Part A: The Vietnamese tax system and Section A

its administration
Part A: Multiple Choice Question: 50 questions
1.
Destle Co, a Malaysian company, holds a 23% shareholding in Trant Co, a Vietnamese
company until 1 May 2020. From 1 June 2020 Destle Co had invested more in to Trant Co and
holding 30% shares. Destle Co sold goods to Trant Co in both 2019 and 2020.
What is the relationship between Destle Co and Trant Co for the purposes of
reporting related parties’ transactions in accordance with the regulations in Vietnam?
Before 1 June 2020 From 1 June 2020
A. Related parties Related parties
B. Not related parties Related parties
C. Related parties Not related parties
D. Not related parties Not related parties

2.
Forect Co is a Vietnamese subsidiary of Rentis Group, which is headquartered in
Europe. During the year ended 30 June 2020, Forect Co carried out related party transactions
with a total value in excess of VND100 billion. Forect Co is required to file documents within
90 days of the fiscal year end in respect of these transactions.
Which of the following combinations correctly states the related party transaction
document filing requirements of Forect Co?
TP form No.01 Local file Master file
A. Prepare and summit Prepare and summit Prepare only
B. Prepare and summit Prepare only Prepare only C. Prepare only
Not required Not required
D. Prepare and summit Prepare only Not required

3.
The 'substance over form' principle is used to review the business activities of
taxpayers when determining the substance of transactions in the context of related party
transactions. Which of the following factors are taken in to account, according to the
regulations, when applying this principle to determine the substance of related party
transactions?
(1) Facts and data of the transactions
(2) Practicality of the transactions
(3) Contracts and agreements between the parties in the transactions
A. 1 only
B. 2 only
C. 1 and 2 only
D. 1,2 and 3

4.
Which of the following acts of administrative violation that enterprises will be
sanctioned with the fines ranging from VND2,000,000 to VND6,000,000?
A. Providing information, documents or records related to the determination of tax
obligations or taxpayers' accounts upon tax authorities' request at least 05 days after
expiration of the prescribed time limits.
B. Providing information, documents or records related to the determination of tax
obligations or taxpayers' accounts upon tax authorities' request at least 10 days after
expiration of the prescribed time limits.
C. Providing information, documents or records related to the determination of tax
obligations or taxpayers' accounts upon tax authorities' request at least 15 days after
Part D
D. expiration of the prescribed time limits.
E. Providing information, documents or records related to the determination of tax
obligations or taxpayers' accounts upon tax authorities' request at least 20 days after
expiration of the prescribed time limits.

5.
Related party transactions are those transactions occurring between related parties in
respect of their production and business processes (Degree 132/2020/ND-CP)
Which of the following transactions between a parent company and a subsidiary fall
within the definition of related party transactions under Decree 132/2020?
(1) The parent company provides a guarantee to the subsidiary for a loan from a commercial
bank
(2) The subsidiary borrows equipment from the parent company
(3) The parent company and the subsidiary enter into an agreement to share costs for a
 research and development project to be conducted by the parent company
A. 1 and 2
only B. 2 and 3
only
C. 1 and 3 only
D. 1, 2 and 3

6.
What is the late payment penalty rate per day in the case of a company which settles
its outstanding tax within 90 days from the time the liability arose, before 1 July 2020 and
from 1 July 2020 to 31 December 2020?
Before 1 July 2020 From 1 July to 31 December
2020
A. 10% 10%
B. 20% 20%
C. 0.03% 0.03%
D. 0.05% 0.03%

7.
Which of the following cases that use the invoices or evidencing documents
mentioned hereunder constitutes the act of using illegal invoices or evidencing documents?
A. Invoices and evidencing documents not yet valid or expired;
B. Invoices suspended during the period of enforcement of the invoice suspension
penalty, except those permitted for use according to a tax authority's notice;
C. E-invoices which are not registered with any tax authority; D. All 3 cases above

8.
Which of the following cases mentioned hereunder that using the invoices or
evidencing documents constitutes the act of illegally using invoices or evidencing
documents?
A. Invoices or evidencing documents that do not contain all compulsory contents as
prescribed; invoices on which information is erased or corrected in breach of
regulations;
 B. Fraudulent invoices or evidencing documents (i.e. invoices or evidencing documents
containing details about goods and services which are not partially or entirely
rendered); invoices incorrectly reflecting amounts due, or invoices issued as
fraudulent, false or fake ones;
C. Invoices with discrepancies in amounts paid for goods or services rendered, or
discrepancies in required data fields between an invoice’s copies; D. All 3 cases above

9.
Which combination of the following statements correctly describes the treatment of
foreign exchange gains/losses arising during the construction period of a new company
which has no revenue?
(1) Gains and losses must be accounted for separately
(2) Gains and losses can be offset
(3) Gains and losses must be recognised in the year of incurrence
(4) Gains and losses must be deferred and allocated over a period of up to five years from
when the project is put into use
A. 1
and 3 B. 2
and 3 C. 1
and 4
D. 2 and 4

10.
Mr Zong is a Hong Kong citizen and tax resident. He arrived in Vietnam to work on 21
April 2019 and on completion of his employment contract, he left Vietnam on 31 October
2020. In the years 2019 and 2020, he spent the following numbers of days in Vietnam:
From 21 April to 31 December 2019 – 130 days
From 1 January to 20 April 2020 – 64 days
From 21 April to 31 October 2020 – 110 days
Based solely on the above information, what is Zong’s tax residency status in his first
and second tax year in Vietnam?
First year Second year
A. Resident Resident
B. Resident Non-resident
C. Non-resident Resident
D. Non-resident Non-resident
 11.
One of the methods for determining the arm’s length price for a transaction between
related parties is CUP.
What does CUP stands for? A.
Controllable uncompared price
B. Controllable unit price
C. Comparable uncontrolled price
D. Comparable unit price

12.
Mr Hung is a tax resident in Vietnam. In 2020 he received income from Thailand, on
which Thailand had imposed personal income tax at its domestic rates. Mr Hung is not a
resident in Thailand.
Which of the following statements correctly describes Mr Hung’s entitlement to a tax
credit in Vietnam for the tax imposed by Thailand?
A. A tax credit can be claimed in Vietnam only if Thailand has a double tax avoidance
agreement (DTAA) with Vietnam
B. A tax credit can be claimed in Vietnam even if Thailand does not have a DTAA with
Vietnam, but only up to the amount of personal income tax payable under the
Vietnamese tax regulations on the income
C. A tax credit can be claimed in Vietnam for the full amount of the overseas tax without
any conditions or restrictions
D. No tax credit can be claimed in Vietnam

13.
What is the time limit for imposition of penalties for administrative violations against
regulations on tax-related procedures?
A. 02 years from the date of commission of these
violations. B. 03 years from the date of commission of these
violations. C. 04 years from the date of commission of these
violations.
D. 05 years from the date of commission of these violations.

14.
Which statement is true with compliance cost?
A. Decrease compliance cost is not good for taxation system
B. Compliance cost are those incurred by the tax officials, tax departments
 C. Compliance cost are the costs which taxpayers and other incur in meeting obligations
imposed under tax legislation
D. Compliance cost is not important factor in taxation system

15.
Which of the following statement is correct in respect of places for submitting tax
declarations?
A. Where a taxpayer that declares and pays tax using credit method has a manufacturing
division (processing, assembling facility) situated in another province than that of the
head office that does not directly sell goods and thus does not earn any revenue and
the manufacturing division keeps accounting records, VAT shall be paid as 2% for 10%
goods and servcies and 1% for 5% goods & services
B. Where the taxpayer has an affiliate in the same province or central-affiliated city
province as the taxpayer’s head office, the taxpayer shall file a joint VAT declaration
regardless the affiliate has a seal, deposit account, directly sells goods or services or
not
C. The individuals that earn income from both business and wages shall submit the
terminal declaration to the Sub-departments of taxation where the business is located
D. Declarations of corporate income tax on real estate transfer if the taxpayer’s head
office is in different province as the property transferred is at the Department of
Taxation of the province where the taxpayer’s head office located

16.
The tax authority is NOT entitled to impose tax in the following cases:
A. The taxpayer fails to provide supplementary documents at the request of the tax
authority
B. The taxpayer is suspected of making a giveway or liquidating assets to avoid tax
liability;
C. The taxpayer fails to apply for tax registration
D. Fail to comply the tax inspection decision within 10 days from the date of signing
(except for case of postpone as regulated)

17.
If the taxpayer owes the state budget several type of taxes & penalties, the taxpayer
must write such amounts in the following orders:
A. New tax; Tax arrears; Tax debt; Late payment penalties; Fines.
B. Overdue tax, fines and late payment interest that are yet to subject to enforcement
 C. Fines; Late payment penalties; New tax; Tax arrears; Tax debt;
D. Late payment penalties; Fines; New tax; Tax debt; Tax arrears;

18.
The following cases of inspection at taxpayer’s premises is not correct
A. Inspections to settle complaints and lawsuits
B. If the tax refund is under the case of examination before refund
C. Unscheduled inspections when taxpayers are suspected of committing tax offences D.
Inspections at the request of State Audit office of Vietnam

19.
Which of the following violations that enterprises will be sanctioned with the fines
ranging from VND 1,000,000 to VND 2,000,000?
A. Making tax registration; notifying the premature business continuation from 1 to 30
days after expiration of the prescribed time limits,
B. Notifying the temporary business suspension after expiration of the time limits, except
the cases prescribed in clause 1 of this Article;
C. Failing to notify the temporary business suspension.
D. All 3 violations above

20.
Which of the following claims for deduction is acceptable for PIT calculation?
A. Social insurance in Vietnam for foreigner working in Vietnam
B. Contribution to political organisation
C. Direct take care of brother who is studying in University in Vietnam
D. Foreigner working in Vietnam claiming family allowance for children leaving overseas

21.
Which TWO of the following statements are true with purpose of taxation in a
modern economy?
(1) Create the collection to State Budget
(2) Redistribution of income/wealth from the rich towards the poor
(3) Placing the duties on some activities to which the government encourage to develop
(4) Offering the tax relief for some activities to which the government discourage to develop
A. (1) & (2) B. (1) & (3) C. (1) & (4)
D. (2) & (3)
 22.
Which statement is true with efficient tax?
A. Cost of collection are high relative to the tax paid over the government
B. Cost of collection are low relative to the tax paid over the government
C. Cost of collection are equal to the tax paid over the government
D. The tax paid to the government is low relative to the cost of collection

23.
Which statement is true with direct & indirect tax?
A. Indirect taxes are those charged on income and gains, whilst direct taxes are those paid
by the consumer to the supplier, and then to the Government
B. Direct taxes are those charged on income and gains, whilst indirect taxes are those paid
by the consumer to the supplier, and then to the Government.
C. Personal income tax, corporate income tax are indirect taxes
D. VAT is direct tax whilst personal income tax, corporate income tax are indirect taxes

24.
Which TWO statements are true with structure of tax system?
(1) The Parliament formally imposes taxation while the tax collection is paid to State
budget (2) The Ministry of Finance is responsibility for issuing tax regulations to tax payer,
supervising the self-assessment system and tax filling, and agreeing tax liabilities, collecting
tax and following up amounts of unpaid tax, conducting tax inquiry and inspection
(3) The taxpayer’s accountant is the person responsible for submitting the return and for
paying whatever tax becomes due
(4) The administrative function for the collection of tax is undertaken by the General
Department of Taxation and scaled down to Provincial Tax Department and
District/Regional Tax Division (tax authority)
A. (1) &
(2) B. (1) & (3)
C. (1) & (4) D.
(2) & (3)

25.
Which statement below is true with tax regulation issuance?
A. Parliament issues Tax Law; Ministries issue Decree of tax ; Government issues Circular
of tax
 B. Parliament issues Tax Law; Government issues Decree of tax ; Ministries issue Circular
of tax
C. Circulars are to providing the implementation of Laws tax
D. Government issues Tax Law; Parliament issues Decree of tax; Ministries issue Circular
of tax

26.
Which TWO statements below are correct?
(1 Tax avoidance could include any illegal method of reducing your tax burden
(2) Tax evasion consists of seeking to mislead the tax authority by suppressing information to
which they are entitled
(3) Tax evasion is legal activities
(4) Tax evasion consists of seeking to mislead the tax authority by providing them with
deliberately false information
A. (1) &
(2) B. (1) & (3)
C. (1) & (4)
D. (2) & (4)
27.
Who must apply for tax registration?
(1) Business organizations, households and individuals
(2) Individuals having incomes where liable to personal income tax or not
(3) Organizations and individuals are responsible for deducting and paying taxes on behalf of
others.
(4) Other organizations and individuals prescribed in the tax law.
A. (2), (3) & (4)
B. (1), (2), (3)
C. (1), (2) & (3)
D. (1), (3) & (4)

28.
For deadlines of tax declaration/finalization submission, which TWO statements
below are correct?
(1) The deadline for submission of a monthly tax declaration dossier is the 30th of
the month following the month in which the tax obligation arises
(2) The deadline for submission of a monthly tax declaration dossier is the 20th of
the month following the month in which the tax obligation arises
 (3) The deadline for submission of a quarterly tax declaration dossier is the 30th of
the quarter following the quarter in which the tax obligation arises.
(4) The time limit for submission of an annual tax finalization dossier is 30 days from
the end of the calendar year or fiscal year
A. (1) &
(2) B. (1) & (4)
C. (2) & (3) D.
(2) & (4)

29.
Which of the following statements that describe correctly the penalties for violations
against regulations on time limits for submission of tax returns for enterprises
A. Penalties imposed in form of cautions shall be imposed for violations arising from filing
tax returns from 01 to 15 days after expiration of the prescribed time limits under
mitigating circumstances.
B. Fines ranging from VND2,000,000 to VND5,000,000 shall be imposed for the act of
submitting tax returns from 01 to 30 days
C. Fines ranging from VND8,000,000 to VND10,000,000 shall be imposed for the act of
submitting tax returns from 31 to 60 days after expiration of the prescribed time limits.
D. Fines ranging from VND5,000,000 to VND8,000,000 shall be imposed for the act of
submitting tax returns from 31 to 60 days after expiration of the prescribed time limits.

