107 INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS Chapter 14: Withholding Taxes CHAPTER 14 WITHHOLDING TAXES Problem 14 – TRUE OR FALSE True True True True False – final withholding taxes are not creditable False – the tax is final tax, hence not required to file an income tax return False – Business income is an income earned but not all subject to expanded withholding tax True 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 – 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 – 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 – 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 – B Tax informer’s fee Less: Withholding tax (P1,000,000 x 10%) Tax informer’s fee, net of withholding tax Problem 14 – 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 Interest on bank deposits a Peso deposits b Dollar account (FCDS) Prize Royalties on books Capital gains on sale of real property Property dividends Compensation from OBU b Nonresident Alien engaged in business Interest on bank deposits a Peso deposits b Dollar account (FCDS) Prize Royalties on books Capital gains on sale of real property Property dividends Compensation from OBU c Nonresident Alien not engaged in business Interest on bank deposits a Peso deposits b Dollar account Prize Royalties on books Capital gains on sale of real property Property dividends Compensation from OBU d Domestic Corporation Interest on bank deposits a Peso deposits b Dollar account Prize Royalties on books Capital gains on sale of property Property dividends Compensation from OBU e Resident Foreign Corporation Interest on bank deposits a Peso deposits b Dollar account Prize Royalties on books Capital gains on sale of property Property dividends Compensation from OBU f Nonresident Foreign Corporation Interest on bank deposits a Peso deposits b Dollar account 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 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 ...108 INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS Chapter 14: Withholding Taxes a Resident Citizen or Resident Alien... 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 Royalties on books Capital gains on