BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS)

SUGGESTED ANSWERS
Ch!t"# $%: LOCAL TAXES
C&A'TER $(
LOCAL TAXES
Problem 171
1. True
2. True
3. False Subject to fnal approval of the executive.
4. False cities
5. True
6. True
7. False Only if employed, doing business or owner of real properties
8. True
9. False Additional should be based on gross receipts.
10.False P10,000.
Problem 172
1.True
2.True
3.True
4.True
5.True
6.True
7.True
8.False Assessed value.
9.True
10.True
Problem 173
1. A 5. D
2. D 6. D
3. D 7. D
4. A 8. D
Problem 174
Case 1:
The administrative order is not enforceable because such is not covered by any city tax
ordinance.
Case 2:
The tax ordinance is still unenforceable because of the lack of required public hearing.
Case 3:
No, because the issue does not involve the tax liability of the taxpayer, but the authority of
the enforcing government unit. The ambiguity of power to tax is to be resolved liberally in
favor of the taxing authority.
Case 4:
No, because with regards to exemption, the burden of proof must be on the part of the
taxpayer.
Case 5:
No. Although appropriately exercised by the Sanggunian (legislative branch), it will still need
the approval of the mayor or provincial governor (executive branch)
Problem 175
Case 1:
Taxable base, (higher value)
Multiply by tax rate
Tax on transfer - amount payable by Mon Ting
P 600,000
0.5%
P 3,000
Case 2:
There is no transfer or ownership tax because the land is intended as a site for personal
residence. Real property for the purpose of this tax refers only to land, building and
machineries intended by the owner for an industry or which tend directly to meet the needs of
the said industry or work. (Sec. 135, LGC)
Problem 176
Taxable base
Multiply by tax rate
Printing and Publication tax
P 200,000
0.5%
P 1,000
Problem 177
1. Total collections P4,000,000
Less: Receipts from the government (P1,000,000 x 50%) 500,000
Balance P3,500,000
Multiplied by 0.005
Local tax payable P 17,500
2. Basic P 5
Additional community tax:
Gross receipts (P4,000,000/P1,000) x P1 4,000
Total community tax P4,005
Problem 178
1. Total market value P6,000,000
Multiplied by provincial tax rate 10%
Provincial tax P 600,000
2. Basic P 500
Additional community tax:
Gross receipts (P9,000,000/P5,000) x P2 P3,600
Market value of real property (assumed as the assessed value)
(P20,000,000/P5,000) x P2 8,000 10,000
Total community tax P10,500
Problem 179
1. P50 annually.
2. Basic P 5.00
Additional [ (P150 x 365) /1,000] x P1.00 54.75
Total community tax P59.75
Problem 1710
Local tax per unit
Multiply by number of vans maintained
Total local tax for the delivery van
P 500
5
P 2,500
Problem 1711
Case 1:
1. Taxable base P1,500,000
Multiplied by tax rate bracket 0.25%
Municipal business tax P 3,750
2. Taxable base P 600,000
Multiplied by tax rate bracket 0.5%
Municipal business tax P 3,000
Case 2:
None, because his business tax is payable to the barangay in as much as his sales is lesser
than P30,000. In that case, the barangay has the exclusive power to levy the local business
tax. (Sec. 152, LGC)
Problem 1712
Case 1:
No, because the imposition is not in excess of what is provided in the Code. What is allowed
in the province is of 1% of the total consideration for the transfer of Real Property.
The maximum that is allowed for the city is an increase of not more than 50% of what is
allowed for the province or municipalities, thus the maximum could be tabulated as:
Provincial rate
Maximum percent increase
Efective % increase
Add: the basic rate for the province
Maximum rate that a city could impose*
0.50%
50%
0.25%
0.50%
0.75%

*0.75% is the same as of 1%.
Case 2:
No, because the imposition is not in excess of what is provided in the Code. The allowed
minimum tax per year in municipalities is P165 of which a maximum of 50% increase is
allowed to compute the tax for the cities. Thus, the computation would be:
Minimum tax in municipalities per year
Add: Maximum increase allowed (P165 x 50%)
Maximum allowed for the cities
P165.00
82.50
P247.50
Case 3:
Yes. The city is only allowed of 30% maximum of what is allowed to the province. Amusement
and professional taxes are not included in the allowed 50% increase a city could make above
the province and the municipality could legally impose.
Case 4:
The retailer should be paying only his business tax to barangay, computed as follows:
Gross receipts
Multiply by rate of tax
Business tax to the barangay
P40,000
2%
P 800
The retailer is no longer required to pay to the city because its gross receipts is not exceeding
P50,000 per year.
Problem 1713
Case 1:
The community tax of AWAN Corporation should be paid on or before February 28, 2005. The
amount of community tax to be paid is P500.
Case 2:
Basic
Additional community tax (P200,000/1,000) x P1
Total
Add: Surcharge P205 x 25%)
Interest (P205 x 2% x 2 mos.)
Total community tax
P 5.00
200.00
P205.00
51.25
8.20
P264.45
Problem 1714
Case 1:
Yes. Engr. Kitik is required to pay a professional tax because any professional, signing a
document in the exercise of his profession is required to indicate the PTR (professional tax
receipt) number on the document he is signing or certifying.
Case 2:
Mr. Max Cuenta need not obtain a PTR in Makati because a person who has paid the
corresponding professional tax shall be entitled to practice his profession in any part of the
Philippines.
Case 3:
Mr. Ado will have to pay P150 for his profession as CPA and another P150 for his profession
as a Lawyer.
Problem 1715
Assume that the fair value is equal to assessed value.
Basic (P600,000 x 1%) P 6,000
Additional tax on idle lands (P600,000 x 5%) 30,000
Total amount P36,000
Problem 1716
Xs total fees and taxes in order to obtain a business permit would be P2,000, computed as
follows:
Mayors permit P 500
Local business tax (P150,000 x 1%) 1,500
Total fees and taxes P2,000