30.
Which priority order for payment of tax and fines are correct?
A. Tax debt, Tax arrears, Late tax payment
B. Tax debt, Late tax, Tax arrears
C. Recently incurred tax, Late payment interest, Fines
D. Tax arrears , Late tax payment ,Tax debt

31.
Which statement below is correct?
A. If tax debt is incurred from 1/7/2016 to now, late payment interest shall be charged at
0.03% per day from the deadline for paying tax
B. If tax debt is incurred from 01/01/2015 to 30/6/2016, late payment interest shall be
charged at 0.07% per day from the deadline for paying tax
C. If tax debt is incurred from 01/01/2015 to 30/6/2016, late payment interest shall be
charged at 0.03% per day from the deadline for paying tax
 D. In case tax payer under-declared taxes for tax periods before 1/1/2015 but
self-identified and paid additionally, the applicable rate is 0,05% for each day of late tax
payment.

32.
Which actions below are considered as breaches of tax procedures?
(1) Submitting a tax registration file after the deadline
(2) Intentionally failing to conduct a declaration or conducting a false declaration of duty
payable on import or export goods
(3) Failing to declare all of the items of a tax file, unless the taxpayer makes an additional
declaration within the stipulated period;
(4) Failing to issue an invoice upon selling goods or services, or recording a value lower than
the actual value of goods or services sold
A. (2) &
(3) B. (2) & (4)
C. (1) & (3) D.
(1) & (4)

33.
Any taxpayer has made a false declaration resulting in a reduction of the amount of
tax payable or an increase in the amount of tax refundable would be subject a fine as which
below option?
A. 10% on the shortfall of tax or excess amount of tax refunded plus a fine for late
payment on the shortfall of tax or excess amount of tax refunded
B. 20% on the shortfall of tax or excess amount of tax refunded plus a fine for late
payment on the shortfall of tax or excess amount of tax refunded
C. Only a fine for late payment on the shortfall of tax or excess amount of tax refunded D.
Only 20% on the shortfall of tax or excess amount of tax refunded

34.
Which of the following cases that enterprises are sanctioned for violations against
regulations on compliance with decisions on tax inspection and examination, enforcement
of tax-related administrative decisions?
 A. Failing to provide data, documents, accounting records and books related to the
determination of tax obligations upon competent authorities’ request during tax
examination or inspection visits at taxpayers' offices or premises;
B. Failing to carry out, or unduly carrying out, decisions on security sealing of documents,
records, reconciliation of funds, stocktaking of goods, input materials, supplies,
machinery, equipment, workshops and facilities;
C. Deliberately removing or changing security seal signs lawfully created by competent
agencies.
D. All 3 cases above

35.
Which of the following cases are corect in term of tax declaration?
(i) Individual is not subject to tax according to tax laws
(ii) The tax payer has to calculate the tax by itself in all case if it is liable to pay tax.
(iii) Export Proccessing Enterprises who only have export activities are not required to submit
the value added tax (VAT) declaration
A. (i), (ii) and (iii)
B. (i) and (ii) only
C. (ii) and (iii) only
D. (i) and (iii) only

36.
In how many days after receiving completely the cancellation of tax debt or fine
records, authotised person must issue a decision of debt cancellation or notify the case that
is not eligible for the cancellation of tax debt or fines?
A.
10 days B.
30 days C.
60 days
D. 90 days

37.
Which of the following statements is correct in respect of personal income tax
finalisation?
(i) Individuals whose an additional payable tax amount on finalisation of VND50,000 or less
(ii) Individuals whose payable tax amount less than tax paid in advance amount but don’t
claim for tax refund or offset in the next tax declaration period
(iii) Individuals whose income from salaries and wages, sign a labor contract for 3 months
or more in a company and have visited income which on average monthly in the year does
not exceed VND10 million and has been deducted the PIT at the rate of 10%.
A. (i) only
B. (i) and (ii) only
C. (ii) and (iii) only
D. (i), (ii) and (iii)

38.
What is the deadline for submitting the VAT declarations by deduction method for
monthly declaration?
A. No later than the 10th day of the month succeeding the month in which tax is
incurred B. No later than the 20th day of the month succeeding the month in which tax
is incurred C. No later than the 30th day of the month succeeding the month in which
tax is incurred
D. No later than the 45th day of the month succeeding the month in which tax is
incurred

39.
If the loss incurred is not offset completely 5 consecutive years from the year which
loss is incurred,
A. Enterprises will be deducted continuously to the CIT income tax of the following years
B. Enterprises will not be deducted to the CIT income tax of the following years
C. Enterprises will be deducted 20% the uncompensated loss in the following year D.
None of the above cases
40.
Which of the following cases that a taxpayer is enforced to tax administrative
decision?
A. Taxpayer who owes tax or fines for tax law violations more than 90 days after the
deadline for paying tax or fines
B. Taxpayer who owes tax or fines for tax law violations when the deadline for differing
tax payment has expired
C. Taxpayer who owes tax or fines for tax law violations liquidates assets D. All 3 cases
above

41.
 Which of the following cases that tax authorities do not have the right to disclose
information of violations against tax laws of the tax payer on the mass media?
A. Tax evasion, tax fraud and failure to pay tax on time
B. Violations against tax laws which affect the right and the obligations of organisations
and other individuals
C. Not follow the requirements of tax authorities according to the tax laws
D. Fail to submit tax return within 30 days from the deadline of tax submission

42.
Which of the following cases that tax authorities can perform tax inspection?
A. The inspection is necessary to settle a complaint or implement anti-corruption
measures.
B. The inspection is necessary for tax administration on the basis of classification of risks
in tax administration.
C. The inspection is requested by State Audit Office of Vietnam, State inspectorate or
another competent authority. D. All 3 cases above

43.
In August 2020, Hoang Ha Co makes an adjustment to the VAT declaration of January
2020, which leads to a decrease in the amount of VAT that remains after deduction from 300
million VND to 200 million VND.
Which statement below is correct?
A. Taxpayer is not required to pay the 100 million VND in VAT as well as the late payment
interest
B. Taxpayer is required to pay only the 100 million VND in VAT not the late payment
interest
C. Taxpayer is required to pay the 100 million VND in VAT as well as late payment interest
D. Taxpayer can’t adjust the VAT declaration

44.
Which of the following violations that the enterprises will be sanctioned with the
fine which equals the amount of evaded tax shall be imposed on the taxpayer committing
under at least a mitigating circumstance?
A. Failing to submit tax registration applications; failing to file tax returns or filing tax
returns 60 days after the deadline or the extended deadline for submission of tax
returns
 B. Failing to submit tax registration applications; failing to file tax returns or filing tax
returns 90 days after the deadline or the extended deadline for submission of tax
returns
C. Failing to submit tax registration applications; failing to file tax returns or filing tax
returns 120 days after the deadline or the extended deadline for submission of tax
returns
D. Failing to submit tax registration applications; failing to file tax returns or filing tax
returns 180 days after the deadline or the extended deadline for submission of tax
returns

45.
Which of the following case that taxpayer may declare VAT monthly or quarterly?
A. Any taxpayer that declares VAT monthly and has a total revenue from sale of goods and
service in the previous years of up to VND50 billion, may declare VAT quarterly
B. Any taxpayer that has inaugurated business recently, may declare VAT quarterly and
can’t change this option
C. Any taxpayer that has inaugurated business recently and declares VAT monthly, after
12 months of business, VAT shall be declared monthly or quarterly, which is optional by
the company.
D. Any taxpayer choose to declare monthly or quarterly from the start of the business and
can’t change this option.

46.
Which of the following penalties for enterprises that ordered the service of printing
of invoices after receipt of the supervisory tax authority’s written notice of ineligibility to
order the invoice printing service, except when the supervisory tax authority does not give
any written opinion upon receiving the request for use of externally printed invoices?
A. Fines ranging from VND500,000 to VND1,500,000
B. Fines ranging from VND20,000,000 to VND50,000,000
C. Fines ranging from VND2,000,000 to VND4,000,000
D. Fines ranging from VND3,000,000 to VND5,000,000

47.
Which of the following penalties for enterprises that reported on the acceptance of
the supply of invoice printing service from 6 to 10 days after expiry of the regulated time
limit under any mitigating circumstances?
 A. Fine ranging from VND500,000 to VND1,500,000
B. Caution
C. Fine ranging from VND2,000,000 to VND4,000,000
D. Compelling the cancellation of invoices

48.
Which of the following penalties for enterprises that issued e-invoices by using cash
registers without network connection or transfer of electronic data to tax authorities?
A. Caution
B. Fine ranging from VND2,000,000 to VND4,000,000
C. Fine ranging from VND4,000,000 to VND8,000,000
D. Compelling the cancellation of invoices

49.
A company which regularly makes real estate transfers is one that is licensed to trade
in real estate (a real estate company). A company which does not make regular real estate
tranfers is one that in not licensed to trade in real estate (a non-real estate company).
Which of the following correctly describes the corporate income tax (CIT) filling
requirements in respect of real estate transfer for each of a real estate and a non-estate
company?
Provisional quarterly tax Tax finalization at year end payments
A. Option 1 Only real estate Both real estate and non-estate company
B. Option 2 Only real estate company Only real estate company
C. Option 3 Both real estate company Both real estate and non-estate
company
D. Option 4 Both real estate and non-estate Only real estate company company

50.
Due to Covid19, Hoang Mai Ltd had difficulty in continuing their business, in June,
2020, they registered the business suspension for 12 months and had the tax authority’s
agreement.
In 2021, Hoang Mai Ltd still want to suspend their business.
Which of the following statement is correct?
A. Hoang Mai Ltd is allowed to register their business suspension only once
B. Hoang Mai Ltd is allowed to register their business suspension for the next 12 months,
start from June, 2021
C. Hoang Mai Ltd does not need to register their business suspension in June, 2021
because the Covid19 has not ended
D. Hoang Mai Ltd is allowed to register their business for the next 2 years from the
deadline of the first registration
Part B: Personal Income Tax Section A
Part B: Multiple Choice Question: 50 questions
1.
Ms Ha Linh is a Vietnamese citizen with two registered dependants. During 2020, she
received a gross monthly salary of VND90 million, plus a bonus equal to three months’ salary
in December 2020, relating to her work performance in 2020. Her employer also paid rent for
a car for her to travel from home to work and vice versa at an annual cost of VND120 million.
Ha Linh is responsible for her own social, health and unemployment insurance, assuming the
cap for all insurances is 20 times of minimum monthly salary.
What is Ms Ha Linh’s annual personal income tax (PIT) liability (in VND millions – to
be rounded only in the final PIT calculations) in the year 2020?
A. VND295
million B. VND113
million C. VND258
million
D. VND268 million

2.
On 1 September 2019, Mr Ian Zong, a Singaporean citizen, commenced a secondment
in the Vietnamese representative office of Finch Co, a company headquartered in Singapore.
He received gross employment income of USD15,000 per month from Finch Co relating to his
secondment. He resided in Vietnam from 1 September 2019 until his employment was
terminated on 15 January 2020 by Finch Co, and he left Vietnam on the same date. He has no
dependants.
What is the amount (in VND million, rounded to one decimal) of Mr Ian Zong’s
personal income tax (PIT) liability for the first tax year in Vietnam in respect of his
secondment (assuming he was not subject to social, health and unemployment insurance in
Vietnam)? Exchange rate: 23,500 VND to 1 USD
A. VND8.62million
B. VND17.25million
C. VND506.1 million
D. VND113.53 million
 3.
In January 2020, Mr Joseph Eldwin, a 50-year-old Australian citizen, started his
employment in Vietnam for An Minh Co, a Vietnamese company. In March 2020, his wife
Fiona, also a 50year-old Australian citizen, suffered an accident in Australia. She was not
handicapped, but had to move to Vietnam to live with Joseph from April 2020 to the end of
the 2020 year. She had no income in 2020. An Minh Co provided Joseph with cash support of
VND150 million towards medical care expenses for Fioan during 2020.
What is the total personal deduction/relief (in VND millions and ignoring social,
health and unemployment insurance) Mr Joseph Eldwin can claim in the year 2020 relating
to his personal income tax (PIT)?
A. VND168 million
B. VND184.8million
C. VND120 million
D. VND132 million

4.
Mr Nhat Minh, a Vietnamese citizen, was assigned to work in the Singapore
representative office of An Nam Tel Co, a company headquartered in Vietnam. In 2020, he
received monthly gross income of USD20,000, plus an annual tuition fee of USD40,000 for his
ten-year-old son, for studying at a school in the Singapore. The tuition fee was paid directly by
the representative office of An Nam Tel Co to the school.
What is the amount (in VND million, rounded to two decimals) of Mr Nhat Minh’s
Vietnamese monthly personal income tax (PIT) liability in the year 2020 (before deducting
any foreign tax credit)? Exrate assum is VND 23,500 to USD1.
You should assume Mr Nhat Minh is not subject to any compulsory insurance in
Vietnam.
A. VND184.10 million
B. VND154.65 million C. .VND150.8 million
D. VND149.26million

5.
Mr Hung Nguyen, a 35-year-old Vietnamese tax resident, works for Eco Vina, a foreign
invested company in Vietnam.
 He was relocated back to Vietnam on 1 January 2020 after a three-year secondment to
Eco Australia, a sister company of Eco Vina. In 2020, Mr Hung received VND200 million
monthly gross salary plus a performance bonus equivalent to VND360 million for his work in
Australia. During 2020 Eco Vina also paid for two return airfare tickets costing VND46 million
in total for Mr Hung to visit his 35-year-old wife and 16-year-old son who live in Australia.
Hung Nguyen is responsible for her own social, health and unemployment insurance,
assuming the cap for all insurances is 20 times of minimum monthly salary.

