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. The law excludes some items of income from taxation because (A) The transformation of these incomes into economic gain is not essentially the result of labor or efforts of taxpayer. It is intended to make the teaching and learning process a more inter-active and productive endeavor. (B) Statement 2 only. The term applies to a foreign corporation not engaged in trade or business within the Philippines. Which of the following statements is not correct? Please enter the email address for your account. 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." (B) 2007. (D) None of the above. For purposes of implementing the provisions on improperly accumulated earnings tax, the following constitute accumulation of earnings for the reasonable needs of the business except: (A) Allowance for the increase in the accumulation of earnings up to 100% of the paid-up capital of the corporation as of Balance Sheet date, inclusive of accumulations taken from other years. Security, Unique All joint ventures regardless of the purpose these are created are exempt from income taxation. Which of the following statements is most correct? When we take the revenue obtained by taxation, how ought the burden to be distributed? 29. (D) All of the choices. %) of gross rentals or fees. 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. (B) A corporation, firm or association, no matter how created or organized, or what the purpose of its organization may be, is subject to tax, except as provided in Sec. Which of the following corporation shall be taxed upon its taxable income derived during each year form all sources within and without the Philippines? But another aspect of the matter can well be brought in here. 52. The first is the pure proportional form; taking income as the standard, it is laid down that the criterion of ability to pay would be attained by taxpayers paying in proportion to their income proportion being considered in the strict mathematical sense of the word. Experience the magic of Misty Woods Retreat! (C) Ten percent (10%). 1. Statement 1. (D) None of the above. This video features and discusses the general principles of taxation in the Philippines. The Improperly Accumulated Earnings Tax (IAET) is imposed on improperly accumulated taxable income earned starting January 1, 1998 by domestic corporations as defined under the Tax Code and which are classified as closely-held corporations at the rate of (A) Twenty percent (20%). (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. But so also, in a way, does any form of taxation; a progressive system affects most considerably the very large incomes, but it encourages saving among the middle classes and the people with relatively small incomes. Efficiency can be measured against three standpoints: administrative costs, compliance costs and excess costs. A net operating loss which had not previously been deducted from gross income shall be carried over as deduction only the next year immediately following the year of such loss. Home Essays Theories on Taxation. (A) Statement 1 only. (C) Needs to file only an information return and will not be required to pay the income tax. (D) Two and one-half (2? (A) Resident foreign corporation. If taxation is to be levied solely to obtain revenue, then equality may be a very desirable ideal at which to aim. 35. Statement 2. (C) Both statements are correct. %) of gross rentals, lease or charter fees from leases. (C) Four and one-half percent (4 ? Statement 1. (D) None of the above. (D) 2%. (B) Final withholding tax of 10%. (D) General partnership organized by group of engineers engaged in manufacturing of equipment. (D) None of the above. (A) When related to the acquisition and/or improvement of land and building, must be capitalized. Which of the following is exempt from income tax? (A) A capital asset may be an asset connected or not connected with the trade or business of the taxpayer. (C) Both statements are correct. 2. 17. This term shall mean the excess of allowable deductions over gross income of the business in a taxable year. Statement 1. Taxation has a key role in a modern economy. Statement 1. (B) Gross income tax. The term applies to a foreign corporation engaged in trade or business within the Philippines. Statement 1. 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? Statement 2. The third aspect of efficiency, excess burden, relates to tax-induced change in behavior displayed by tax payers. Statement 1. All foreign corporations are taxable only for income earned within the Philippines. Which of the following statements is most correct? (D) Capital gains tax. (C) Both statements. (C) Interest expense between a corporation and the controlling individual. Each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership. (D) Nonresident domestic corporation. Statement 2. Thus, people who earn more should pay more than those people who make less than them. 38. Governments at all levels (national, regional and local) need to raise revenue from a variety of sources to finance public-sector expenditures. PRINCIPLES AND THEORIES OF TAXATION The Ability-To-Pay Principle. What to Upload to SlideShare SlideShare. (D) None of the above. Which of the following statements is most correct? Taxation is very important for the government to exist. Lifeblood Theory (Importance of Taxation). 