PROBLEM 1

Mike received the following income during 2023 taxable year:

Gross income PH – 3,850,000
Gross Income, Canada – 1,650,000
Business expenses, PH – 2,000,000
Business Expenses, Canada – 725,000
Interest on bank deposit, MBTC – 50,000
Capital gain on sales of shares of closely held domestic corporation – 180,000
1. How much is the taxable income of Mike assuming he is
a. RC
b. NRC
c. RA
d. NRA-ETB
2. How much is the income tax due of Mike assuming he is
a. RC
b. NRA ETB
c. NRA-NETB

PROBLEM 2
A taxpayer received during the taxable year the following passive income derived from
within the PH:

Royalty on a software application (gross) – 95,000

Dividend income RFC(gross) – 150,000

If a taxpayer is non-resident alien engaged in business, the final tax on the above
passive income would amount to ______________
PROBLEM 3
Carlo received the following passive income in 2022

Interest, peso deposit MBTC - Php100,000

Interest, dollar deposit, BDO 10,000 USD @56 pesos
Interest, deposit in Hongkong – HKD 10,000 @ 5 pesos
Prize (TV) won in a local lottery – 50,000
PCSO winnings – 2,000,000
Prize won in contest in US – 300,000
Lotto winnings in US – 100,000
Dividend domestic company – 600,000

1. Assuming the income were earned during the effectivity of the CREATE LAW,
how much is the correct final withholding tax on passive income assuming further
that Carlo is
a. RC
b. NRC
c. RA
d. NRA-ETB

PROBLEM 4
On March 2021, Johnson sold the following shares of stock of domestic corporation
which he bought for investment purposes:

Listed and traded Not listed and traded

Selling price 250,000 140,000
Cost 118,000 80,000

1. How much is the capital gains tax?

2. Assume that Johnson is a dealer in securities, the capital gains tax should be
3. Assume the shares sold were issued by foreign corporations, the capital gains
tax should be
4. Assuming the shares not listed and traded in the local stock exchange were only
sold for 60,000, the capital gains tax should be
PROBLEM 5
Ana, a resident citizen, provided the following data for current taxable year:
Gross income from business (gross of 12,000 CWT) 700,000
Business expense 300,000
Royalty from books 40,000
Gain on direct sale to buyer of shares of stock of
a domestic corporation held as capital asset 70,000
loss on sale of land in the Philippines held as capital
asset with cost of 1,500,000 when the zonal value
is 1,200,000 500,000

1. How much is the income tax payable of Ana?

2. How much is the total capital gains tax?
3. How much is the total income tax expense of Ana?

PROBLEM 6
Lorna, a self-employed resident citizen provided the following data for the taxable year
Sales 2,800,000
Cost of sales 1,125,000
Business expenses 650,000
Gain on sale of shares of foreign corporation 50,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under FCDS 120,000
Gain on sales of shares of DC (not listed) 150,000
Gain on sale of land in the Philippines held as capital asset with 500,000
cost of P1,500,000 WHEN THE ZONAL VALUE IS 1,200,000

1. How much is the total income tax expense of Lorna for this year?
2. How much is the total income tax of Lorna assuming she opted to be taxed at
8%?
3. Assuming Lorna is a vat-registered taxpayer, how much is her total income tax
expense assuming she opted to be taxed at 8% income tax rate?
4. Using the same data except that her gross sales for the year was 3,800,000, how
much is her total income tax expense assuming she opted to be taxed at 8%
income tax rate?
Facilities and privileges of relatively small value.
The following shall be considered as “de minimis” benefits not subject to
income tax as well as withholding tax on compensation income of both
managerial, and rank and file employees:
a. Monetized unused vacation leave credits of private employees not exceeding ten
(10) days during the year;
b. Monetized value of vacation and sick leave credits paid to government officials
and employees;

c. Medical cash allowance to dependents of employees, not exceeding ₱1,500 per

employee per semester of ₱250 per month;
d. Rice subsidy of ₱2,000 or one sack of 50kg. rice per month amounting to not
more than ₱2,000;
e. Uniform and clothing allowance not exceeding ₱6,000 per annum;
f. Laundry allowance - 300 per month
g. Bonus – 5,000

Exemption from withholding tax on compensation. - The following income

payments are exempted from the requirement of withholding tax on compensation
but may be subject to income tax depending on the nature/sources of income
earned by the individual recipient.