What is Mr Hung Nguyen’s annual personal income tax (PIT) liability (in VND millions
– to be rounded only in the final PIT calculations) in the year 2020?
A. VND786
million B. VND733
million C. VND754
million
D. VND759 million

6.
In May 2020, Mr Hoan and Ms Tuyet, two Vietnamese tax residents, were the equal
co-winners of a promotion prize, a house which had a market value of VND3300 million,
inclusive of 10% VAT, from a real estate company.
What is the amount (in VND million, rounded by one decimal) of Ms Tuyet’s personal
income tax (PIT) liability on the above promotion prize?
A. VND0 million
B. VND165 million
C. VND164.5 million
D. VND330 million

7.
Mr Lee Nam-Jung is a Korean citizen employed by H&Z KR, a company in Korea. From
March 2020 to June 2020, Lee was assigned to work in Vietnam on a short-term project for
H&Z VN Co, a subsidiary of H&Z KR. During that time Lee was present in Vietnam for 128 days.
H&Z Group cannot separate his income attributable to the project in Vietnam from his total
employment income from H&Z KR. In 2020, Lee’s annual gross employment income from H&Z
KR was USD300,000 and H&Z VN Co also paid for a golf course membership at a cost of
VND50 million for his use whilst in Vietnam. In 2020, Mr Lee Nam-Jung had two dependants
in Korea.
What is the total personal income tax (PIT) liability (rounded to VND millions) in
Vietnam for Mr Lee Nam-jung in the year 2020? Exrate VND 23,500 to USD 1.
A. VND1,420million
B. VND504 million
C. VND494 million
D. VND577million

8.
Ms Minh Anh, a Vietnamese citizen, purchased 200,000 shares in TBC Bank in 2017
when the price per share was VND40,000 (four times par value). The shares were listed on the
official stock exchange and in 2020, TBC Bank announced a 20% dividend per share, of which
half would be paid in cash and half in the form of script dividend (shares). The market price of
the shares at the time of announcement was VND70,000 per share. Ms Minh Anh had no
intention of selling these shares in 2020.
What is Ms Minh Anh’s Vietnamese personal income tax (PIT) liability (in VND million)
in the year 2020 in relation to the dividend?
A. VND10 million
B. VND20 million
C. VND40million
D. VND0 million

9.
Ms Kha Oanh is 30 years old, a Vietnamese tax resident and has one dependant. For the
whole of the year 2020, she worked as an executive assistant for Petronas Co, a local company
in Vietnam, for a monthly salary of VND136 million (gross of personal income tax (PIT)). Ms
Oanh is responsible for her own social, health and unemployment insurance, assuming the
cap for all insurances is 20 times of minimum monthly salary.
What is Ms Kha Ooanh’s monthly personal income tax liability (in VND millions,
rounded to two decimals only in the final PIT calculations) in the year 2020?
A. VND32.8 million
B. VND27.3 million
 C. VND26.48 million
D. VND31.2 million

10.
On 1 January 2020, Mr Viet Hoang, a Vietnamese citizen, inherited from his uncle, and
registered ownership of, 150,000 shares in Alumimum JSC. Alumimum JSC is a non-listed joint
stock company. Mr Viet Hoang’s uncle purchased the shares for VND15,000 per share when
Alumimum JSC was established. The value per share, based on the audited financial
statements of Alumimum JSC for the year ended 31 December 2019, was VND36,000.
What is the amount of Mr Viet Hoang’s personal income tax (PIT) liability in respect of
his inheritance in 2020?
A. VND1078 million
B. VND0 million
C. VND540 million
D. VND539 million
.
11.
Ms Tran Quynh, a 40-year-old Vietnamese citizen, registered her two children as
dependants in 2020. Throughout that year her first son, Tho, was 20 years old and studied at
the university in United State and he had no income. Her daughter, Van, became 18 years old
on 1 October 2020 and was studying at the university in Vietnam. Van is a teen actress and
earned an income of VND100 million from movie casting in 2020.
What is the total dependant relief (in VND million, rounded to one decimal) available
to Ms Tran Quynh in 2020?
A. VND92.4
million B. VND52.8
million
C. VND39.6 million
D. VND105.6 million

12.
Mr Oliver Grabiel is a 30-year-old UK citizen assigned to work for ATF Co, a foreign
invested company in Vietnam. In 2020, Oliver spent more than 183 days in Vietnam, and
received gross income consisting of a monthly salary of USD35,000, housing allowance of
USD5,500 per month in cash, and a performance incentive of USD35,000. He was not subject
to any mandatory insurance.
What is Mr Oliver Gabriel’s monthly Vietnamese personal income tax (PIT) liability (in
VND million rounded to one decimal only at the final PIT calculation) in the year 2020?
Exrate assumes VND23,500 to 1USD
A. VND309.2 million
B. VND319 million C. VND343 million D. VND347
million

13.
Mr Minh Hieu, a Vietnamese tax resident, is 45 years old and has three dependants. He
is the director of An Khanh Co, a company incorporated in Vietnam. In 2020, he earned a
gross monthly salary of VND300 million plus an annual bonus equal to four-months salary.
Hieu is responsible for his own social heath and unemployment insurance assuming the cap
for all insurances is 20 times of minimum monthly salary.
What is Mr Minh Hieu’s monthly personal income tax liability (rounded to the nearest
VND million only in the final PIT calculations) in the fiscal year 2020?
A. VND121 million
B. VND86 million
C. VND122million
D. VND111 million.

14.
In 2020, Ms Mai Nguyen and Mr Hong Tran won a car as a promotional prize in a
campaign held by B car, a car dealer in Vietnam. The car has a market value of VND1,870
million (inclusive of value added tax (VAT)). Mai and Hong agreed to share equally the
personal income tax to be withheld by B car, and that Hong would pay 50% of the market
value of the car (after deducting 10% VAT) to Mai, so that Hong would be sole owner of the
car.
What is the amount of personal income tax (PIT) liability (rounded to the nearest VND
million) that Ms Mai Nguyen is subject to on her share of the promotional prize won in the
fiscal year 2020?
 A. VND93
million B. VND0
million
C. VND85 million
D. VND169 million

15.
Ms Huong Doan is a real estate trader and owns various plots of land. In 2010, she
bought the land use right for a 1,500 square metre plot of land in Da Nang for VND4 million
per square metre. There was non construction project on the land. In 2020, she sold the land
use right under a contract which denominated the proceeds at VND6 million per square
metre. The price of the same area of land set by The People’s Committee was VND4,5 million
per square metre in 2010, and VND12 million per square metre in 2020
What is the personal income tax (PIT) liability of Ms Huong Doan from the sale of the
land use right in the fiscal year 2020?
A. VND360
million B. VND0million
C. VND240 million
D. VND 225 million
16.
Ms Hong Hanh, who is 40 years old, is a Vietnamese citizen. During 2019, she worked
for
Khanh Binh Co, a company incorporated in Vietnam. Her hourly equivalent gross salary
was VND0.8 million. During the year, she had recorded overtime of 200 hours. Half of her
overtime hours were paid at 150% of her hourly equivalent gross salary and the remaining
hours were paid at 200% of her hourly equivalent gross salary.
What is Ms Hong Hanh’s non taxable overtime income for Vietnamese personal
income tax (PIT) purposes (in VND million) in the fiscal year 2019?
A. VND210 million
B. VND120 million
C. VND30 million
D. VND0 million
 17.
Which of the following items of income would NOT be subject to personal income tax
in Vietnam?
(1) Medical support for fatal disease from the employer to the parent-in-law of an employee
(2) One time round trip home leave air fares for the family of an expatriate employee
(3) Kindergarten tuition fees for the children of a Vietnamese employee working abroad
(4) Voucher issued by the employer to an employee for lunches in the canteen operated by
the employer
A. 1, 2
and 3 B. 2, 3
and 4
C. 1, 2 and 4
D. 1, 3, and 4

18.
Mr Alfie is a Canadian and non-resident in Vietnam. On 1 December 2020, during his
vacation trip to Vietnam, he visited PHT, a casino for expatriates in Vietnam. He cashed in (i.e.
exchanged cash for chips) USD3000 at the beginning, and cashed out (i.e. exchanged chips for
cash) USD5000 on each of three separate occasions with his winnings. Exrate VND23,500 to
1USD.
What is Mr Alfie’s tax liability in Vietnam as a result of these transactions?
A. VND27,200,000
B. VND34,250,000
C. VND54,400,000
D. VND85,350,000

19.
Ms Linh Pham has two dependants. In 2020, her monthly gross salary was VND70
million and she was responsible for all national insurance contribution, assuming the cap for
all insurances is 20 times of minimum monthly salary.
What is Ms Linh Pham’s monthly tax liability (to the nearest VND10,000)?
A. VND7.46 million
 B. VND8.52 million C. VND9.3 million
D. VND10.7 million

20.
Mr Albert, a Canadian citizen, arrived in Vietnam on 18 September 2019 to work under
an employment contract. He stayed in Vietnam for the whole of the time until 19 June 2020
when he completed his employment contract and left Vietnam.
What is the amount of personal relief to which Mr Albert will be entitled to for his
period in Vietnam?
A. VND0 million
B. VND102 million
C. VND132 million
D. VND88 million

21.
On 1 March 2020, Mr Cuong, a Vietnamese national, started employment with a new
employer, Ling Co. Ling Co has a policy whereby both the employer and the employee
contribute to a voluntary pension fund approved by the Government. The monthly
contributions for the employer and the employee, respectively, are VND6 million and VND3
million.
What is the amount of the deduction Mr Cuong can claim against his taxable income
for the above contributions in 2020?
A. VND10
million B. VND27
million
C. VND90 million
D. VND0 million

22.
Ms Thanh Le is a Vietnamese national with no dependants. On 1 January 2020, she
signed a gross employment contract with salary of VND360 million per month. Her employer
is not required to withhold compulsory insurance from her income.
What is the amount of Ms Thanh Le’s monthly net take home income?
 A. VND260.9
million B. VND237.9
million C. VND243.9
million
D. VND247.7 million

23.
Mr. Theodore is a foreigner dispatched by Coastal Oil Co to an oil rig on the continental
shelf of Vietnam.
According to the labor contract, the work cycle of Mr. Theodore on this oil rig is 28
consecutive working days and following 28 days off. Coastal Oil Co pays the following for Mr.
Theodore: (i) air tickets for Mr. Theodore to fly from his country to Vietnam and vice
versa for every time of changing shift
(ii) the helicopter that take Mr. Theodore from the mainland to the oil rig and
vice versa (iii) the residence expense while Mr. Theodore is waiting for the helicopter
What is taxable income of Mr. Theodore?
A. (i) and (ii) only
B. (ii) and (iii) only
C. (i), (ii), and (iii)
D. None (exempt)

24.
The wages of Mr. Nam on an ordinary working day is 140,000 VND/hour.
(i) When working overtime on Monday (working day) he is paid 210,000 VND/hour
(ii) When working overtime on Sunday (holiday) he is paid 280,000 VND/hour
What is average hourly taxable income (in VND) of (i) and (ii) of Mr. Nam?
A. 140,000
B. 210,000
C. 280,000
D. 330,000

25.
 Mr. Joshua is a foreigner who first comes to Vietnam on 20 April 2019. In 2019, up to 31
December, Mr. Joshua has stayed in Vietnam for 150 days. In 2020, up to 19 April, Mr. Joshua
has stayed in Vietnam for 165 days.
What is first tax period and second tax period of Mr. Joshua ?
A. First tax period: 20 Apr 2019-31 Dec 2019. Second tax period: 1 Jan 2020-31 Dec 2020.
B. First tax period: 1 Jan 2019-31 Dec 2019. Second tax period: 1 Jan 2020-31 Dec 2020.
C. First tax period: 20 Apr 2019 - 19 Apr 2020. Second tax period: 1 Jan 2020-31 Dec 2020.
D. First tax period: 20 Apr 2019-19 Apr 2020. Second tax period: 20 Apr 2020-31 Dec2020.

