the effectivity of the TRAIN law, in no case shall the deficiency and delinquency interest be imposed simultaneously.
a. Statement 1 is True; Statement 2 is True b. Statement 1 is True; Statement 2 is False c. Statement 1 is False; Statement 2 is True d. Statement 1 is False; Statement 2 is False e. 2 statements are true and 1 statement is false
- Colmi Corporation received a deficiency income tax assessment from the BIR amounting to P1,000,000, exclusive of surcharge and interest, for Taxable Year 2015. As stated in the notice and demand signed by the Commissioner of the BIR, the deadline for payment of the assessed amount is June 30, 2017. Actual payment was made only by Colmi on February 10,
- How much is the total amount due on June 30, 2017?
a. P1,000,000. b. P 1,491,643. c. P 1,241,643. d. P 1,450,000. e. Zero. The BIR’s right to examine and assess has already prescribed.
- Colmi Corporation received a deficiency income tax assessment from the BIR amounting to P1,000,000, exclusive of surcharge and interest, for Taxable Year 2015. As stated in the notice and demand signed by the Commissioner of the BIR, the deadline for payment of the assessed amount is June 30, 2017. Actual payment was made only by Colmi on February 10,
- How much is the total amount paid on February 10, 2018?
a. P1,450,000. b. P 1,491,643. c. P 1,762,962. d. P 1,750,000. e. None of the above
- Marionne Corporation received a deficiency income tax assessment from the BIR amounting to P1,000,000, exclusive of surcharge and interest, for Taxable Year 2018. The tax liability has remained unpaid on June 30, 2020, the deadline for payment stated in the notice and demand issued by the BIR. Marionne paid the BIR only on February 10, 2021. How much is the total amount paid on February 10, 2021?
a. P1,500,000. b. P 1,395,315. c. P 1,250,000. d. P 1,498,530. e. None of the above
- Monique Corporation received a deficiency income tax assessment from the BIR amounting to P1,000,000, exclusive of surcharge and interest, for Taxable Year 2018. The tax liability has remained unpaid on June 30, 2020, the deadline for payment stated in the notice and demand
issued by the BIR. Monique paid the BIR only on February 10, 2021. How much is the total delinquency interest paid on February 10, 2021?
a. P 250,000. b. P 145,315. c. P 103,215. d. P 395,315. e. None of the above
- Refers to a substance that is sweet and includes sucrose, fructose, and glucose that produces certain sweetness
a. Caloric sweetener b. Sweetened beverage c. Non-caloric sweetener d. High-fructose corn syrup e. None of the above
- Which of the following is exempt from the excise tax imposed on sugar sweetened beverage?
a. Nature Spring Grape Flavored water b. Pocari Sweat health hydration drink c. RC Cola Neo – stevia sweetened cola drink d. Nestle Fitnesse Cereal drink e. None of the above
- The following shall be liable for the payment of excise tax on sweetened beverages, except:
a. Manufacturers of locally-manufactured sweetened beverages b. Persons having possession of domestically-manufactured sweetened beverages removed from the place of production without payment of the tax c. Owners or importers of sweetened beverages d. Persons having possession of imported sweetened beverages removed from customs custody without the payment of the tax e. None of the above
- Rutay Mfg. Corp will remove from the place of production 100 cases of Masarap Cola drink which uses high fructose corn syrup and non-caloric sweetener. Each case contains 6 bottles of 1.5 liters each. How much is the excise tax to be paid by Rutay before removal of the finished products from the place of production?
a. P10, b. P5, c. P7, d. P10, e. None of the above
- The following are the conditions for the allowance for family home as deduction from the gross estate, except:
a. The family home must be the actual residential home of the decedent and his family at the time of his death, as certified by the Barangay Captain of the locality where the family home is situated
the shares she bought for P143,445 for P 345,989 to her boyfriend, John Jonnix, a Fil- Nigerian professional basketball player in the Philippines. Mr. Jonnix incurred certain expenses amounting to P27,632 related to the deal such as fees for the accountant and lawyers. Compute the capital gains tax (CGT) paid by Ms. Irene on the transaction.
a. P17, b. P8, c. P26, d. P30, e. Zero
- Which of the following is true regarding excise tax rules under the TRAIN law?
a. Excise tax for tobacco products will increase annually by 4% starting January 1, 2022. b. The excise tax on automobiles is based on the gross selling price of the manufacturer or the dealer or the fair market value of the vehicle, whichever is higher. c. Diesel fuel oil, aviation fuel and kerosene for public transportation are exempt from excise tax prior to TRAIN law. d. Soymilk and sweetened condensed milk are exempt from excise tax on sweetened beverages. e. Dairy and milk products are covered by exemption from excise tax on sweetened beverages.
- FJR Corporation, a domestic manufacturer of state-of-the-art LED screens for mobile phones and television, purchased capital goods which are detailed, as follows:
Month of Purchase
Amount (Philippine Peso)
Input tax claimed
Useful Life
January 2018 500,00 60,000 6 years February 2018 8,500,00 1,020,000 4 years December 2018 10,000,000 1,200,000 5 years January 2022 10,000,000 1,200,000 5 years
Which of the following is incorrect?
a. For the purchase made in January 2018, the input tax can be claimed on the month of the purchase. b. For the purchase made in February 2018, the amortization of input tax shall be for 4 years only or up to January 2022. c. For the purchase made in December 2021, the amortization of input tax shall be for 5 years or up to November 2026. d. For the purchase made in December 2021, the input tax can be claimed on the month of the purchase. e. For the purchase made in January 2022, the input tax can be claimed on the month of the purchase.
