Chapter 17 Local Tax

8/20/2019 Chapter 17 Local Tax

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

Ch!t"# $%: LOCAL TAXES

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LOCAL TAXES

Problem 17–1

1. True

2. True

3. False – Subject to final 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 17–2

1. True

2. True

3. True

4. True

5. True

6. True

7. True

8.False – Assessed value.

9. True

10. True

Problem 17–3

1. A 5. D

2. D 6. D

3. D 7. D

4. A 8. D

Problem 17–4

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.



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 17–5

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 17–6

Taxable base

Multiply by tax rate

Printing and Publication tax

P 200,000

0.5%

P 1,000

Problem 17–7

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 17–8

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 17–9

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 17–10

Local tax per unit

Multiply by number of vans maintained Total local tax for the delivery van

P 500

5P 2,500

Problem 17–11

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 17–12

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

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 17–13

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 2 mos.)

Total community tax

P 5.00

200.00

P205.00

51.25

8.20

P264.45

Problem 17–14

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 thecorresponding 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 17–15

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 17–16

X’s total fees and taxes in order to obtain a business permit would be P2,000, computed as

follows:

Mayor’s permit P 500

Local business tax (P150,000 x 1%) 1,500

Total fees and taxes P2,000

Chapter 17 Local Tax

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