26.
In 2020, Mrs. Quynh Anh is paid monthly gross salary of 60 million VND, and pay 8% of
salary for social insurance, 1.5% of salary for health insurance and 1% for unemployment
insurance. Mrs. Quynh Anh has 2 children under the age of 18, and makes no charitable
donations. What is monthly assessable income and PIT (in million VND) of Mrs. C?
A. 60 and 6.02
B. 37.07 and 9.27
C. 40.02 and 6.02
D. 37.07 and 6.02

27.
In 2020, according to the labor contract between Mr. Binh and ReInk Co, Mr. Binh
receives a monthly salary of 34 million VND. Apart from that, ReInk Co pays for the sports club
membership of 2 million VND/month on behalf of Mr. Binh. Mr. Binh has to pay 3.13
million VND/month for compulsory insurance. ReInk Co is responsible for paying personal
income tax on behalf of Mr. Binh. In the year Mr. Binh only has a personal deduction for
himself, no dependents, and does not make charitable donations.
What is monthly assessable income and PIT (in million VND) of Mr. Binh?
A. 21.43 and 3.3
B. 21.43 and 4.3
C. 24.7 and 4.95
D. 25.3 and 3.4

28.
 In 2020, according to the labor contract between Mr. Duong and ECar Co, Mr. Duong
receives a monthly salary of 34 million VND. Apart from that, ECar Co pays for the sports club
membership of 2 million VND/month on behalf of Mr. Duong. Mr. Duong has to pay 3.13
million VND/month for compulsory insurance. ECar Co is responsible for paying personal
income tax on behalf of Mr. Duong. In the year Mr. Duong only has a personal deduction
for himself, no dependents, and does not make charitable donations.
In addition, ECar Co also pays 8 million VND/month in house rental on behalf of Mr. D.
What is monthly assessable income and PIT (in million VND) of Mr. Duong?
A. 51.5 and 4.93
B. 32.71. and 8.18
C. 32.71 and 4.93
D. 51.5 and 8.18

29.
In 2020, according to the labor contract between Mr. Tung and Asiana Co, Mr. Tung
receives a monthly salary of 83 million VND. Apart from that, Asiana Co pays for the golf
membership of 20 million VND/month on behalf of Mr. Tung. Mr. Tung has to pay 3.129
million VND/month for compulsory insurance. Asiana Co is responsible for paying personal
income tax on behalf of Mr. Tung. In the year Mr. Tung only has a personal deduction for
himself, two dependents, and does not make charitable donations.
What is monthly assessable income and PIT (in million VND) of Mr. Tung?
A. 80.07 and 28.02
B. 80.07 and 18.17
C. 108.03 and 27.96
D. 108.03 and 37.8

30.
In 2020, according to the labor contract between Mr. Tuan and company Viettravel Co,
Mr. Tuan receives a monthly salary of 34 million VND. Apart from that, Viettravel Co pays for
the sports club membership of 2 million VND/month on behalf of Mr. Tuan. Mr. Tuan has
to pay 3.13 million VND/month for compulsory insurance. Viettravel Co is responsible for
paying personal income tax on behalf of Mr. Tuan. In the year Mr. Tuan only has a
personal deduction for himself, no dependents, and does not make charitable donations.
 In addition Mr. Tuan has a contract and earn an income of 12 million VND/month
at Luxtravel Co from January 2020 to May 2020 apart from the incomes earned at
Viettravel Co.
Luxtralvel Co also pays personal income tax on behalf of Mr. Tuan.
What is total annual assessable income and PIT (in million , one decimal) of Mr. Tuan? A.
572.2 and 72.5 B. 382.8 and 56.8 C. 530.4 and 66.5
D. 620.1 and 79.2

31.
Mr. Eliot is a foreigner that comes to work in Vietnam continuously from 01
March 2020. On 15 November 2020, the labor contract expires and Mr. Eliot goes home.
Mr. Eliot is from country which has Double Taxation Agreement (DTA) with Vietnam.
For what period Mr. Eliot can claim personal and dependent deduction?
A. From Jan 2020 to Nov 2020
B. From Mar 2020 to Dec 2020
C. From Jan 2020 to Dec 2020
D. From Mar 2020 to Nov 2020

32.
Ms Hanh Nguyen, who has incomes from wages and remunerations of MNY Co, also
has dividend income paid by Cao su VN Co. Which of the following statement that describes
correctly about authorising tax statement?
A. Ms Hanh can authorise MNY Co to pay tax on her behalf
B. Ms Hanh can authorise Cao su VN Co to pay tax on her behalf
C. Ms Hanh must pay tax by herself
D. Ms Hanh can select MNY Co or Cao su VN Co for paying tax on her behalf

33.
A child of Mr. Hai born on 25 July 2019.
When this child is considered a dependent of Mr. Hai for PIT purpose?
A. From December 2019
B. From August 2019
 C. From July 2020
D. From January 2019

34.
In 2020 Mr. Yen contributes 4,000,000 VND/month to the voluntary pension fund by
concluding insurance contracts with an insurance company from 1 January. The voluntary
pension plans are conformable with regulations of the Ministry of Finance and approved by
the Ministry of Finance.
What is 2020 annual amount of deduction on voluntary pension fund Mr. Yen can
claim for PIT calculation?
A. 24,000,000 VND/year B. 12,000,000 VND/year
C. 48,000,000 VND/year
D. 6,000,000 VND/year

35.
Mr. Khai is a shareholder of Binh Minh JSC (listed at the Stock Exchange). In 2017, Mr.
Khai receives 15,000 shares instead of dividend paid by Binh Minh JSC (the face value of a
share is10,000 VND). In August 2020, Mr. Khai transfers 8,000 shares at a price of 55,000 VND
per share.
What is provisional tax amount (in million VND) to be paid by Mr. Khai?
A. 7.94
B. 7.5
C. 4.4
D. 0.44

36.
Mr. Son has exchanged cash for chips 3 times since he gets in and gets out of the game
center.
The total value of 3 exchanges is 15000 USD. He also exchanged chips for cash twice
with a total value of 17000 USD. VND/USD exchange rate is 23,500.
What are winning income and assessable income of Mr. Son (in million VND)? A.
389 and 39
 B. 370 and 37
C. 47 and 37
D. 389 and 126

37.
Mr. Ngoc plays with an automatic game machine using cash. In a game, Mr. Ngoc key in
totally 3000 USD. After the game is over, Mr. Ngoc withdraws out 7,500 USD in cash (cash out)
from the machine. In that game, Mr. Ngoc also wins a jackpot being 1,000 USD (accrued in the
cash out).
What are income from jackpot and winning income from the slot machine of Mr. Ngoc
(in USD)?
A. 1000 and 3500
B. 1000 and 1200 C. 1500 and 200
D. 1500 and 1200

38.
Mr. Quynh signs a service contract with EcoPlant Co to take care of ornamental plants
on the company’s premises once per month from September 2020 to April 2021. EcoPlant Co
pays an income of 03 million VND per month to Mr. Quynh. EcoPlant Co withhold tax at 10%
before making payment.
Can Mr. Quynh ask EcoPalnt Co to issue Tax Withholding Receipt to him and for what
period?
A. He can ask for receipt for each month
B. He can ask for one receipt from Sep 2020 to Dec 2020 and one receipt from Jan 2020 to
April 2021
C. A or B above
D. A and B above

39.
Mr. Long signs a long-term labor contract (from September 2019 till the end of August
2020) with Hang Hai Company. In this case, if Mr. Long is required to finalize tax directly with
the tax authority and requests Hang Hai Company to issue the certificate of tax withheld at
source. For what period Hang Hai Company will issue tax withholding certificate?
 A. One from Sep 2019 to Aug 2020
B. One from Sep 2019 to Dec 2019 and one from Jan 2020 to Aug 2020
C. One for each month
D. A, B and C above

40.
Mr Phuc is a Vietnamese citizen with three registered dependants. During 2020, he
received a gross monthly salary of VND60 million, plus a bonus equal to two months’ salary in
February 2020, relating to his work performance in 2019. His company also paid telephone
and rent for a car for he to travel from home to work and vice versa at an annual cost of
VND68 million. Phuc is responsible for his own social, health and unemployment insurance.
What is Mr Phuc’s annual personal income tax (PIT) liability (in VND millions – to be
rounded only in the final PIT calculations) in the year 2020?
A. VND89 million
B. VND127 million C. VND80 million
D. VND119 million

41.
Which of the following claims for deduction is acceptable?
A. Direct take care of brother who is studying in University in Vietnam
B. Foreigner working in Vietnam claiming family allowance for children leaving overseas
C. Social insurance in Vietnam for foreigner working in Vietnam D. Contribution to political
organisation

42.
Mr Van An Hoang, who is 68 years old, has retired and has pension of VND15 million.
Mr Van An also works as a consultant for a construction company with a salary of VND7
million per month.
How does Mr Van An declare and pay tax?
A. Mr Van An declares and pays tax with income of VND22 million per month
B. Mr Van An declares and pays tax with overtime income
 C. Mr Van An does not declare and pays tax because he hasn’t reached the tax payment
rate D. Mr Van An declares and pays tax with income of VND22 million per month after
deduction for family circumstance
43.
Which type of the following income is not income being salary of an individual?
A. Income from doing professional accounting services
B. Income from provision of marketing advise for a company
C. Income from participating in fashion show
D. Income from participating in science research project

44.
Who is not dependant for the claiming of family deduction purposes?
A. Children under the age of 18 years
B. Children over 18 years of age who is handicapped and unable to work.
C. Children studying master and have no income.
D. Mother (of 70 year old) owns several real estate for lease but clients owe the rental
until next year, she has no other income

45.
Mr. An & his wife has a house for rent. The rental is 20 millions per months share
equally to
Mr. An and his wife. The contract is for period from 1 April 2020 to 31 March 2022
Which of the following is the total tax payable on the rental income in 2020
A. VND18 million
B. VND 9 million
C. VND 4.5 million
D. VND 0 million

46.
Which of the following cases that have to do tax finalisation by oneself?
(i) Earners who are permitted to authorize their payers to do tax finalisation and the payer
has been issued tax withhold at source receipt
(ii) Earners have several sources of income which has been deducted tax at source at the rate
of
10%
(iii) Earners have only permament salary income and teaching partime at several training
center with teaching fee of net 8 millions/month in average (after 10% tax withhold at
source) A. (i), (ii) and (iii)
B. (ii) and (iii)
C. (i) and (ii)
D. (i) and (iii)

47.
What is the tax refund condition for individuals that overpaid the PIT?
A. Only the person having TINs shall receive PIT refund
B. Any taxpayer who authorizes the income payer to make the annual tax statement, tax
shall be refunded via the income payer.
C. Any the taxpayer who declares tax himself/herself, overpaid tax shall be refunded or
offset against the tax payable in the next period.
D. All 3 cases above

48.
Ms Wang and WS Ltd jointly set up a partnership in Vietnam, WS Wang Co, providing
accounting services and sharing profits and losses equally. The taxable profit of WS Wang Co
for 2020 was VND1,400,000,000. The partners agreed to distribute VND600,000,000 of this
profit.
Ms Wang does not have other taxable income. No dependants and no compulsory
insurance. What is the amount of individual income tax (IIT) payable by Ms Wang in the year
2020 in million VND?
A. 0
B. 142 C. 103 D. 206

49.
Mr. Manh & his wife has a house for rent. The rental is 30 millions per months share
equally to
 Mr. An and his wife. The contract is for period from 1 April 2019 to 31 March 2021
Which of the following is the total tax payable on the rental income in 2020
A. VND27 million
B. VND13.5 million
C. VND3 million
D. VND0

50.
Which of the following are treated as taxable income for the purposes of personal
income tax?
(1) Cash of VND100 million from grandfather’s estate
(2) Insurance compensation of VND25 million from a traffic accident
(3) Moon-cake coupon worth VND1 million received from an employer
(4) Company car, valued at VND500 million, and transferred to an employee free of charge
A. 1, 3 and 4 only
B. 3 and 4 only
C. 1 and 2 only
D. 4 only
Part B: Personal Income Tax Section B
Part B: Constructed Response Question: 15 questions
1. Mr Nam Nguyen
Mr Nam Nguyen and Ms Linh Nguyen are brother and sister. In 2016, they inherited a
piece of land of 300 square metres in the city downtown from their parents, for which they
have duly settled all personal income tax (PIT) obligations for the inheritance. There was no
specific indication as to the ratio of ownership in their parents’ will or any other documents.
At the beginning of 2020, they decided to sell the land, and entered into an agreement
with an individual buyer on 1 April 2020. The agreed contractual price was VND100 million
per square metre (being the market price at the time of transfer), and the seller was obliged
to handle the tax filing and payment. The contract was effective from 15 April 2020 and Mr
Nam Nguyen registered the change in ownership on 30 April 2020. Payments were fully
settled on 10 May 2020.
After the sale of the land, on 15 May 2020, Mr Nam Nguyen used all of the cash
received plus 400,000 shares of ABC Co, a listed company on the HNX Stock Exchange, to
contribute capital into HD Co, a limited liability company. At the time of contribution, the
market price of the ABC Co shares was VND25,000 per share. The value of the capital
contribution was agreed based on the actual cash contribution and this market value for the
ABC Co shares. On 1 September 2020, Mr Nam Nguyen sold the capital contribution in HD Co
to Mr Vu, a Vietnamese individual, for VND78,000 million. The market price of the ABC Co
shares was unchanged.

Required:
(a) Determine the taxing date for personal income tax (PIT) purposes of the land sale
made by Mr Nam Nguyen and Ms Linh Nguyen. (2 marks)
(b) State the basis on which the taxable income on the land sale will be allocated
between Mr Nam Nguyen and Ms Linh Nguyen and calculate (in VND millions) the PIT liability,
if any, payable by Mr Nam Nguyen. (3 marks)
(c) Briefly explain the tax treatment of the capital contribution made to HD Co by Mr
Nam Nguyen on 15 May 2020 and calculate (to the nearest VND millions) the PIT liability
incurred, if any. (2 marks)
(d) Calculate (to the nearest VND millions) the PIT liability incurred by Mr Nam
Nguyen, if any, in respect of the sale of the capital contribution in HD Co on 1 September
2020. (3 marks)
(Total: 10 marks)

2. Ms Hoa
 Ms Hoa is 40 years old, and a Vietnamese citizen. She is divorced and is bringing up her
two children who were born in 2005 and 2009, respectively. In 2020, she has been working
two jobs at the same time as follows:
• Full-time at JWM Co, for a net salary of VND144 million per month plus a bonus equal
to two months’ salary.
She is responsible for her own compulsory insurance in respect of this employment.
• Part-time at CNL Co, for a net salary of VND25 million per month. No insurance is
covered by CNL Co in respect of this employment.
Ms Hoa also maintains a portfolio of investments, which earned her the following
amounts in 2020:
• VND150 million cash from bond interest.
• VND180 million cash from dividends distributed by TCL Co, a non-public joint stock
company (representing a yield of 10% over face value).
• 20,000 shares of PDL JSC, a listed company, as a scrip dividend in respect of the 120,000
shares she held in May 2020. At the time of this distribution, the market price of PDL
JSC shares was VND18,000 per share.
On 1 September 2020, Ms Hoa decided to quit the job at CNL Co to have more time for
her children. She also sold all of her shares in PDL JSC and TCL Co at the price of VND25,000
and VND36,000 per share, respectively. The face value of both companies’ shares is
VND10,000 per share.