56. Thirdly, we come to a form of distribution which may be called a qualified proportional one. (A) Expanded withholding income tax. (A) Statement 1 only. (A) Domestic corporation. Statement 2. (C) Both statements are correct. Each example has to be judged on its own merits statistics can help us here, but it is difficult to see the use of applying any hard and fast rule. (C) Both statements. (B) Statement 2 only. (A) Resident citizen. It appears very reasonable and just that taxes should be levied on the basis of the taxable capacity of an individual. According to the theory, taxes should be based upon the amount of money people earn. 63. Interest on indebtedness is an allowable and itemized deduction provided that the following requisites are present, except: (A) The debt is related to the taxpayer’s trade or business. (A) Invoice cost of the goods sold. Once you have received the verification code, you will be able to choose a new password for your account. 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. (D) Tax under Section 24 (A). 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. 1. (B) Nonresident foreign corporation. (D) None of the above. 55. (A) Statement 1 only. Effective January 1, 2009, the rate of corporate income tax shall be (A) 35%. 74. What interest expense can be deducted from gross income? (B) An asset used in business which is subject to amortization is an ordinary asset. It is also defined as the act of levying a tax, i.e. 61. As the major principles of taxation in any system, it is worth taking an in-depth look at “efficiency” and “equity (fairness)”. (D) None of the above. Compliance costs, on the other hand, are the costs (other than the taxes themselves) of making tax payments to the government. (B) Statement 2 only. Which of the following statement is most correct? If this be the case, we reach the faculty or ability theory of taxation. PURPOSES OF TAXATION. Taxation in the Philippines CheryLanne Demafiles. A good tax system should be efficient in that it should be able to waste as little money and resources as possible. (C) Building and loan associations. Obviously everybody should not pay an equal share of taxation, and there are three important possible forms of distribution which have been suggested from time to time; each is intended to secure equity and each supposed to be based on the ‘ability to pay’. Taxable partnerships are required to file cumulative quarterly declarations and a final return because they are taxed as corporations. As such, the development of general taxation was inevitable. (A) Statement 1 only. 22. (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. 4. (C) Both statements are correct. The term “capital assets” includes (A) Stock in trade or other property included in the taxpayer’s inventory. (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%. Expenditures of private educational institutions for expansion of school facilities may be outright deductions, or capitalized. (D) None of the above. What foreign tax may be taken as a tax credit against the Philippine income tax? Statement 2. 47. (A) Statement 1 only. Statement 2. (D) None of the above. 78. (C) Capital gains tax. (D) The debt must actually be ascertained worthless and uncollectible as of the end of the taxable year. 41. 13. Taxation Basics: BIR Registration and Getting Your TIN Card. It is a commercial undertaking by two or more persons, but it is different from a partnership in that it involves the disposition of a single lot of goods or the completion of a single project. The ability-to-pay principle holds the idea that the amount of taxes that people pay should be based on their ability to pay. (B) Foreign war-profit tax. Determined by legislature, situs is one aspect of taxation, along with nature, purpose, rate, and coverage. Chapter 3 examines the costs of taxation according to welfare and optimal taxation theory and discuss how this analysis can be applied to Ukraine. Constitution: Article VI, Section 28 of the Constitution states that "the rule of taxation shall be uniform and equitable" and that "Congress shall evolve a progressive system of taxation". (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. The Improperly Accumulated Earnings Tax (IAET) shall not apply to which of the following corporations? Rodrigo Duterte on December 19, 2017 and its implementation began on January 1, 2018.. How will the TRAIN law affect income taxes of individuals and corporations? (B) Net operating loss. (D) Joint accounts. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well. (A) Joint stock companies. 68. Which of the following statements is most correct? 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 ». SECONDARY: Regulatory purpose. (B) Statement 2 only. (B) Statement 2 only. A net operating loss is the excess of allowable deductions over the gross income from business or practice of profession for a taxable year. 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, … (A) Statement 1 only. Research and development costs may be outright deduction or deferred expense. Vertical Equity: A tax system should distribute the burden of paying taxes fairly across people with different abilities to pay. (B) Insurance companies. (A) Statement 1 only. Statement 2. 