Final answer:
Yes, there is a double tax in this scenario where Ala pays VAT on his gross sales to the BIR and municipal license tax based on gross sales to Makati, resulting in taxation on the same income.
Step-by-step explanation:
Yes, there is a double tax in this scenario. Ala pays the Value Added Tax (VAT) on his gross sales to the Bureau of Internal Revenue (BIR) and the municipal license tax based on gross sales to the city of Makati. Both taxes are levied on the same income, which results in double taxation.
To illustrate, let's say Ala's gross sales total $10,000. He would pay a certain percentage of this amount as VAT to the BIR. Additionally, he would pay another percentage of the same $10,000 as municipal license tax to Makati. As a result, he is being taxed twice on the same income.
This double taxation can happen when there are multiple levels of government or different tax authorities imposing taxes on the same income or transaction. It can create a burden on businesses and individuals, reducing their net income.