Required:
(a) Calculate Ms Hoa’s taxable income and personal income tax (PIT) liability in
respect of her employment income for the year 2020. (8 marks)
(b) Calculate the PIT liability of Ms Hoa for the year 2020 in respect of the following
investment activities:
• the receipt of the interest and cash dividend;
• the receipt of the scrip dividend; and
• the sale of the PDL JSC and TCL Co shares).
Note: All calculations in both parts of this question should be made in VND millions,
rounded to one decimal. (7 marks)
(Total: 15 marks)

3. Mr Felix Cooper
Mr Felix Cooper, a 52-year-old South African, arrived in Vietnam on 15 March 2020
following an invitation to become a permanent teacher for VSU, an international school in
Vietnam, for the period to December 2024. VSU successfully registered Felix ’s personal tax
code and other necessary dependant registrations for personal income tax (PIT) purposes on
31 March 2020. Felix spent the remainder of 2020 in Vietnam. On a trip to visit an orphanage
in the South, he adopted Luong Tran, a one-year-old Vietnamese boy, as his son. He
completed the procedures for adoption and started to raise Luong Le from 10 August 2020.
Luong Le officially became a dependant of Felix from 31 August 2020.
Felix has a daughter, Ariana, who is 19 years old. At the time Felix moved to Vietnam,
Lauren was studying at a university in South Africa. In September 2020, she came to Vietnam
to live with Felix and study at an international university in Vietnam. Lauren has no income in
the year 2020.
From May 2020, VSU signed a contract with a voluntary insurance fund which is
allowed to operate in Vietnam for Felix . According to this contract, VSU and Felix contributed
VND2.5 million and VND0.8 million per month, respectively.
In December 2020, Felix donated VND80 million to a qualifying charity fund.
After arriving in Vietnam, Felix started to write a book about his experiences with the
culture in Vietnam, and he signed a contract with Alone World, a foreign publisher, for
publishing this book. According to this contract, the total royalty will be USD80,000. In 2020,
Alone World paid Felix the full amount of the royalty in two instalments of USD40,000 each.
Exchange rate is 23,500VND to 1 USD

Required:
(a) Calculate (in VND millions rounded up to the nearest one decimal) all the
possible deductions from taxable income which Mr Felix Cooper is entitled to for personal
income tax (PIT) purposes during the year 2020. (7 marks)
(b) Briefly explain the tax treatment of a royalty received by a resident individual and
calculate (to the nearest VND million) the PIT liability, if any, incurred by Mr Felix Cooper on
the royalty income received from Alone World in the year 2020. (3 marks)
(Total: 10 marks)

4. Mr Phuc Tran
For the purposes of this question you should assume that today’s date is 1 January
2021. Mr Phuc Tran, a 40-year-old Vietnamese citizen, is married with two children, a
ten-year-old daughter and a six-year-old son. In 2020 Phuc was promoted to become the
general director of GIV JSC, a Vietnamese joint stock company with diversified operations in
various sectors in Vietnam, including retail outlets and education. Phuc’s gross-of-tax
remuneration package for 2020, as stated in the labour contract, is as follows:
 • Salary: VND650 million per month, with two additional monthly salaries to be received
in February and December.
• Incentive bonus: an award of 100,000 shares of GIV JSC if he successfully achieves the
corporate performance as set out at the beginning of 2020. Phuc can choose to receive
either the shares or cash equivalent to the market share price as at 31 December 2020.
In both cases the award will be made in June 2021.
• Car rental for transporting Phuc from home to office and office to home: VND20 million
per month to be paid directly to the lessor by GIV JSC.
• Medical insurance fee (non-accumulative): VND240 million per year in total for the six
persons in Phuc’s family (himself, his wife, his two children and his parents). An equal
fee is payable for each person. The insurance covers medical expenses up to VND1
billion per year for each insured person.
• Membership fee for golf club: VND200 million per year. The membership card is issued
specifically to Phuc.
• Share options to purchase 50,000 shares of GIV JSC at the nominal value of
VND10,000 per share at the beginning of 2020. These options had to be mandatorily
exercised on 4 January 2020 (i.e. Phuc had to purchase the shares on that date), and
the purchase cost of VND500 million was to be deducted from the additional salary he
received in February 2020. The shares were sold on 31 December 2020 at their market
price and the proceeds paid in cash to Phuc on the same date

As a standard benefit offered to all management positions, Phuc’s children can study in
a school established and operated by a subsidiary of GIV JSC, with the tuition fees settled
directly by GIV JSC to this subsidiary with valid supporting documents. The fees quoted by the
school for pupils at the grades of Phuc’s daughter and son are VND195 million and VND180
million per annum, respectively. The school has a general policy (applicable to everyone) to
offer a 5% discount for the second child of a family enrolled with the school. The market price
of the GIV JSC shares as at 4 January 2020 and 31 December 2020 was
VND45,000 and VND48,000 respectively. On 6 August 2020, GIV JSC paid a dividend of
VND8,000 per share held (including the shares received from the exercise of the share
options).
GIV JSC has obtained guidance from the tax authorities instructing that the share
options are taxable in the year when the shares are sold, and that the taxable employment
income is the difference between the market price at the time of exercise and the exercise
price (i.e. the price which the employee has to pay for the shares).
 Phuc is responsible for his personal income tax (PIT), as well as the social, health and
unemployment insurance contributions payable on his part. Phuc’s wife and parents all have
income in excess of an average of VND2 million per month.

Required:
(a) Determine (in VND millions) Mr Phuc Tran’s taxable income and non-taxable income for
the year 2020, and taxable income in future years for personal income tax (PIT) purposes
with respect to his employment income.
Note: You should present your answer in tabular form with the headings ‘Taxable in
2020,’
‘Non-taxable in 2020’ and ‘Taxable in the future’, listing all of the relevant items
referred to in the question in the appropriate column. (8 marks)
(b) Calculate (in VND millions rounded to one decimal) Mr Phuc Tran’s monthly taxable
income and the total PIT liability in respect of his employment income for the year 2020.
(4 marks)
(c) Briefly explain the tax rates and timing of taxation in respect of the following items of Mr
Phuc Tran’s investment income for the year 2020:
– the sale of the shares received as an incentive bonus;
– the sale of the shares received from the exercise of the share options; and – the
dividend from the shares.
Note: You are not required to calculate the tax payable in this part. (3 marks)
(Total: 15 marks)

5. Mr Thien Nguyen
Mr Thien Nguyen is a 35-year-old Vietnamese citizen. He has a full-time employment
as a manager with BOFF Co and has also signed a part-time employment contract with KNB
Co for the delivery of sales skill training courses. Both BOFF Co and KNB Co are Vietnamese
companies.
Details of the income received by Mr Phan from the two companies in 2020 are as
follows:
BOFF Co KNB Co
Salary VND65 million/month VND15 million/month
Training allowances VND108 million VND360 million
Personal income tax Borne by employer Borne by employer
Employee insurance Borne by Mr Phan N/A
 contributions
Mr Thien has a son, Van Nguyen, who is 16 years old. From January 2021, Van has been
enrolled to study in a secondary school in Australia. In order to fund Van’s tuition fees, in
2020 Mr Phan sold an apartment for VND5,500 million.
He had purchased the apartment in 2018 for VND5,000 million as an investment and it
was never his sole house. It was agreed in the sales contract that the personal income tax
(PIT) incurred from the transaction would be borne by Mr Thien but that the buyer would be
responsible for declaring and paying the tax. The sales contract was effective from 1
November 2020, however, the registration procedures were not completed by the buyer until
20 December 2020, when the buyer settled the payment for the apartment in full.

Required:
(a) Calculate (in VND millions, rounded to one decimal) Mr Thien Nguyen’s taxable
income and personal income tax (PIT) liability in respect of his employment income for the
year 2020.
(7 marks)
(b) Explain, by reference to the relevant provisions, when Mr Thien Nguyen would be
subject to tax on the sale of his apartment and calculate his PIT liability in respect of the sale
in the year 2020. (3 marks)
(Total: 10 marks)

6. Mr Geogre Logan
Mr Geogre Logan is a New Zealand citizen, who works for PGS Co, a company in New
Zealand. PGS Co has invested in a Vietnam company, PGSVN Co. Mr Geogre was assigned to
work in PGSVN Co in Vietnam from 1 August 2019 to 31 December 2020.
Mr Geogre was present in Vietnam throughout the period from his first arrival on 1
August 2019 until his departure on 31 December 2020 as follows:
• From 1 August 2019 to 31 December 2019: 82 days
• From 1 January 2020 to 31 July 2020: 123 days
• From 1 August 2020 to 31 December 2020: 138 days
During his assignment in Vietnam, Mr Geogre received a salary of USD21,000 per
month from PGS Co, from which PGS Co deducted New Zealand tax of USD6,000 per month
and paid the remainder directly into his account in New Zealand. PGSVN Co also paid Mr
Geogre an allowance of VND45million per month and rented him an apartment at a cost of
USD2,400 per month. On 1 October 2020, Mr Geogre received an incentive bonus of
USD30,000 from PGS Co for his good performance.
 The employment agreement between Mr Geogre and PGS Co states that all taxes
incurred on his income would be borne by him.
While he was in Vietnam, on 20 September 2020, Mr Geogre adopted Thien Nam, a
Vietnamese new-born boy.
Average exchange rate 23,500 for VND1: USD1

Required:
(a) State the basis period (i.e. the period subject to tax) applicable to Mr Geogre
Logan for each of the tax years 2019 and 2020 and explain why he will be considered as tax
resident in
Vietnam in both of those tax years. (3 marks)
(b) Calculate (in VND millions rounded to one decimal) the taxable income and
personal income tax (PIT) liability and PIT payable by Mr Geogre for each of the tax years
2019 and 2020.
Note: You should ignore insurance contributions and any available overseas tax credits.
(12 marks)
(Total: 15 marks)

7. Mr Minh Le
Mr Minh Le is 32 years old and is a Vietnamese football player. He plays for the TH
Football Club (THFC) in Vietnam and the national youth team of Vietnam. He entered into a
two-year term labour contract with the THFC management company from the beginning of
January 2020 and received the following remuneration package for his first year of service
under the contract:
• Salary: VND75 million per month;
• Performance incentives: based on six months’ salary if THFC is the champion of the
league, or three months’ salary in other cases; and
• One-off sign-on payment of VND3,201 million for his two-year contract of services
(payment to be made at the time the contract is signed).
The remuneration stated in the contract is gross of personal income tax (PIT). Minh is
responsible for his share of insurance contribution expenses.
THFC was ranked second in the league in 2020, which lasted from January to September
2020.
From October to December 2020, Minh played for the national youth team where, in
addition to his THFC salary, he received a gross monthly allowance of VND18 million, which
was paid to THFC who then paid it to Minh. By late 2020, the national youth team had made
an historic achievement in an Asian football competition. For his excellent contribution
towards this achievement, Minh received:
1. a cash prize of VND1,200 million, accompanied by a certificate of reward issued by the
government authorities in charge of sports in Vietnam;
2. a car with a market value of VND900 million from a car assembling company; and
3. free-of-charge flights for one year up to a value of VND500 million from Bamboo airline, an
airline in Vietnam.
Minh was single in 2020. He lived with his father who is 65 years old, and his mother
who is 60 years old. Neither of his parents had any income in 2020.
According to a recent ruling issued by the tax authorities, the contractual one-off
sign-on payment shall be taxed in the same manner as employment income.
Required:
(a) Briefly explain the tax treatment for each of the three prizes received by Mr
Minh Le during 2020. (3 marks)
(b) Calculate (in VND millions, rounded to one decimal) Mr Minh Le’s taxable
employment income, and his total personal income tax (PIT) liability from all income sources
for the year 2020.
Note: You should list all of the income items referred to in the question, indicating by
the use of ‘0’ any non-taxable items. (7 marks)
(Total: 10 marks)
8. Mr Nobi Keita
For the purposes of this question, you should assume that today’s date is 31
December 2020.
Mr Nobi Keita, a 52-year-old Japanese citizen, was employed to work in Vietnam from
1 January 2020 by Local-I Co, a company established in Vietnam. Nobi was accompanied by
his wife, Shizuka, who is 50 years old. Shizuka is a part-time teacher working for a foreign
language centre in Vietnam, from which she earns VND10 million per month. They have two
children, Nobisuke who is 19 years old, and Nobijaiko who is 12 years old. Nobijaiko has
resided in Vietnam with his parents since 1 January 2020 and has been attending school
throughout 2020. Nobisuke came to Vietnam in June 2020 to attend a half-year of university.
Neither child had any income in 2020.
In 2020, Nobi’s remuneration package from Local-I Co included the following
items: – Monthly salary: USD35,000.
 – Performance bonus: one month’s salary to be paid in February each year, plus a
variable incentive dependent on the company’s performance. Nobi was paid a bonus of
USD96,000 in March 2021 based on the company’s performance in 2020.
– Air fares: Local-I Co paid for two return trips for Nobi and his whole family to visit
Japan, at a cost of USD1,500 per person. In May 2020, Nobi also requested that Local-I Co
book one return trip at a cost of USD2,500 per trip per person for his family to visit Australia,
where
Shizuka’s parents live. The company decided to pay for the air fare for Nobi only and to
deduct the air fare for his family from his salary.
– Housing: Local-I Co signed a contract directly with the landlord for Nobi and his
family to live in a property. The rent paid by Local-I Co was USD2,100 per month.
– Tuition fees: the company agreed to pay tuition fees in Vietnam for both children
at an annual cost of USD15,000 each. The tuition fees are paid directly to the school and
university
in two equal instalments, due in March and October each year (in 2020, in respect of
Nobisuke, only one payment was made in October).
– Car: The company rented a car for Nobi and his family at a cost of VND36 million
per month. According to the records, in 2020 40% of the car’s usage related to Nobi’s
transportation from home to the company’s premises and vice versa. The remainder was for
his family’s personal use.
– Relocation allowance: Nobi was offered a relocation allowance of up to
USD15,000, to be settled directly by the company to the vendor. The actual costs were
USD18,000, for which Nobi settled the difference with the vendor himself.
The remuneration is gross of Vietnamese tax. You should assume Nobi registered all
eligible dependants on time with relevant documents, and was responsible for his part of
social, health and unemployment insurance in the same manner as a local employee.
Exchange rate 23,500 VND for 1 USD.
Required:
(a) Calculate (in VND millions, rounded to one decimal) the taxable and non-taxable
income (before any housing benefits) of Mr Nobi Keita in 2020.
Note: You should list all the items of income, other than any housing benefits,
specifically referred to above, indicating by the use of a ‘0’ any item which is not relevant. (10
marks) (b) Calculate (in VND millions, rounded to one decimal) Mr Nobi Keita’s monthly
taxable income (including any taxable housing benefits) and the personal income tax (PIT)
liability in respect of his employment income for the year 2020. (5 marks)
(Total: 15 marks)
 9. Mr Phu Phan
Mr Phu Phan, previously resident in Vietnam, is 38 years old and holds Australian
citizenship. From 1 April 2020, he was employed as chief executive officer (CEO) of NSV Co,
the Vietnamese subsidiary of Next Start Co, a company in Australia.
Phu’s gross remuneration for his employment with NSV Co is as
follows: – Monthly salary: USD30,000.
– Fixed bonus: USD60,000 for 12-months’ employment or pro-rata.
– Variable bonus: up to USD120,000, depending on group and NSV Co’s performance, to be
determined and paid in 2021.
At the commencement of his employment, NSV Co also gave Phu the company’s
executive well-being fitness membership card. This cost NSV Co an amount of USD120,000
for a period of 18 months.
In Phu’s leisure time he develops artificial intelligence (AI) systems. In 2020, Phu
completed one AI system, in his own time, which could significantly boost the operational
efficiency of both NSV Co and Next Start Co. Next Start Co wants to pay Phu, via NSV Co, an
amount of USD10 million for acquiring the licence to use and further develop his AI system.
Since the commencement of his employment with NSV Co in April 2020, Phu has been
present in Vietnam along with his wife, Huyen Tran, a 30-year-old Vietnamese tax resident,
and their two children: a five-year-old boy and a two-year-old girl. Throughout that time the
family has been living in a villa which Huyen inherited from her parents.
As this resulted in a saving of accommodation costs for NSV Co, the company paid Phu
and Huyen a monthly home allowance of USD6,000 in cash. Phu used half of this allowance
to pay for kindergarten fees for their children.
Note: You should ignore any social, health or unemployment insurance contributions
which may be applicable.
Exchange rate 23,500 VND to 1 USD

