Property Rights and Government Powers Quiz

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Questions and Answers

Who is authorized to exercise the power of taxation?

The government only (correct)

Public service companies

Private entities

Any individual citizen

What is the primary purpose of police power?

To promote general welfare through regulations (correct)

To facilitate property transactions

To control the real estate market

To raise government funds

What happens to title upon exercising eminent domain?

Title is divided between the state and private entities

Title is auctioned to the highest bidder

Title is transferred to the state (correct)

Title is retained by the property owner

Which of the following does not provide direct benefits to taxpayers?

Taxation Signup and view all the answers

Which power allows for the impairment of contracts?

Both police power and eminent domain Signup and view all the answers

What is one significant difference between police power and taxation?

Taxation must raise revenue, whereas police power focuses on health and safety. Signup and view all the answers

What limits the amount of exaction in police power?

Limited to the cost of regulation and license issuance Signup and view all the answers

Which statement is true regarding eminent domain's benefits for property owners?

Compensation is provided based on market value. Signup and view all the answers

Which types of pay are covered under the exemption for an MWE?

Holiday pay, overtime pay, night shift differential pay, and hazard pay Signup and view all the answers

What is the maximum gross sales or receipts a Marginal Income Earner can have in a 12-month period?

P100,000 Signup and view all the answers

Which of the following best describes a Mixed Income Earner?

An individual earning compensation income and income from other sources Signup and view all the answers

What distinguishes an OCW or OFW from other workers?

They have a valid Overseas Employment Certificate and are registered with POEA Signup and view all the answers

What is the definition of a self-employed individual?

An independent contractor or sole proprietor reporting income from self-employment Signup and view all the answers

Which statement accurately describes Gross Receipts?

The total amount representing contract prices, fees, rentals, excluding VAT for VAT taxpayers Signup and view all the answers

Which of the following defines Gross Sales?

Total sales transactions net of VAT reported without deductions Signup and view all the answers

What deductions are applicable when calculating gross sales subject to the 8% income tax rate option?

Sales returns, allowances, and discounts indicated in the invoice Signup and view all the answers

What is Taxable Income based on?

Gross income minus authorized deductions Signup and view all the answers

What is the VAT Threshold currently set at?

Three million pesos (P3,000,000) Signup and view all the answers

What is the primary function of Regional or Area Headquarters (RHQs)?

Act as a supervisory and communication center Signup and view all the answers

Deposits related to offshore banking refer to which of the following?

Funds accepted in foreign currencies by an Offshore Banking Unit Signup and view all the answers

What is the definition of Deposit Substitutes?

Instruments for obtaining funds from twenty or more lenders Signup and view all the answers

Foreign Currency Deposit Units (FCDUs) are authorized to engage in what type of transactions?

Transactions in foreign currency only Signup and view all the answers

Which of the following statements is true regarding the Foreign Currency Deposit System (FCDS)?

It allows the deposit of foreign currencies as part of the Philippine international reserves Signup and view all the answers

Which of the following accurately describes an Offshore Banking Unit?

A banking unit that accepts and holds foreign currencies Signup and view all the answers

What is the maximum tax rate applied to YouTube payments if GBG does not inform the income payor of her residency in the Philippines?

24% Signup and view all the answers

If GBG proves her residency in the Philippines, what is the maximum tax rate on royalties under the Philippines-US tax treaty?

15% Signup and view all the answers

When must self-employed individuals file their estimated income declaration for the current taxable year?

April 15 Signup and view all the answers

When is the final adjusted income tax return due for individuals following the fourth installment?

April 15 of the following year Signup and view all the answers

Which of the following individuals is exempt from income tax?

Barangay Micro Business Enterprise operator Signup and view all the answers

How are personal exemptions handled in the final income tax returns?

Allowed only in the final return Signup and view all the answers

What does the term 'estimated tax' refer to?

Amount declared in prior year's tax return minus credits Signup and view all the answers

What action is necessary for Barangay Micro Business Enterprises to avail of tax incentives?

Register as a BMBE with the local treasury Signup and view all the answers

Which of the following sources of income are considered business income for social media influencers?

Advertising revenue from the YouTube Partner Program Signup and view all the answers

What is the tax liability threshold for individual taxpayers to be exempt from income tax?

P250,000 Signup and view all the answers

Which entity provides incentives, including income tax exemption, to micro businesses?

Barangay Micro Business Enterprises Act Signup and view all the answers

Which of the following activities is NOT a source of income for social media influencers?

Selling personal photos privately Signup and view all the answers

Under which law are individual tax exemptions granted for taxpayers with certain income limits?

Tax Reform for Acceleration and Inclusion (TRAIN) Act Signup and view all the answers

What type of tax are influencers with gross revenues not exceeding P3 million exempt from?

Value-Added Tax (VAT) Signup and view all the answers

What income source allows influencers to earn money from recurring payments in exchange for perks?

Channel membership Signup and view all the answers

Which of the following is considered a form of passive income for social media influencers?