- Which of the following is true regarding VAT rules under the TRAIN law?
a. An amount equivalent to 5% of the total VAT collections of the BIR and the BOC from the immediately preceding year shall be automatically appropriated annually and shall be treated as a special account in the general fund or as trust receipts for the purpose of funding claims for VAT refund.
b. After December 31, 2023, the filing and payment of VAT shall be done within 25 days following the close of the taxable quarter. c. Beginning January 1, 2022, the VAT withholding system on sales to government shall shift from final to creditable system. d. A lessor rents his 5 commercial units and 10 residential units for a monthly rent of P60,000 and P15, 500 per unit respectively. In 2018, the gross receipts from the commercial leasing business amounted to P3.6 million while the residential leasing amounted to P1,860,000. The lessor is required to pay 12% VAT on the commercial leasing business only since it exceeded the P3M threshold. e. Self-employed individuals and professionals availing of the 8% tax on gross income and other non-operating income shall also be exempt from the payment of the 12% VAT or the 3% percentage tax, as applicable.
- The following are the details of the donations made in 2018 by Don Edgardo Abraham, a CPA and currently in the Top 2 of the Richest Filipinos recognized by the Forbes Park Magazine:
Donations to Jenny, a beauty titlist, on January 30, 2018 amounting to P2,000, Donations to Luwie, a professional artist, on March 30, 2018 amounting to P1,000, Donations to Jenika, a special friend, on August 15, 2018 amounting to P500,
How much is the donor’s tax paid on the donations made in 2018?
a. P195, b. P105, c. P60, d. P30, e. P210,
- Which of the following is not a requirement to qualify and avail of the 8% income tax rate option under the TRAIN law?
a. Individuals (single proprietor or professional or mixed income earner) earning from self- employment and/or practice of profession b. Taxpayers whose gross income/receipts and other non-operating income did not exceed the P3,000,000 VAT threshold during the taxable year c. Taxpayers registered and subject only to percentage tax under Section 111 of the 1997 Tax Code, as amended d. Taxpayers exempt from VAT or other percentage taxes e. Taxpayers who have signified their intention to elect the 8% income tax rate upon registration from the BIR as a new business registrant
- Mr. Ervin Pogi, a Filipino entrepreneur engaged in selling love potions, signified his intention to be taxed at 8% income tax rate on gross sales in his 1st^ Quarter 2018 income tax return. He has no other source of income. His total sales for the first three (3) quarters amounted to P3,000,000 while the 4th^ quarter sales amounted to P3,500,000. For the first 3 quarters of the year, he paid 8% income tax. The details of the results of his business operations are as follows:
1 st^ Quarter (8% income tax rate)
2 nd^ Quarter (8% income tax rate)
3rd Quarter (8% income tax rate)
4th Quarter
Sales 500,000 500,000 2,000,000 3,500,
operating expenses during the year amounted to P1,000,000 and P600,000, respectively. He opted to be taxed at 8% income tax rate.
How much is Mr. James’s tax due for 2019?
a. P180, b. P200, c. P190, d. P192, e. P200,
- Natalie Mau Corporation (NMC) entered into the following loan arrangements for calendar year (CY) 2018:
- January 1, 2018 - Loan from BPI amounting to PhP 15,500,000 payable on June 30,
- The fund will be used for the working capital of the Company.
- June 1, 2018 – Provided educational loan to Razel, the Company’s accountant, amounting to PhP 150,050 payable within one (1) year through semi-monthly salary deduction.
- August 1, 2018 – Provided loan to Macoy Gaylord, company’s sales director, amounting to PhP 255,500 payable on December 31, 2018. The loan will be used for business of the employee.
Assuming that it is the NMC’s obligation to pay the documentary stamp tax (DST) due on loan agreements as stated in the contracts, how much will NMC pay for DST during the year?
a. P 66,282. b. P 58,312. c. P 44,501. d. P 66,751. e. None of the above
- FJR Corporation, a domestic corporation engaged in the manufacture of electric vehicles, granted Ms. Gay Karyl, a Filipino chief financial officer, P5,000 cash per quarter for her personal membership fee at the Celebrity Sports and Golf Club, in addition to her compensation package which is composed of P2,000,000 (basic salary) and transportation/representation allowance of P500,000.
How much is the FBT liability of FJR for the 1st^ quarter of 2018?
a. P7,692. b. P1,750. c. P5,000. d. P2,692. e. None of the above
Withholding Tax Table (2018):
Annual Income Bracket Tax Rate Not Over P250,000 0% Over 250,000 – 400,000 20% of the excess over 250,
- Over 400,000 – 800,000 30,000 + 25% of the excess over 400,
- Over 800,000 – 2,000,000 130,000 + 30% of the excess over 800,
- Over 2,000,000 – 8,000,000 490,000 + 32% of the excess over 2,000, - Over 8,000,000 2,410,000 + 35% of the excess over 8,000,