Thirteenth month pay and other benefits.

a. Thirteenth month pay equivalent to the mandatory one (1) month basic salary of
official and employees of the government (whether national or local), including
government-owned or controlled corporations, and/or private offices received
after the twelfth month pay; and
b. Other benefits such as Christmas bonus, productivity incentives, loyalty award,
gift in cash or in kind, and other benefits of similar nature actually received by
officials and employees of both government and private offices, including the
Additional Compensation Allowance (ACA) granted and paid to all officials and
employees of the National Government Agencies (NGAs) including State
Universities and Colleges (SUCs), Government-Owned and/or Controlled
Corporations (GOCCs), Government Financial Institutions (GFIs) and Local
Government Units (LGUs).

The above stated exclusions under (a) and (b) shall cover benefits paid or
accrued during the year, provided that the total amount shall not exceed ninety
thousand pesos (₱ 90,000), which may be increased through rules and
regulations issued by the Secretary of Finance, upon recommendation of the
Commissioner, after considering among others, the effect on the same of the
inflation rate at the end of the taxable year.
 c. GSIS, SSS, Medicare and other contributions. – GSIS, SSS, Medicare and Pag-
Ibig contributions, and union dues of individual employees.

d. Compensation income of Minimum Wage Earners (MWEs) who work in the

private sector and being paid the Statutory Minimum Wage (SMW), as fixed by
Regional Tripartite Wage and Productivity Board (RTWPB)/National Wages and
Productivity Commission (NWPC), applicable to the place where he/she is
assigned, as well as the compensation of employees in the public sector who are
paid not more than the SMW applicable to non-agricultural sector, as fixed by
RTWPB/NWPC, applicable to the place where he/she is assigned.

e. Compensation during the year not exceeding Two hundred fifty thousand pesos
(₱250,000).

PROBLEM 7
Juan is a mixed income earner. He is self-employed resident citizen and currently the
finance manager of Omega corporation. The following data were provided for 2021
taxable year

Compensation income 1,800,000

13th month pay and other benefits 150,000
Sales 2,800,000
Cost of sales 1,125,000
Business expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under 120,000
FCDS
Gain on sale of land in the Philippines 500,000
held as capital asset with cost of
P1,500,000 when the zonal value is
1,200,000
Creditable withholding tax on 448,000
compensation
Creditable withhjolding tax on sale of 28,000
goods

How much is the income tax payable of Juan assuming he opted to be taxed at 8% for
the year?
How much is his total income tax expenses assuming he opted to be taxed at 8%?
PROBLEM 8
The following data were taken from Juan (single), holding managerial position for 2021
taxable year:
Gross salaries @50,000 per month 600,000
SSS Contributions 12,000
Philhealth contributions 7,200
PAG-IBIG contributions 4,800
Union dues 3,000
Withholding tax on compensation income 73,250
Allowances, not subject to liquidation 100,000
Gasoline allowances, subject to 17,000
liquidation
13th month pay 50,000
De minimis benefits 12,000

1. The taxable compensation income subject to graduated rate is

2. Based on the above data, the fringe tax benefit due is
3. The total income tax expense of Juan is
4. The income tax payable of Juan is

PROBLEM 9
A domestic corporation has the following income and expenses for the year
Philippines Abroad
Gross sales 100,000,000 50,000,000
Cost of sales 40,000,000 20,000,000
Opex 30,000,000 12,000,000

1. How much is the income tax due assuming the taxable

a. 2019?
b. 2020?
c. 2021?
2. How much is the income tax due assuming?
a. The taxable year is 2021 and the corporation is a resident foreign
corporation?
b. The taxable year is 2021 and the corporation is a nonresident foreign
corporation?

PROBLEM 10
Mega Construction corporation, a domestic corporation has the following data for 2021
taxable year:
 PH Gross income 100M
USA Gross income 50M
JP Gross income 50M
PH Expense 30m
USA Expense 20M
JP Expense 10M

Dividend from SM domestic corp 7m

Dividend from Ford – RFC income within 12M
Gain on sale of shares of a domestic 15M
corporation sold directly to buyers
PH Royalty income 5m
US Royalty income 10m
Interest income PH bank 8m
Interest income FCDS deposit 3m
Interest from receivables PH 6m
Rent income, land in US 25M
Rent income, building in PH 10M

The company also sold a condominium classified as capital asset for 200M. the cost of
the condo is 100M while its zonal value is 300m. the company’s total asset excluding
the condo sold and the land on which the business office building is situated amounted
to 680M.

1. How much is the income tax due in 2021?

2. How much is the final withholding tax on passive income in 2021?
3. How much is the total capital gains tax in 2021?