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. (C) Property primarily for sale to customers in the ordinary course of his trade or business. Capital losses can be deducted only from capital gains. Hi there, would you like to get such a paper? (C) Foreign excess-profit tax. 57. The Concept & Theories of Governance Introduction “Knowledge is knowledge only when the students do at their best on what they learn. 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. The term “reasonable needs of the business” are hereby construed to mean the immediate needs of the business, including reasonably anticipated needs. How to Get Taxpayer Identification Number (TIN). (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. (C) Both statements are correct. (B) Statement 2 only. (A) Income from a general partnership is constructively received by a partner when his share in the net income is credited to his capital account. For purposes of computing the distributive share of the partners, the net income of the partnership shall be computed in the same manner as a corporation. Statement 2. He is asking, in effect, “How much ought a man to pay in taxation and how much ought he to have left for his own consumption?” But surely we ought to consider also his production as well as his consumption of wealth. (D) None of the above. In order the rules on capital gains and losses in the NIRC may apply, the transaction on the asset should be a sale or an exchange. (D) Any foreign national tax. 45. Capital losses are deductible from (A) Ordinary gains only. Is it to the advantage of the common that this should be done? (A) Banks and other non-bank financial intermediaries. Which of the following statements is not correct? (C) Associations. (C) The debt must actually be charged off the books of accounts of the taxpayer as of the end of the taxable year. Statement 1. General Principles A. 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. 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. Which of the following statements is most correct? (A) Insurance premium on life insurance of employee where the employer is the beneficiary. (B) Resident foreign corporation. (B) Import duties. (B) 25%. 11. 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. 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. None of the above. (C) General professional partnership. (B) Resident corporation. (B) Optional corporate income tax. In general the larger any of these costs get, the worse it is for efficiency. The MCIT shall be imposed upon a domestic corporation or a resident foreign corporation whenever such corporation has a zero or negative taxable income. 64. Federal Supreme Court Cassation Decisions - Table of content Volume 1-24, Federal Supreme Court Cassation Decisions Volume 24, Federal Supreme Court Cassation Decisions - Table of content Volume 1-23, The Secutity of Movable Properties In Ethiopia, Freedom of Expression and The Media Landscape in Ethiopia - Contemporary Challenges, Search - Resources and Research Papers (Pdf). Statement 2. Which of the following statements is not correct? (A) Statement 1 only. (A) Statement 1 only. 65. Theories of Taxation Classical Taxation Theory. (C) 2008. (C) Domestic corporation. (C) Fair market value of the property received. (D) 10%. Statement 2. (D) None of the above. HAVEN’T FOUND ESSAY YOU WANT? Statement 1. 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. All earnings are taxable with income tax. Statement 2. Salaries received by a partner from a general professional partnership is not considered gross compensation income but as part of his share in the distributable net income of the partnership. 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. (A) The tax imposed on corporations is not imposed only upon such corporations as are organized and operated for profit. 2.3.1 The taxation of cross-border income under domestic corporate income tax laws It is commonly accepted that there are two aspects to a state’s sovereignty: the power over a territory (“enforcement jurisdiction”) and the power over a particular set of … (D) None of the above. website. 23. Suppose that a quarter of a man's income was required by the State; then a man earning 10 Birr a week would pay 25 cents, and the one getting 2 Birr a week would pay l0 cents each week; the first man might now no longer be able to keep a motor cycle, while the latter would hardly be able to feed his wife and family. Which of the following statements is most correct? (B) Fifteen percent (15%). Statement 1. Statement 1. (A) There must be an existing indebtedness to the taxpayer and this must be valid and legally demandable. (D) None of the above. Statement 1. (C) Interest from Philippine currency bank. (B) Seven and one-half percent (7 ? 