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EXERCISES 4.1

TRUE OR FALSE. State whether the statement is TRUE or FALSE.

1. An overseas contract worker in Japan is classified as non- resident citizen in the Philippines.
2. A foreign who stays in the Philippines for 250 days is deemed engaged in business or trade in the
Philippines.
3. An individual taxpayer may either be a natural or a judicial person.
4. A natural-born citizen may either of the Philippines from birth and has to perform any act to
perfect his/her citizenship.
5. Resident citizen may include a Filipino citizen who stays outside the Philippines for more than 183
days.
6. Non-resident citizens may include Filipino employed by an offshore banking unit in the
Philippines.
7. A special alien does not include Filipino citizen employed by an offshore banking unit in the
Philippines.
8. A seaman on international vessel is taxable only on his income within the Philippines.
9. A non-resident citizen is taxable on his/her income from within and outside the Philippines.
10. A Filipino citizen who earns income abroad and stays in foreign country most of the time is a non-
resident citizen.

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EXERCISES 4.2

Classify properly the following individual taxpayers whether they are resident citizen (RC),
nonresident citizen (NRC), resident alien (RA), non-resident alien engaged in trade or business in the
Philippines (NRAETBP), non-resident alien not engaged in trade or business in the Philippines
(NRANETBP), and special individual (Sl).

1. Mr. Jeff Bulandos, Filipino, employed as a seaman abroad, returned to the Philippines for a 15day
vacation.
2. Ms. Camille Binajbaj left from the Philippines to work as a nurse in California, U.S.A.
3. Mr. Christopher Vergara, alien, stayed in the Philippines for 10 months.
4. Ms. Kathleen Jose, a Filipino overseas contract worker, returned to the Philippines to attend the
wedding of her older sister.
5. Mr. Rey Blas, a non-resident alien, has been in the Philippines for more than one year as a tourist
enjoying the weather and beauty of the various places.
6. Ms. Lady Anne Murillo, Filipino citizen, has her residence in Singapore.
7. Ms. Irene Diaz, Filipino citizen, left Philippines for a surgical operation in U.S.A.
8. Mr. Walter Salva, non-resident alien, stayed in the Philippines as manager of a domestic
telecommunication company from February to November of the current taxable year.
9. Mr. Alvin Bautista, Filipino, is engaged by a foreign petroleum service contractor in petroleum
operations at Palawan.
10. Ms. Mary Chris Autria, non-resident citizen, returned to the Philippines during the taxable year to
reside therein after working for three years in Singapore as an entertainer.
11. Ms. Germina Santos, a British, left Manila for Europe for vacation. He has a re-entry permit.
12. Ms. Grace Taruc, a non-resident alien, stayed in the Philippines as manager of a domestic airline
from January to September.
13. Ms. Mercy Torres, a non-resident alien, finding the beauty of the Philippines, stayed therein for
more than one hundred eighty days.
14. Ms. Hazel Mina, an alien, stayed in the Philippines for more than one year.
15. Ms. Adel Crisolo, citizen, maintained her residence in Australia.

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EXERCISES 4.3

Identify whether the following are subject to final tax or not (year 2018). Taxpayer is a RESIDENT
CITIZEN unless otherwise stated (Y/N).
Final Tax? Rate

1) Interest from peso bank deposit, Equitable — PCIB Makati

2) Interest from Japanese yen bank deposit, Sumitomo Bank, Japan

3) Interest from USA dollar bank deposit, First USA Bank, New York

4) Interest income from a debt instrument not within the coverage of deposit substitute,
Philippines
5) Interest income from a debt instrument within the coverage of a deposit substitute, Philippines

6) Interest on government debt instrument and securities (regardless of number of lenders at the
time of the origination)
7) Interest from overdue accounts receivable, Philippines

8) Royalties, in general, Manila

9) Royalties, books published in Manila

O) Prize amounting to P 30,000, Philippines

1) Prize amounting to P 10,000, Philippines

2) Prize amounting to P 40,000, USA

3) Winnings amounting to P 30,000, Philippines

4) Winnings amounting to P 10,000, Philippines

5) USA Sweepstakes winnings

6) Philippine Lotto winnings

7) Interest received from depository bank under expanded foreign currency deposit system (jointly
in the name of a non-resident citizen and his spouse who is a resident citizen)
8) Interest income from long-term deposit or investment evidenced by certificates issued by BSP
(issued by a financial institution other than a bank in denomination of P 10,000)
9) Interest income from long-term deposit or investment evidenced by certificates issued by BSP
(issued by a bank to an individual in denomination of P 10,000)
O) Dividend from a domestic corporation received on April 15, 2006

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1) Share in distributive net income of local business partnership received on May 15, 2006

2) Share in net income after tax of an association, a joint account, or a joint venture or consortium
received on August 15, 2006
3) Share in the net income of a general professional partnership

4) Dividend from a foreign corporation

5) Interest income from long-term deposit or investment evidenced by certificates issued by BSP
received by a NONRESIDENT ALIEN NOT ENGAGED IN TRADE OR BUSINESS
6) Interest income from long-term deposit or investment evidenced by certificates issued by BSP
received by a NONRESIDENT ALIEN ENGAGED IN TRADE OR BUSINESS
7) Interest income received by NON-RESIDENT ALIEN individual from a depository bank under
expanded foreign currency deposit system
8) Interest income received by NON-RESIDENT CITIZEN individual from a depository bank under
expanded foreign currency deposit system
9) Dividend received by a NON-RESIDENT ALIEN not engaged in business in the Philippines from a
domestic corporation
O) Dividend received by a NON-RESIDENT ALIEN engaged in business in the Philippines from a
domestic corporation

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EXERCISES 4.4

Problem

A married resident citizen supports three (3) qualified dependent children and a brother-in-law
who is PWD, unmarried and not gainfully employed. He has the following data on income and expenses
for the year 2018:
Salary, Philippines P 560,000
Gross business income, Philippines (gross sales, 500,000
Business expenses, Philippines 180,000
Gross business income, USA (gross sales, P 1,500,000) 900,000
Business expenses, USA 300,000
Interest income from bank deposit, Philippines 50,000
Interest income from bank deposit, USA 70,000
Interest income from domestic depository bank under EFCDS 80,000 Interest
income from a debt instrument not within the coverage of deposit substitute,
Philippines, gross of 20% creditable withholding tax 50,000
Interest income from a debt instrument within the coverage of a deposit
substitute, Philippines 60,000 Royalty on book published in the Philippines
100,000
Prize in a contest he joined in the Philippines 5,000
Philippine Charity Sweepstakes winnings
Gain from sale of shares of stock not traded through the
local stock exchange 150,000
Dividend received from a domestic corporation 40,000
Tax payments, first three (3) quarters 100,000
Required: Compute for the following questions:
1. How much is the total final tax on certain passive income?
2. How much is the capital gains tax?
3. How much is the taxable net income and income tax due if the taxpayer failed to avail of the 8%
tax option?

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