Display advertising Signup and view all the answers

Study Notes

Eminent Domain

Eminent Domain is a power exercised by the government, but can also be granted to public service companies or public utilities.
It involves the taking of property for public use, with just compensation paid to the owner.
Unlike taxation, eminent domain results in a transfer of title.
It can be used to facilitate the State’s need of property for public use.

Taxation

Only exercised by the government.
Purpose is to raise revenue to support the government.
Taxes paid become part of the public funds.
No special or direct benefit is received by the taxpayer.
Contracts may not be impaired.

Police Power

Only exercised by the government.
Purpose is to promote the general welfare through regulations.
All persons, property, rights, and privileges are subject to it.
No direct benefit is received, but a healthy economic standard of society is attained.
Contracts may be impaired.

Marginal Income Earner (MWE)

An individual whose business does not realize gross sales or receipts exceeding P100,000 in any 12-month period.
Excluded from income tax.

Mixed Income Earner

Earns compensation income from employment, and income from business, practice of a profession, and/or other sources.

Overseas Contract Workers (OCWs) or Overseas Filipino Workers (OFWs)

Filipino citizens employed in foreign countries.
Must be duly registered with the Philippine Overseas Employment Administration (POEA), with a valid Overseas Employment Certificate (OEC).

Self-employed

Sole proprietors or independent contractors.
Control who they work for, how the work is done, and when it is done.

Professional

A person formally certified by a professional body belonging to a specific profession by virtue of having completed a required examination or course of studies and/or practice.

Gross Receipts

Total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services.
In the case of VAT taxpayers, it excludes the VAT component.

Gross Sales

Total sales transactions net of VAT, if applicable, reported during the period, without any other deduction.
Gross sales subject to the 8% income tax rate option shall be net of the following deductions:
- Sales returns and allowances for which a proper credit or refund was made during the month or quarter to the buyer for sales previously recorded as taxable sales.
- Discounts determined and granted at the time of sale, which are expressly indicated in the invoice, the amount thereof forming part of the gross sales duly recorded in the books of accounts.

Taxable Income

Pertinent items of gross income specified in the Code, less deductions, if any, authorized for such types of income by the Code or other special laws.

VAT Threshold

Ceiling fixed by law to determine VAT registrable taxpayers.
Currently set at three million pesos (P3,000,000).

Regional or Area Headquarters (RHQs)

Do not earn or derive income from the Philippines.
Act as supervisory, communications, and coordinating centers for their branches in the Asia-Pacific Region and other foreign markets.

Regional Operating Headquarters (ROHQs)

General administration and planning.
Business planning and coordination.
Sourcing and procurement of raw materials and components.

Deposits (Offshore Banking)

Funds in foreign currencies accepted and held by an Offshore Banking Unit or Foreign Currency Deposit Unit in the regular course of business.
Obligation to return an equivalent amount to the owner thereof, with or without interest.

Deposit Substitutes

An alternative form of obtaining funds from the public (borrowing from twenty (20) or more individual or corporate lenders at any one time) other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrowers own account.

Foreign Currency Deposit System (FCDS)

Natural or juridical persons may deposit foreign currencies forming part of the Philippine international reserves, in accordance with the provisions of R.A. 6426.

Foreign Currency Deposit Unit (FCDU)

Unit of a local bank or a local branch of a foreign bank authorized by the Bangko Sentral ng Pilipinas (BSP) to engage in foreign currency-denominated transactions, pursuant to the provisions of R.A. 6426.

Unless exempted, social media influencers are liable to income tax and percentage or value-added tax.
Classified as self-employed individuals or persons engaged in trade or business as sole proprietors.
Derive income from various sources, such as:
- YouTube Partner Program
  - Advertising revenue
  - Channel membership
  - Merch shelf
  - Super chat and super stickers
  - YouTube Premium Revenue
- Sponsored social and blog posts
- Display advertising
- Becoming a brand representative/ambassador
- Affiliate marketing

Income Tax Exemption for Individuals

Individual taxpayers earning a taxable annual income not exceeding P250,000 are exempt from income tax under the TRAIN Act.

Barangay Micro Business Enterprises (BMBEs)

Gross revenue not exceeding P3 Million a year, are exempt from VAT.
Liable to percentage tax.
Must register with the Office of the City or Municipal Treasurer.
Certificate of authority is valid for two years and may be renewed for the same period.

Declaration of Income Tax for Individuals (Self-employed)

Required to file a declaration of their estimated income for the current taxable year on or before April 15 of the same taxable year.
Installment dates:
- April 15
- August 15
- November 15
- April 15 (Final return, filed and paid)

Estimated Tax

Amount declared as income tax in the final adjusted and annual income tax return for the preceding taxable year, minus the credits allowed.

Individuals Exempt from Income Tax

Non-Resident Citizens
Overseas Contract Workers, Including Overseas Seaman
Barangay Micro Business Enterprises (R.A. 9178 or BMBE Law)

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Description

This quiz explores key concepts related to eminent domain, taxation, and police power. It examines how these governmental powers affect individual property rights and public welfare. Test your understanding of these essential legal principles with this engaging quiz.