Required:
(a) Calculate the taxable income and personal income tax (PIT) liability of Mr Phu
Phan in Vietnam in the calendar year 2020.
Note: The taxable income should be calculated in both USD, and VND millions (rounded
to one decimal) and the PIT liability should be calculated in VND millions only (rounded to
one decimal). (8 marks)
 (b) Briefly discuss the treatment for PIT purposes of the amount of USD10 million
which Next Start Co may pay Phu to acquire the artificial intelligence licence, assuming the
licence is acquired during Phu’s employment with NSV Co in Vietnam. (2 marks)
(Total: 10 marks)
10. ZLC Co
ZLC Co employs four Vietnamese employees in its Ho Chi Minh City office. Their annual
gross remuneration and number of dependants for 2020 is summarised below:
Salary Allowance Performance Overtime Uniform Number of
Bonus (at 200% allowance dependants
of normal in cash
rate)
VND VND VND VND VND
million million million million million
Bui Anh 480 150 200 100 13 2
Dang 500 80 100 180 15 3
Thao
Phan Chi 156 84 18 10 6 1
Doan 280 90 68 0 5 2
Giang

Note: The overtime represents both the normal pay rate (100%) and the excess rate
(100%).
ZLC Co withholds, at the set rates, the employees’ contributions of social, health and
unemployment insurance from their remuneration. In a recent written reply received from
the Vietnamese tax authority to a query raised by ZLC Co, it was confirmed that overtime and
uniform allowance would NOT be in the list of items to be excluded in determining income
which is subject to social, health and unemployment insurance contributions.

Required:
(a) Calculate (in VND millions, rounded to one decimal) the taxable income, personal
deductions, social, health and unemployment insurance contributions and the monthly
personal income tax (PIT) liability of each of the four employees of ZLC Co. (13 marks) (b)
Briefly explain the treatment of the social, health and unemployment insurance
contributions for PIT purposes. (2 marks)
(Total: 15 marks)
 11. Mr Quach Pham
Mr Quach Pham is a 35-year-old Vietnamese citizen and is the IT Manager for FRS Co, a
company in Vietnam. In 2020, his gross remuneration received from FRS Co included a salary
of VND40 million per month plus an annual bonus equal to two months’ salary. In addition,
he also performed services for various other organisations and earned other income as
described below. All income is gross of personal income tax (PIT) unless otherwise stated.
Services performed:
- Website design for three companies, for a total fee of VND70 million. The net fee
received by Quach was VND63 million, after the companies withheld provisional PIT at
a rate of 10%.
- IT e-learning courses delivery for EDM Co for a training fee of VND324 million (the
content, materials and design of the courses were prepared by EDM Co). The fee
received was net of 10% PIT withheld by EDM Co.
Other income:
- Dividends of VND200 million received from ITPro Co, a limited liability company in
Vietnam. Quach contributed capital of VND100 million to set up the company with his
friends five years ago.
- Sale of all of his capital contribution to ITPro Co for VND1,500 million.
Quach also plans to set up his own international on-line channel on which he will
prepare and upload his own e-learning courses. The channel will be hosted by an offshore
provider and he expects the channel will generate some income for him. He read in a
newspaper article that such income would be subject to deemed value added tax (VAT) and
PIT rates of 5% and 2% respectively. However, he is not sure whether and how much of the
income generated from the channel is taxable.

Required
(a) Calculate the taxable income and PIT liability (in VND million, rounded to one
decimal) of Mr Quach Pham in Vietnam in the calendar year 2020. (8 marks)
(b) Briefly advise Mr Quach Pham of the relevant income threshold above which
income received from the proposed international on-line channel will be taxable, and state
the tax filing requirements. (2 marks)
 (Total: 10 marks)

12. Ms Yen Nguyen

You should assume that today’s date is 31 December 2020.
Ms Yen Nguyen, a 40-year-old Vietnamese citizen with two children under 18 years old,
became a manager for WSU Co, a foreign invested company in Vietnam, on 1 May 2020.
Before joining WSU Co, she worked for VS JSC, a Vietnamese joint stock company, the shares
of which were listed on the Vietnamese stock exchange until 30 April 2020.
Her income in 2020 includes the following (her remuneration packages from both
companies were net of personal income tax (PIT)):
VS JSC WSU Co
VND million VND million
Monthly salary 50 40
Monthly petrol allowance 15 in 0
cash
Tet bonus (received in 100 February 0
2020)

In December 2020 she also received a 13th month salary from WSU Co, pro-rata based
on her working time during the year.
During her employment with VS JSC, Ms Yen Nguyen received some shares in the
company as a reward for her performance. The total number of VS JSC’s shares she received
was 100,000, with a market value of VND35,000 million as at 31 December 2020. She is
considering selling the shares in 2021 and will use the proceeds to start her own business.

Required
(a) Calculate (in VND millions, rounded to one decimal) the gross monthly taxable
income from each company, and the monthly and annual personal income tax (PIT) liabilities
of Ms
Yen Nguyen in 2020. (12 marks)
(b) Advise Ms Yen Nguyen of the PIT implications if she sells the shares in VS JSC on
the first day of 2021, assuming the share price is unchanged from that on 31 December 2020.
(3 marks)
(Total: 15 marks)
 13. Mr Ngoc Tran
Mr Ngoc Tran is a Vietnamese citizen and is the chief financial official of TBC JSC, a
company listed on the Vietnamese stock market. In 2020, his gross income was VND100
million per month, comprising salary, allowances and compulsory insurance. Ha is 45 years
old, and is single with no dependants
On 31 December 2019, given his exceptional performance in the fiscal year 2019, Ha
was awarded the following
- Actual share award: 100,000 ordinary shares in TBC JSC, free of charge
- Cashing share award: A nominal award of 500,000 special shares in TBC JSC, with no right to
a dividend or votes, nor any other right given to holders of ordinary shares. On 31
December 2020, TBC JSC paid Ha cash equal to the difference between the share price
at 31
December 2020 and the share price at 31 December 2019
- Share options to purchase 500,000 ordinary shares at nominal value. The options are
exercisable wholly or partly at any time from 1 January 2020.
Ha held no shares in TBC JSC before these awards were made. The nominal value of one
ordinary share is VND10,000
In February 2020, Ha decided to sell 50,000 shares when the share price was
VND30,000 per share, and used the entire proceeds (after personal income tax (PIT) on
transfer of securities) to exercise a part of the share options. These were the only shares sold
by Ha during the fiscal year 2020.
In March 2020, TBC JSC paid a dividend of VND5,000 per share in cash to all investors
who held shares on 1 March 2020, and offered all existing investors a bonus of one share for
every four shares held.
On 31 December 2019, the price of one share in TBC JSC was VND25,000. On 31
December 2020, the price of one share in TBC JSC was VND28,000
The local tax authorities instructed TBC JSC that, for personal income tax (PIT)
purposes, the taxable employment income of the actual share award (upon any sales of the
company's shares by the receiving employee after the award) would be the market value of
the shares on the date of the award on the basis that this would be the amount the recipient
would earn from employment if they were to sell the shares immediately upon the shares
being awarded

Required
 (a) Calculate the personal income tax (PIT) liability on the transfer of the securities
and investment income (in VND million, rounded to two decimals) or Mr Ngoc Tran in the
calendar year 2020 (5 marks)
(b) Calculate the personal income tax (PIT) liability from employment income (in
VND million), rounded to one decimal) of Mr Ngoc Tran in the fiscal year 2020. (5 marks)
(Total: 10 marks)
14. Mr Bert Walsh
Mr Bert Walsh, a United Kingdom (UK) citizen, retired from a consulting firm and was
invited to Vietnam to work as a senior advisor to LDT Co, a foreign invested company in
Vietnam, from 1 April 2020. Bert is 65 years old.
Bert's wife, Mrs Jane Walsh, who is 53 years old, joined Bert to live in Vietnam
Bert and Jane have two granddaughters, Clara aged eight years, and Sarah aged six
years, who live with them in Vietnam Jane has no income and stays at home in Vietnam to
take care of Clara and Sarah
Bert's contractual gross remuneration from LDT Co during 2020 consisted of the
following items.
- Monthly salary: USD25,000
- Incentives: two month's salary for each year of service (pro-rata), plus a bonus of
USD50,000 to be paid on the completion of Bert's first year of work for LDT Co.
- International school tuition fee monthly fee of USD1,500 for Clara and USD1,000 for
Sarah were paid directly by LDT Co to the school during 2020. LDT Co also settled the
fees for the school bus and meals of USD 400 per month for each child, and sought
reimbursement from Bert.
- Air fares. LDT Co reimbursed air fares for two round trips between the UK and Vietnam
for Bert and his wife. Bert also asked LDT Co to book flights for his granddaughters to
join him on those trips, which LDT Co did, and deducted the costs from his monthly
salary. The air fare costs for each round trip in the year ended 31 December 2020 was
USD3,500 per person
- Medical insurance. LDT Co purchased medical insurance to cover each member of
Bert's family in Vietnam, at a cost of USD1,000 per month per person
- Accommodation: An apartment was purchased near to the office of LDT Co for
USD600,000, with the intention to let it out to special guests such as Bert. The
apartment had a term of use of 50 years. LDT CO depreciated the apartment in its
accounting records using the straight-line method over the term of use
 - Utilities, apartment management fee cleaning services and transportation LDT Co paid
Bert a monthly amount of USD2,000 in cash so that Bert could pay for these expenses
directly.

Required
(a) Calculate (in USD) the total gross taxable income, excluding taxable
accommodation, in the fiscal year 2020 for Mr Bert Walsh.
You should also clearly identify income that is not taxable in 2020 (including income
which is not taxable at all and income which is taxable but not in the fiscal year 2020), and
non-income items of Mr Bert Walsh. (10 marks)
 (b) Calculate (in VND million, rounded to one decimal) the personal income tax (PIT)
liability of Mr Bert Walsh in the fiscal year 2020.
Note: You should ignore all insurance contributions for the purposes of the calculations
(5 marks)
(Total: 15 marks)
 15. Mr Hung Tran
Mr Hung Tran is a 40-year-old Vietnamese, who has been relocated back to Vietnam
after serving a five-year secondment in the US with VGC Inc. VGC Inc is the parent company
of VGC Co, a foreign invested company in Vietnam.
On his return to Vietnam on 1 April 2020, Mr Hung entered into an employment
contract with VGC Co. His annual remuneration package for 2020 includes the following (all
amounts are for his employment period in Vietnam in 2020, unless specified otherwise):
– Salary: VND400 million per month.
– Bonus: a fixed 13th month’s salary, pro-rata for the employment time during the year, plus
three months’ salary for meeting all his performance criteria in 2020. – Relocation
allowance in cash: VND200 million (one-off payment).
– Medical insurance fee for 2020 purchased by VGC Inc (with a foreign insurer having no
presence in Vietnam but allowed to carry out ad-hoc insurance operations in Vietnam):
VND20 million.
– Voluntary life insurance fee for 2020: VND100 million paid by VGC Co to Bao Viet (an
authorised insurance company operating in Vietnam). Mr Hung will only receive the
accumulated insured amount upon his retirement or the termination of his employment. –
Car (for transportation from his apartment to his work place and vice versa): hired by VGC
Co for VND15 million per month
– Uniform allowance: VND15 million in cash
– Two return air fares for his personal travel to the US to visit his girlfriend: VND40 million
The personal income tax on his income in Vietnam will be borne by Mr Hung.

