107
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)
SUGGESTED ANSWERS
Chapter 14: Withholding Taxes
CHAPTER 14
WITHHOLDING TAXES
Problem 14 – 1 TRUE OR FALSE
1. True
2. True
3. True
4. True
5. False – final withholding taxes are not creditable.
6. False – the tax is final tax, hence not required to file an income tax return.
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. False – all payments made by the government are net of withholding 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 70,000
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 900,000
108
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)
SUGGESTED ANSWERS
Chapter 14: Withholding Taxes
a. Resident Citizen or Resident 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
5. Property dividends
6. Compensation from OBU
b. 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
5. Property dividends
6. Compensation from OBU
c.
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
5. Property dividends
6. Compensation from OBU
d. 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 OBU
e. 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 OBU
f.
Nonresident Foreign Corporation
1. Interest on bank 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
109
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)
SUGGESTED ANSWERS
Chapter 14: Withholding Taxes
3.
4.
5.
6.
Royalties on books
Capital 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