19. Situs of taxation is the State or country which has jurisdiction to tax a person, property or interest. But he/she is considering only the consumption aspect of income. All wealth that flows into the taxpayer’s hand other than mere return of capital is income. (A) Business partnerships. What year would be the first MCIT be imposed on such corporation? Which of the following statement is most correct? Which of the following statements is most correct? (C) Both statements are correct. (D) Fifteen percent (15%). (A) Statement 1 only. (D) Fifteen percent (15%). (C) Earnings reserved for building, plants or equipments acquisition as approved by the Board of Directors or equivalent body. 81. Graduated, meaning, that taxes to be paid are divided into several brackets of income; and progressive, meaning, that the higher the income, the higher will be the tax rate to be paid, and vice-versa. (A) Statement 1 only. (B) 10%. Which of the following statements is most correct? It is said that taxes are what we pay for civilized society. (A) Statement 1 only. Regional operating headquarters. (D) Needs to file an information return and pay the income tax. Penalty: punishment for the commission of a crime 3. The strongest argument against this graduated form of taxation seems to be that it checks saving. (A) Minimum corporate income tax. This is perhaps the view of Adam Smith, but surely it must be repudiated by common sense, as a single example will show. (C) Any distribution of dividend made to shareholders of a corporation shall be deemed to have been made form the most recently accumulated earnings or surplus. (C) Fair market value of the property received. (D) None of the above. (C) Shares of individual partners in the net profits of taxable partnerships. %) of gross rentals or fees. (B) Statement 2 only. Constitutional Limitations - (Naaayon sa ating saligang batas) Due process and equal protection clause Statement 2. Statement 1. 66. (C) Nonresident foreign corporations are subject to income tax based on gross income from sources within the Philippines. Which of the following is not subject to tax as a corporation? All Filipino citizens are taxable for their income earned within and outside the Philippines. 21. All Filipino citizens are taxable for their income earned within and outside the Philippines. (B) Insurance comp, 47 Bergen St--Floor 3, Brooklyn, NY 11201, USA, Sorry, but copying text is forbidden on this (D) The interest is paid or accrued during the taxable year. 70. (A) Thirty percent (30%). 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. 84. (B) Statement 2 only. 80. In order to comply with their obligation to pay taxes, citizens are bound to incur certain costs. (D) None of the above. (C) The election of the gross income tax option by the corporation shall be irrevocable for three (3) consecutive taxable years during which the corporation is qualified under the scheme. All foreign corporations are taxable only for income earned within the Philippines. 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. For purposes of the Optional Standard Deduction, gross income means: (A) If a trading concern, gross profit from sales. (B) Seven and one-half percent (7 ? 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. (B) Fair market value of the property. Theories of Taxation which the government adopts should be equitable so that tax avoidance is decreased. (C) Multinational corporation. (B) Withholding income tax on passive income. (C) January 1, 2009. (A) Statement 1 only. 48. This principle implies two things: Horizontal Equity: People in equal positions should be made to pay the same amount of taxes. FOR ONLY $13.90/PAGE, United States v. Woods – Oral Argument – October 09, 2013, United California Bank v. United States – Oral Argument – October 04, 1978, Media Law: Freedom of Speech and Protecting an Individual’s Reputation, Humanitarian Law: Growth of Technology and the Nature of Conflict, The Main Laws of Business and Ethical Standards, GET YOUR CUSTOM ESSAY Statement 2. (D) 25%. The principle holds that income, wealth, and transaction should be taxed at fixed percentage. In tax parlance, situs refers to the place of taxation. Administrative costs are the costs to the government (and ultimately to the taxpayer) of collecting tax revenue. January 7, 2021. blog. A domestic corporation was registered with the Bureau of Internal Revenue on January 1, 2004. 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. (D) Regular repairs of business property. 42. 44. (D) A deduction for uncollectible account is available to a taxpayer whether he is on the cash or accrual method of accounting. 9. This is the so-called benefits-received principle. (D) 2010. Bad debt is an expense in the books of accounts when a provision is made for it. (A) 30%. Employed as a device for regulation or control Effect: - Promotion of general welfare - Reduction of social inequality - Economic growth; THEORIES OF TAXATION 1. can send it to you via email. But what does equality mean? (C) Both statements. (D) None of the above. Working 24/7, 100% Purchase Statement 1. (C) A corporation is not exempt simply and only because it is primarily not organized and operated for profit. (D) Capital losses are always deductible only to the extent of capital gains. (B) Is required to file an income tax return although not required to pay the income tax. What is the minimum corporation income tax (MCIT) rate imposed upon any domestic corporation on its gross income within and without the Philippines? 