True or False 5.1 Write True if the statement is correct. If you believe otherwise, write False, then state your reason briefly.

1. Generally, percentage is imposed on businesses not subject to VAT.

2. A business with gross sale of less than P 1,500,000 from the preceding taxable year may opt to register under the VAT system.

3. Business with gross receipts of P 1,500,000 or less in the preceding taxable year may opt to register under VAT system, and the said option is irrevocable once registered.

4. The gross receipts, as the tax base in computing percentage tax, of service concerned are computed by deducting the cost of services rendered from the service revenue.

5. Percentage tax is imposed generally on the sale, exchange, or barter of goods.

6. Services rendered on account are subject to percentage tax of 5%.

7. Business whose annual gross sales or receipts are less than P 100,000 from the preceding period is treated as for subsistence only and not subject either to VAT or percentage tax.

8. Cooperatives, other than electric cooperatives, are exempt from 3% percentage tax.

9. Domestic carrier transporting passengers by air or sea is subject to 12% percentage tax.

10. Generally, franchise is a grant of a private individual to private corporation to operate public utilities.

True or False 5.2 Write True if the statement is correct. If you believe otherwise, write False, then state your reason briefly.

1. The tax base of 3% common carriers tax is the actual gross receipts or the amount prescribed by the BIR based on the prevailing city or provincial rates, whichever is higher.

2. Radio or television companies with gross receipts of more than P 10,000,000 from the preceding taxable year may opt for percentage tax.

3. Business entities transporting goods or cargoes by land, air, and sea are subject to 3% common carriers tax.

4. Keepers of garage, transportation contractors, and owners of bancas are subject to 3% common carriers tax. 5. When there is no evidence of actual gross receipts derived from domestic common carrier, the business is exempted from percentage tax.

6. Overseas communication tax is collected from incoming oversea calls or messages.

7. Gross receipts from transshipment of international carriers are not included in the computation of percentage tax.

8. Both the owner of the communication facility and the overseas caller are subject to percentage tax.

9. Businesses subject to franchise tax include franchise grantees on radio and/or television, domestic carriers, gas, water, and electric companies.

10. Option to register under VAT system by franchise grantees of radio and/or television is non-cancelable for the next three years.