Solution manual transfer and business taxes by valencia CHAPTER 13 LOCAL TAX

BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 68 Chapter 13: LOCAL TAX CHAPTER 13 LOCAL TAXES Problem 13–1 True True False – Subject to final approval of the executive False – cities True True False – Only if employed, doing business or owner of real properties True False – Additional should be based on gross receipts 10 False – P10,000 Problem 13–2 True True True True True True True False – Assessed value True 10 True Problem 13–3 A D D D D D A D Problem 13–4 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 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 69 Chapter 13: LOCAL TAX 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 13–5 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 13–6 Taxable base Multiply by tax rate Printing and Publication tax P 200,000 0.5% P 1,000 Problem 13–7 Total collections Less: Receipts from the government (P1,000,000 x 50%) Balance Multiplied by Local tax payable P4,000,000 500,000 P3,500,000 0.005 P 17,500 Basic P Additional community tax: Gross receipts (P4,000,000/P1,000) x P1 Total community tax 4,000 P4,005 Problem 13–8 Total market value P6,000,000 Multiplied by provincial tax rate Provincial tax 10% P 600,000 Basic Additional community tax: Gross receipts (P9,000,000/P5,000) x P2 Market value of real property (assumed as the assessed value) (P20,000,000/P5,000) x P2 Total community tax P 500 P3,600 8,000 10,000 P10,500 Problem 13–9 P50 annually Basic P 5.00 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 70 Chapter 13: LOCAL TAX Additional [ (P150 x 365) /1,000] x P1.00 Total community tax 54.75 P59.75 Problem 13–10 Local tax per unit Multiply by number of vans maintained Total local tax for the delivery van Problem 13–11 Case 1: Taxable base Multiplied by tax rate bracket Municipal business tax P 500 P 2,500 P1,500,000 0.25% 3,750 P Taxable base P 600,000 Multiplied by tax rate bracket Municipal business tax P 0.5% 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 13–12 Case 1: No, because the imposition is not in excess of what is provided in the Code What is allowed in the province is ½ 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 Effective % 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 ¾ 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 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 71 Chapter 13: LOCAL TAX 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 13–13 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 mos.) Total community tax P 5.00 200.00 P205.00 51.25 8.20 P264.45 Problem 13–14 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 13–15 Assume that the fair value is equal to assessed value Basic (P600,000 x 1%) Additional tax on idle lands (P600,000 x 5%) Total amount Problem 13–16 P 6,000 30,000 P36,000 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 72 Chapter 13: LOCAL TAX X’s total fees and taxes in order to obtain a business permit would be P2,000, computed as follows: Mayor’s permit Local business tax (P150,000 x 1%) Total fees and taxes P 500 1,500 P2,000 ... Problem 13 16 P 6,000 30,000 P36,000 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 72 Chapter 13: LOCAL TAX X’s total fees and taxes in order to obtain a business. .. 8,000 10,000 P10,500 Problem 13 9 P50 annually Basic P 5.00 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 70 Chapter 13: LOCAL TAX Additional [ (P150 x 365)... community tax 54.75 P59.75 Problem 13 10 Local tax per unit Multiply by number of vans maintained Total local tax for the delivery van Problem 13 11 Case 1: Taxable base Multiplied by tax rate