INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
107
Chapter 14: Withholding Taxes
CHAPTER 14
WITHHOLDING TAXES Problem 14 – 1 TRUE OR FALSE 1. True 2. True 3. True 4. True 5. Fals False e – fina finall with withho hold ldin ing g tax taxes es are are not not cred credit itab able le.. 6. Fals False e – the the tax tax is fin final al tax tax,, henc hence e not not req requir uired ed to to fil file e an an inco income me tax tax retur return. n. 7. False – Business income is an income earned but not all subject to expanded withholding tax. 8. True 9. True 10. True 11. True 12. 12. False False – all payme payments nts made made by the govern governmen mentt are are net net of withhol withholding ding taxes. taxes. 13. True 14. True 15. True Problem 14 – 2 C Share from the professional partnership (P500,000 x 50%) Less: Creditable withholding tax (P250,000 x 10%) Amount received, net of withholding tax
P250,000 25,000 P225,000
Problem 14 – 3 D Dividend income (P10 x 10,000) Less: Withholding tax on dividends income of NRFC (30%) Dividend income, net of withholding tax
P 100,000 30,000 P 70 70,000
Problem 14 – 4 C Lease income Less: Withholding tax (P500,000 x 4.5%) Lease income, net of withholding tax
P 500,000 22,500 P 477,500
Problem 14 – 5 B Tax informer’s fee Less: Withholding tax (P1,000,000 x 10%) Tax informer’s fee, net of withholding tax
Problem 14 – 6
SOLUTIONS
P1,000,000 100,000 P 90 9 00,000
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
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Chapter 14: Withholding Taxes
a. Residen Residentt Citiz Citizen en or Resident Resident Alien Alien 1. Interest on bank deposits a. Peso deposits b. Dollar account (FCDS) 2. Prize 3. Royalties on books 4. Capital gains on sale of real property property 5. Property dividends 6. Compensation from from OBU Nonresident Alien engaged in business 1. Interest on bank deposits a. Peso deposits b. Dollar account (FCDS) 2. Prize 3. Royalties on books 4. Capital gains on sale of real property property 5. Property dividends 6. Compensation from from OBU Nonresident Alien not engaged in business 1. Interest on bank deposits a. Peso deposits b. Dollar account 2. Prize 3. Royalties on books 4. Capital gains on sale of real property property 5. Property dividends 6. Compensation from from OBU Domestic Corporation 1. Interest on bank deposits a. Peso deposits b. Dollar account 2. Prize 3. Royalties on books 4. Capital gains on sale of property 5. Property dividends 6. Compensation from from OBU Resident Foreign Corporation 1. Interest on bank deposits a. Peso deposits b. Dollar account 2. Prize 3. Royalties on books 4. Capital gains on sale of property 5. Property dividends 6. Compensation from from OBU b. Nonresi Nonresident dent Foreign Foreign Corpor Corporatio ation n 1. Interest on bank deposits deposits a. Peso deposits b. Dollar account 2. Prize
(P 50,000 x 20%) ($ 10,000 x 7.5%) (P100,000 x 20%) (P300,000 x 10%) (P1,000,000 x 6%) (P120,000 x 10%) (P400,000 x 15%)
P10,000 $ 750 P20,000 P30,000 P60,000 P12,000 P60,000
(P 50,000 x 20%)
P10,000 Exempt P20,000 P30,000 P60,000 P24,000 P60,000
(P100,000 x 20%) (P300,000 x 10%) (P1,000,000 x 6%) (P120,000 x 20%) (P400,000 x 15%)
(P 50,000 x 25%) (P100,000 x 25%) (P300,000 x 25%) (P1,000,000 x 6%) (P120,000 x 25%) (P400,000 x 15%)
(P 50,000 x 20%) ($ 10,000 x 7.5%) (P300,000 x 20%) (P200,000 x 6%)
(P 50,000 x 20%) ($ 10,000 x 7.5%) (P300,000 x 20%)
(P 50,000 x 30%) (P100,000 x 30%)
P12,500 Exempt P25,000 P75,000 P60,000 P30,000 P60,000
P10,000 $ 750 N/A P60,000 P12,000 Exempt N/A
P10,000 $ 750 N/A P60,000 N/A Exempt N/A
P15,000 Exempt P30,000
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
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Chapter 14: Withholding Taxes
3. 4. 5. 6.
Royalties on books Capital gains gains on sale of property Property dividends Compensation from OBU
(P300,000 x 30%) (P120,000 x 30%)
P90,000 N/A P36,000 N/A