Required:
(a) State the personal income tax (PIT) treatment, including the tax payment
requirements, where applicable, of a non-accumulated insurance fee and an accumulated
voluntary life insurance fee paid by an employer direct to the insurer. (3 marks)
(b) Calculate (in VND millions) Mr Hung Tran’s taxable and non-taxable income in
Vietnam in the year 2020. (7 marks)
(Total: 10 marks)
Part C: Corporate Income Tax Section A
Part C: Multiple Choice Question: 50 questions
1.
Hoang Ngan Co, a Vietnamese company, rented an office for its operations in 3 years
from 1 April 2020 and paid a of VND780 million, equivalent to three monthly rental fees,
inclusive of 10% value added tax (VAT). Rent is payable three months in advance.
What is the amount of deductible rental expense which Hoang Ngan Co can claim for
corporate income tax (CIT) purposes in the year ended 31 December 2020?
A. VND709 million
B. VND2,127 million C. VND3,120 million
D. VND2,772 million

2.
A company sublets part of its office accommodation. In the year ended 30 June 2020
cash received from tenants was million VND83,700.
Details of rent in arrears and in advance at the beginning and end of the year were:
In arrears In advance
million VND million VND
30 June 2019 3,800
2,400 30 June 2020 4,700
3,000
All arrears of rent were subsequently received.
What the amount of rental should be include in the corporate income tax (CIT) for
the fiscal year ended on 30 June 2020?
A. VND84,000
million B. VND83,400
million C. VND80,600
million
D. VND86,800 million
 3.
In 2020, Social Benefit Co, a Vietnamese company, sold 70% of its 100% shareholding
in Activity Co, another Vietnamese company, to a Chinese buyer for VND150,000 million.
Activity Co was established in 2015 with capital of VND110,000 million (fully paid up). Social
 Benefit Co purchased all of the shares of Activity Co in 2017 from the original founder
for an amount of VND130,000 million, as reflected in the share purchase agreement. The
transfer expenses incurred were immaterial.
What is the corporate income tax (CIT) payable by Social Benefit Co on the sale of
shares in Activity Co in the year 2020?
A. VND11,800 million
B. VND30,000 million
C. VND8,000 million
D. VND4,000 million

4.
Nha Nam Co is a Vietnamese company. In 2020, the company contributed capital to
Huynh Tho Co, a newly established company in Vietnam, in the form of an indefinite-term
land use right (LUR) for a piece of land in Hoi An City.
The book value of the LUR recorded in Nha Nam Co’s accounts before the contribution
was VND130,000 million. The agreed capital contribution value was VND200,000 million. Nha
Nam Co wants to use the maximum period to allocate the revaluation gain from the LUR to
other income as allowed under prevailing corporate income tax (CIT) regulations.
What is the taxable income figure in respect of the capital contribution of the land
use right (LUR) to Huynh Tho Co which Nha Nam Co should declare on its corporate income
tax (CIT) return for the year ended 31 December 2020?
A. VND70,000 million
B. VND200,000 million
C. VND7,000 million
D. VND14,000 million

5.
Garment Co is a Vietnamese company employing 1,500 employees in 2020. The
company has a policy to provide uniforms to employees in both cash and in kind. In 2020, the
total uniform expenses paid by Garment Co was VND15,500 million, of which VND9,000
million was paid in cash to employees. 30% of the expenses in kind are not supported by
proper documents.
 How much of Garment Co’s uniform expenses are non-deductible for corporate
income tax (CIT) purposes in 2020?
A. VND9,000 million
B. VND3,450 million
C. VND10,950 million
D. VND1,950 million

6.
In March 2020, Dong Phong Co, a Vietnamese company, disposed of a machine for
VND6,900 million. The machine was purchased in January 2019 for VND10,800 million with
an estimated useful life of three years. Dong Phong Co’s policy (which is acceptable for tax
depreciation) is to provide for a full month’s depreciation in the month of purchase and no
depreciation in the month of disposal.
What is the taxable gain on the disposal of the machine which DPN Co must declare
for corporate income tax (CIT) purposes for its financial year ended 30 June 2020?
A. VND6,900 million
B. VND3,900 million C. VND0 million
D. VND6,600 million

7.
In April 2020, EMS Co, a US investor, sold its capital contribution in HSK Co, a
Vietnamese limited liability company, to a foreign buyer for USD11 million, when the USD
buy–sell exchange rate from the commercial bank was VND23,100–VND23,200. The original
capital contribution in HSK Co was USD11 million which is reflected in the audited financial
statements at an exchange rate of USD1 = VND21,000. The transfer expenses incurred were
130,000,000 dong. HSK Co’s functional currency is VND.
What is the corporate income tax (CIT) liability incurred by EMS Co on the sale of its
capital contribution in HSK Co in the year 2020?
A. VND4,594
million B. VND0 million
C. VND4,814 million
D. VND11000 million
 8.
Tangwang Co is a Singapore company. In 2016, the company purchased shares in PNJ
JSC, an unlisted Vietnamese joint stock company, for VND20,000 million (equivalent to USD1
million at that time). In 2020 when PNJ JSC’s shares were listed on the Vietnamese stock
exchange, Tangwang Co sold the entire shareholding for USD1,5 million when exchange rate
is VND23,500 to 1USD.
What is the amount of tax (in VND million) which should be deducted before the
proceeds from the sale of the shares can be remitted overseas to Tangwang Co?
A. VND34.8
million B. VND35.2
million
C. VND14.8 million
D. VND0 million

9.
Ms Hang Nguyen, who gave birth on 20 February 2020, is CFO of Him Lam Co, a
company in Vietnam. She returned to work on 1 July 2020, despite the company policy and
the regulations allowing her a six-month maternity leave.
When she returned, the company paid her normal salary of VND60 million per month
and in addition, during the period from 1 July 2020 to 20 August 2020, she received an
overtime allowance of VND95 million per month (which is within the range of allowed
overtime under prevailing labour regulations). However, Ms Hang Nguyen did not actually
work any overtime and the allowance was paid to compensate her for early return from
maternity leave as a result of work requirements. The company and Ms Hang Nguyen did not
claim any maternity leave benefits from social insurance from July 2020 onwards.
What is the adjustment amount for non-deductible expenses which Him Lam Co
should make in its corporate income tax (CIT) return for the year ended 31 December 2020
in respect of the payments to Ms Hang Nguyen?
A. VND90 million
B. VND150 million C. VND0 million
D. VND195 million

10.
 OCD Co, a company in Vietnam, reimbursed employees’ expenses for overseas
business trips originally paid by the employees using their personal credit cards. The
expenses amounted to VND60 million in total.
Which of the following conditions must be met for OCD Co to treat such reimbursed
expenses as deductible for corporate income tax (CIT) purposes?
(1) The credit card is guaranteed by the company
(2) The expenses are supported by proper documents/invoices
(3) The trip is authorised by a decision issued by the company’s directors
(4) The company policy allows employees to advance expenses for business trips by personal
credit cards
A. 1 and 4 only
B. 2 and 3 only
C. 2, 3 and 4 only
D. 1, 2, 3 and 4

11.
The Vietnamese enterprises who have income from overseas have paid CIT or similar
CIT tax from overseas. Which of the following statements that describe correctly when the
Vietnamese enterprises pay CIT in Vietnam?
A. The Vietnamese enterprises are credited all the paid CIT from overseas
B. The Vietnamese enterprises are credited all the paid CIT from overseas, but must not
exceed the payable CIT in Vietnam
C. The Vietnamese enterprises are not allowed to credit the paid CIT from overseas
D. The Vietnamese enterprises do not have to pay tax overseas but pay full CIT in Vietnam

12.
In the year ended 31 December 2019, DWO Co, a Vietnamese company, wrote off as an
expense in its accounting records, an irrecoverable debt of VND 700 million owed by BRK Co
when there were signs that BRK Co could not repay it. However, during a tax audit in 2020,
the tax authorities denied this write-off because it was not supported by proper evidence. In
2020, DWO Co hired a debt collector and received a first payment of VND 400 million from
BRK Co by bank transfer in respect of this debt. DWO Co paid the debt collector a service fee
of VND 70 million in cash and recorded the payment from BRK Co and the fee paid to the
debt collector as other income and expenses respectively, in calculating its taxable income for
2020. What is the net adjustment to be made to taxable income in DWO Co’s tax return for
corporate income tax (CIT) purposes for the year ended 31 December 2020?
A. VND0 million
B. VND330 million C. VND380 million
D. VND580 million

13.
Which of the following incomes that is eligible for the CIT exemption?
A. Income of enterprises from cultivation and husbandry
B. Income of enterprises from job training exclusively provided for ethnic minority people
C. Income from fine due to the supplier fail to supply good by deadlines D. Income of
enterprises from liquidation of assets

14.
On 25 June 2020, the local tax authorities of LPP Co, a Vietnamese company, issued a
minute of tax audit stating that the company made an under-declaration of corporate income
tax (CIT) of VND 25,000 million for the year ended 31 December 2019. The deadline for tax
payments for this period was 2 April 2020. The tax authorities also issued a decision for tax
and penalty collection on 3 July 2020, and gave the company ten days from the date of issue
to settle the amount due.
What is the potential late payment interest which LPP Co would be required to pay, if
LPP Co made a settlement on the decision date of 3 July 2020?
A. VND920
million B. VND690
million C. VND606
million
D. VND504 million

15.
EXT Co is a limited liability company in Vietnam and has four corporate shareholders,
all of which are Vietnamese companies. EXT Co has chartered capital of VND20,000 million,
equally contributed by each shareholder. On 1 December 2020, EXT Co converted into a joint
stock company and its chartered capital was increased to VND25,000 million by issuing new
shares, with a total nominal value of VND5,000 million, to NJR Co, a foreign invested
company in Vietnam, for VND12,000 million. On 31 December 2020, EXT Co distributed total
dividends of VND10,000 million to its shareholders (including NJR Co) with each shareholder
receiving a proportion based on the nominal value of their shareholding.
What is EXT Co’s corporate income tax (CIT) liability on the receipt of VND12,000
million from NJR Co, and what is NJR Co’s CIT liability on the receipt of dividends from EXT
Co in 2020?
EXT Co CIT liability NJR Co CIT liability
A. Option 1 VND0 million VND0 million
B. Option 2 VND0 million VND1,400 million
C. Option 3 VND1,400 million VND0 million
D. Option 4 VND1,400 million VND1,400 million
16.
In the year ended 31 December 2020, LMK Co made taxable profits of VND 15,000
million from software development activities, which are entitled to the corporate income tax
(CIT) incentive rate of 10%; and taxable profits of VND 19,000 million from hardware trading
activities, which have no CIT incentive rate. LMK Co also made a loss of VND 7,000 million
from securities trading in 2020 and has a trading loss of VND 13,000 million from prior years
which can be carried forward up to 2022. However the trading loss cannot be allocated to any
specific business activities.
What is the CIT liability payable by LMK Co for the year ended 31 December 2020
after offsetting all possible losses in accordance with the CIT regulations?
A. VND800 million
B. VND1,100 million
C. VND 2,400 million
D. VND2,600 million

17.
CPC Co is a Vietnamese company. On 1 March 2019, the company purchased a
four-seat vehicle for business use with a total invoiced value of VND 2,145 million. The useful
life of the vehicle was expected to be six years. On 1 May 2020, the company sold the vehicle
for VND1,825 million. All amounts are inclusive of 10% value added tax (VAT).
What is the amount of depreciation expense (in VND million, rounded to one
decimal) in relation to the vehicle for corporate income tax (CIT) purposes in the year
ended 30 September 2020?
 A. VND133.3
million B. VND150.0
million C. VND155.6
million D. VND177.4
million

18.
In July 2019, DPN Co, a company incorpotated in Vietnam, purchased two identical
items of equipment, A and B, for a total amount of VND 18,000 million (exclusive of value
added tax (VAT)). The estimated useful life of the equipment is five years, and DPN Co
depreciates it on a monthly basis. Both A and B are used from August to December each year
to make a product that is consumed specifically on the occasion of Lunar New Year. In 2019,
both A and B were fully operated from August to December. In 2020, as orders received were
insufficient, only A was fully functional from August to December 2020 while B was used
from November to December 2020 only.
What is the total accumulated depreciation of DPN Co for corporate income tax (CIT)
purposes with respect to equipment items A and B at the fiscal year ended 31 December
2020?
A. VND1,400
million B. VND2,400
million
C. VND3,400 million
D. VND3,900 million