31. (B) 32%. (B) Nonresident foreign corporation. Special Assessment: levied only on land based wholly on benefit accruing theories as a result of improvements or public works undertaken by … (C) Associations. (D) None of the above. However, such a view was evidenced to lead to absurd conclusions. (C) Four and one-half percent (4 ? In the case of exchange, the selling price shall be the (A) Total consideration per deed of sale. (B) Optional corporate income tax. (A) Minimum corporate income tax. Compromise Penalty: amount collected in lieu of criminal prosecution in cases of tax violations 4. Which of the following statements is most correct? In case of cash sale of shares of stocks not traded through the local stock exchange, the selling price shall be the (A) Total consideration per deed of sale. (A) Interest expense on money borrowed to buy government bonds. 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. (A) A club organized and operated exclusively for pleasure, recreation, and other non-profitable purposes, no part of the net income of which inures to the benefit of any private stockholder or individual. 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. The MCIT shall be imposed upon a domestic corporation or a resident foreign corporation whenever such corporation has a zero or negative taxable income. Which of the following statement is most correct? SAMPLE. (C) Two percent (2%) on its Gross Philippine Billings. Taxation Rishabh Sharma. (B) If a service concern, gross receipts less direct cost of services. we might edit this sample to provide you with a plagiarism-free paper, Service (D) None of the above. 1. Ordinary losses can be deducted from any gross income item, including capital gains. 54. The Philippines’ new tax reform bill, known as TRAIN or Tax Reform for Acceleration and Inclusion, was signed into law by Pres. Which of the following statement is most correct? In order to collect taxes, the government must hire collectors to collect the revenue; data entry clerks to process the tax returns; auditors to inspect questionable returns; lawyers to deal with disputes; and accountants to track the flow of money. Proprietary educational institutions shall pay a tax of how much on their taxable income at what percent? Which of the following statement is most correct? (B) Statement 2 only. It is a commercial undertaking by two or more persons, but it is different from a partnership in that it involves the disposition of a single lot of goods or the completion of a single project. (B) Domestic corporations are subject to income tax based on net income from all sources. In return for his contribution, the tax payer receives the general advantages and protection which the government affords the taxpayer and his property. (B) Resident foreign corporation. Which of the following statements is most correct? (D) None of the above. 75. 20. (A) Domestic corporation. (C) A partnership organized by a group of CPAs for the purpose of selling real properties. 72. (A) Straight-line method. Every person needs, say, protection and justice, and experience shows that these can best be obtained in a society; the taxes he/she pays may be a quid pro quo, a payment for the services rendered. 28. Effective January 1, 2000, the President, upon recommendation of the Secretary of Finance, may allow corporations the option to be taxed at what percent of gross income, after satisfying certain conditions? Which of the following statements is most correct? 49. (C) Freight in transporting the goods to the place where the goods are actually sold. Which of the following expenses of the business would be allowed as deduction from its business income? (C) Both statements. (C) Both statements are correct. “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. (A) Partnership organized by a lawyer, engineer and a CPA to provide professional advice. as well as discuss the impact of taxation system on small and medium enterprises development. Chapter 4 will examine current changes in Ukrainian tax legislation and analyze “ This module is the first part of the course on Governance and Development. (C) Both statements. (B) Statement 2 only. (B) Statement 2 only. 32. Toll: amount charged for the cost and maintenance of the property used 2. ; “Equality of taxation”, therefore, as a deferred expense taxation... Keynesian taxation and! Concept & Theories of taxation which the government to administer the tax payer receives the general principles of the! 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Is shadowed by the taxes which are imposed on corporations administer the tax imposed by law on is. The costs to the place where the goods to the development of general taxation was inevitable not and... Less direct cost of the purpose these are created are exempt from income.... Not organized and operated for profit subject to 15 % final tax of efficiency, excess burden, to. Jurisdiction to tax a person, property or activities within the Philippines why taxation is to be on. Costs may be treated as an outright deduction, i.e to have important and complicated questions popping into! A surety for the debtor against whom collection may be an ordinary.. Will be governed by the Board of Directors or equivalent body behavior displayed by tax payers the Improperly Accumulated tax... And discusses the general principles of taxation exist in public economics deducted from gross income sources. Has at least three different and distinct meanings percent ( 15 % ) of gross rentals lease.

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