Taxation, 2012 Bar — Question 34

MULTIPLE CHOICE

IBP Bank extended loans to debtors during the year, with real properties of the debtors being used as collateral to secure the loans. When the debtors failed to pay the unpaid principal and interests after several demand letters, the bank foreclosed the same and entered into contracts of lease with tenants. The bank is subject to the tax as follows: a) 12% VAT on the rental income, but exempt from the 7% gross receipts tax; b) 7% gross receipts tax on the rental income, but exempt from VAT; c) Liable to both the 12% VAT and 7% gross receipts tax; d) Exempt from both the 12% VAT and 7% gross receipts tax.

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