19.
ITC Co, a company incorporated in Vietnam, operates in the soft drinks industry. In
2020, the company issued water from its inventory as follows:
Purpose Cost value
(VND million)
For business meetings 580
For employees to drink in the factories while working 412
For further processing into other soft drinks 1350
What is ITC Co’s taxable revenue and deductible expense for corporate income tax
(CIT) purposes in relation to the above issuance of the inventory for the fiscal year 2020?
Taxable revenue Deductible expense
A. Option 1 VND0 million VND2,342 million
B. Option 2 VND412 million VND2,142 million
C. Option 3 VND580 million VND2,342 million
D. Option 4 VND0 million VND2,142 million

20.
In 2019, SHC JSC, a joint-stock company registered in Vietnam, invested in shares of
VNC JSC, a company listed on the Vietnamese stock market, when the share price was
VND12,000 per share. In July 2020, SHC JSC received dividends from VNC JSC in the form of
five million bonus shares when the market price of one share in VNC JSC was VND15,200. In
November 2020, SHC JSC sold four million bonus shares of VNC JSC for VND15,000 per share.
SHC JSC is subject to the standard rate of corporate tax.
What is the total corporate income tax (CIT) liability payable by SHC JSC in the fiscal
year 2020 on the receipt of the dividend in July 2020 and the sale of the shares in
November 2020?
A. VND2,400 million
B. VND15,200 million
C. VND12,000 million
D. VND3,200 million

21.
BDC JSC is a Vietnamese company listed on the stock market. The company has seven
board members, three are active members and the remaining four are non-active members.
According to the board resolution, members in each category should receive equal salary.
Active members who participate directly in managing the company’s operations receive a
salary which is 200% of the received by non-active members. The company recorded a total
salary expense for the board of VND13,500 million in its accounting books for the fiscal year
ended 31 December 2020.
 What are the non-deductible expenses BDC JSC should declare in its corporate
income tax (CIT) return for the fiscal year ended 31 December 2020?
A. VND10,000 million
B. VND0 million
C. VND6,000 million
D. VND5,400 million

22.
What are the principles to claim deductible expense?
(1) Expenses are actually incurred, relevant to production/trading activities
(2) Expenses are supported by legitimate documentation (e.g.: invoices, contracts, certificate
of ownership, etc.)
(3) Payment with each time of invoice is VND20 million or more must be made by bank
transfer
(4) Expenses are not under the list of non-deductible expenses as provided in current
regulation
A. 1, 2, 3 and 4
B. 1, 2 and 4 only
C. 1, 2 and 3 only D. 2, 3 and 4 only

23.

24.
Hoang Minh Co, a company specialising in developing real estate projects, has an
apartment and villa development project in the centre of Hanoi, which is expected to be
completed in 2022. The estimated total revenue and profits from this project are VND2,000
billion and VND300 billion, respectively. Hoang Minh Co has been collecting money in
advance from customers and in 2020 the total proceeds received were VND400 billion, on
which provisional tax of 1% was duly paid on receipt.
What is the taxable income from the project of Hoang Minh Co for the purposes of its
2020 corporate income tax (CIT) finalisation return?
A. VND0 billion
B. VND400 billion C. VND4 billion
 D. VND360 billion

25.
Hoang Mai Emurus Co is a one member limited liability company, which is wholly own
by
Emurussia, a company incorporated in Bermuda. In 2020, Emurussia decided to
convert Hoang Mai Emurus Co into a joint stock company by selling the shares of Hoang Mai
Emurus Co to two local Vietnamese entities. The sale of the shares and the conversion of the
company was completed in August 2020.
Which combination of the following statements correctly describes the reporting
requirements for capital gains tax and corporate income tax (CIT) finalisation under the
current regulations?
(1) Hoang Mai Emurus Co is required to file a capital gains tax declaration
(2) The buyers are required to file a capital gains tax declaration
(3) Hoang Mai Emurus Co is required to file a CIT finalisation return at the time of conversion
and at the year end
(4) Hoang Mai Emurus Co is required to file a CIT finalisation return at the year end only A. 1
and 3 B. 1 and 4 C. 2 and 3 D. 2 and 4

26.
In 2019, Sounthen Co, a Vietnamese Company incurred losses of VND12 billion from
incentive activities which were subject to a tax rate of 10%, made gains from the transferring
of real estate of VND5 billion and had other income of VND10 billion in the year 2020.
What is the minimum tax liability of Sounthen Co in 2020?
A. VND600 million
B. VND3,000 million
C. VND1,000 million
D. VND0 million

27.
On 1 August 2018, Thanh Ngan Co leased an asset for four years and paid the whole
rent of VND800 million in advance. On 1 July 2020, Thanh Ngan Co decided to shorten the
lease period to three years. The company expects that it will have to pay a penalty of VND80
million when it terminates the lease in 2021 in order to receive a refund of one year of the
original lease payment.
What is the deductible expense for Thanh Ngan Co with regard to the lease in the
year ended 31 December 2020?
A. VND200
million B. VND220
million C. VND293
million
D. VND267 million

28.
In 2020, company Dimsum Co purchased materials from supplier Mr Trung Nguyen
who is households doing business. Dimsum Co wanted to use the list of goods purchased
(without invoices) to claim tax deductible expenses for these purchases.
What is the threshold of annual revenue which households doing business must
satisfy for Dimsum Co to use the list of goods purchased method to claim for the purchases
as a tax deductible expense?
A. VND300
million B. VND108
million C. VND100
million D. VND120
million

29.
At the end of 2020, company, Bingular, a Vietnamese Co, paid bonuses to its board of
directors of VND4,200 million. Each of the six directors is paid an equal amount of bonus.
Two out of the six directors are not involved in the daily management of the company’s
business.
What is the amount of tax deductible expenses which Bingular Co will be able to
claim for the year 2020?
A. VND4,200
million B. VND1,400
million
C. VND2,800 million
D. VND0 million

30.
Which of the following expense is NOT deductible for CIT purpose?
A. Loan interest where the loan is use to buy the capital of other company
B. Issuance cost for raising equity capital
C. Sponsor for science research
D. Life insurance for staff

31.
Which of the following statement is correct in term of CIT?
A. Tools is allowed to allocate within maximum 2 years since purchase
B. The net book value in calculation of Disposal of nine seats car or less equal original cost
minus accumulated depreciation for tax purpose
C. If the salary provision fund of the previous year is not used up in full by the 30/6 of the
following year, the company has to reduce the salary fund of the later by such amount
D. The company is requested to inform the tax authority the normal loss level of major
raw materials, goods, energies.. used

32.
Which statement is not correct in term of loss relief?
A. Company is allowed to offset loss of real estate activity to the profit of ordinary
activities
B. Company is allowed to offset loss of foreign income to the profit of ordinary activities

C. Profit of transfer of capital contribution in a company by LUR cannot offset with the
loss of ordinary activities
D. Profit of other income without the sources of ordinary activity cannot offset with the
loss of ordinary activities

33.
 Which statement is not true in term of tax rate incentive and tax exemption?
A. During the enterprise income tax incentive period, if an enterprise fails to satisfy any of
the conditions for enjoying tax incentives in a tax year, it is not entitled to tax
incentives in that tax year and that year shall not be counted in its incentive enjoyment
period
B. Operating enterprises having expanded investment not in the fields or geographical
areas eligible for tax incentives but cannot saparate the account, are not entitled to
enterprise income tax incentives for additional incomes brought about expanded
investment.
C. For enterprises that modify or supplement investment licenses or investment
certificates of their operating projects without changing conditions for enjoyment of
incentives, incomes from modified or supplemented activities may continue to enjoy
incentives given to these projects before the modification or supplementation for the
remaining duration or enjoy incentives for expanded investment in case of satisfying
the prescribed conditions for incentives.
D. Expanded investment projects in the fields or geographical areas eligible for enterprise
income tax incentives may be chosen to enjoy enterprise income tax incentives for
their operating projects for the remaining duration (if any) or to be entitled to a
duration of tax exemption or reduction for additional incomes brought about by
expansion investment (not eligible for preferential tax rates) equal to the tax
exemption or reduction duration applicable to new investment projects in the same
geographical area or field eligible for enterprise income tax incentives.

34.
At the end of fiscal year 2020, Hoang An Co has a profit of VND2 billion, the Board of
Directors decides to pay bonus to all staff members of the company, the payment will be
made in January 2021.
Conditions and regulations requirement for Hoang An Co recognizes bonus payment
as deductible expenses when calculating corporate income tax payable in 2020?
A. Hoang An Co has proper invoices and documents and this expense is based on the
bonus regime and conditions must be clearly specified in one of the documents of the
unit: Labor contract; Collective labor agreement; Financial regulations of the Company,
Corporation, and Group; Bonus regulations are stipulated by the Chairman of the
Board of Directors, General Director...according to the financial regulations of the
Company.
B. Hoang An Co has proper invoices and documents and this expense is based on the
bonus regime and conditions must be clearly stated in all documents of the unit: Labor
 contract; Collective labor agreement; Financial regulations of the Company,
Corporation, and Group; Bonus regulations are stipulated by the Chairman of the
Board of Directors, General Director....according to the financial regulations of the
Company.
C. Employee bonuses are not counted as deductible expenses when determining the
corporate income tax for 2020 because it was paid by the company in 2021.
The company is required to attach full invoices and payment voucher related to the
bonus payment amount together with the income statement of 2020.

35.
Which type of the following expense is not deductible for CIT purpose?
A. Contribution of ACCA membership fee for the accountant
B. Depreciation of housing built for worker in industry zone
C. Life insurance for company staff
D. Salary accrued but not yet paid by finalisation deadline

36.
Which of the following statements that describes the correct CIT period?
A. The tax period of the first year, of the last year and of the year of conversion must not
exceed 15 months.
B. The tax period of the first year, of the last year and of the year of conversion must not
exceed 12 months
C. The tax period of the first year and of the last year must not exceed 15 months; the tax
of the year of conversion must not exceed 11 months
D. The tax period of the first year and of the last year must not exceed 12 months; the tax
of the year of conversion must not exceed 15 months

37.
SHL Limited, a foreign company operates in Vietnam, received a one-year loan of
VND50,000 million from Ultra Bank, a non-tax resident bank without an establishment in
Vietnam. The annual net-of-tax interest on the loan was VND5,000 million and SHL Limited
will bear the value added tax (VAT) of 5% and the corporation income tax relating to Vietnam.
What is the amount of CIT (withholding tax) to be withheld by SHL Limited on the
interest payable to Ultra Bank?
 A. VND263 million
B. VND555 million
C. VND250 million
D. VND2,630 million

38.
Big-Mart Store (BMS) offered a promotion whereby each walk-in customer received a
packet of tissue paper free of if they buy good from 500,000 dong. The programs was register
to authority. The cost and usual selling price of each packet is VND5,000 and VND10,000
respectively. In February 2020, BMS gave 10,000 packets of tissue paper to walk-in
customers. What are the sales, and cost of good sold of BMS for corporation income tax
(CIT) purposes regarding to promotion items, in February 2020? You should ignore value
added tax (VAT).
Sales Cost of good sold
A. VND10,000,000 VND 0
B. VND10,000,000 VND5,000,000
C. VND5,000,000 VND5,000,000
D. VND0 VND5,000,000

39.
Bur Ltd qualified as a small-profit enterprise in 2020 operates in Vietnam. Its
corporation income tax (CIT) status is as follows:
Billion VND
Tax loss brought forward from 2019 38,000
Taxation profit for 2020 220,000
What is Bur Ltd’s corporation income tax (CIT) payable for 2020?
A. VND0
B. VND18,200 C. VND44,000
D. VND36,400

40.
 Aquarius plc allowed the following amounts in arriving at its draft trade profits of
VND53,000 million
Select how each item should be treated in the adjustment-to-profits working in order
to determine Aquarius plc's final trade profits.
Aquarius plc included VND1,090 million relating to the profit on disposal of an item of
machinery
(1) Add back VND1,090 million
(2) Deduct VND1,090 million
(3) Do not adjust
Aquarius plc included an expense of VND21,400 million relating to chief executive
director’ bonuses and salaries (the directors are also the majority shareholders)
(4) Add back VND21,400 million
(5) Deduct VND21,400 million
(6) Do not adjust
A. (1) and
(4) B. (2) and (4)
C. (3) and (5)
D. (3) and (6)

41.
Sagittarius plc deducted the following amounts in arriving at its draft trade profits of
VND654,544 million for the year ended 31 January 2020.
Select whether an adjustment to profits should be made for each of the following
items in order to determine Sagittarius plc's final trade profits for tax purposes. VND599
million of repair costs relating to the 25-year property
(1) Adjust
(2) Do not adjust
Irrecoverable VAT of VND3,500 million on a company car purchased excess limit 1,6
billion for director's use
(3) Adjust
(4) Do not adjust
 A. (1) and (3)
B. (1) and (4)
C. (2) and (3)
D. (2) and (4)
42.
Scorpio plc charged the following items in arriving at its net profit for the year to 31
March 2020:
VND million
Amount written off one item in stock due to it damaged because flood 4,600
Interest on late payment of corporation tax 16,456
How much should be disallowed when calculating Scorpio plc's trade profits for the
year?
A. VND0 million
B. VND4,600 million
C. VND16,456 million
D. VND21,056 million

43.
Cashew Ltd drew up accounts for the six-month period to 30 June 2020. Cashew Ltd
pays interest on its VND20,000 million 9% debenture stock annually on 31 March. The
debenture stock finances the company's working capital. Cashew Ltd paid VND100 million
interest in respect of late corporation tax on 30 June 2020.
How much interest is allowable against trading profits for the six months ended 30
June 2020?
A. VND0 million
B. VND900 million
C. VND1,000 million
D. VND1,800 million

44.
Russell plc allowed the following amounts in arriving at its draft trading income of
VND1,555,000 million
 Select how each item should be treated in the adjustment to profits working in order
to determine Russell plc's final trading income.
Russell plc included VND4,000 million relating to the loss on disposal of an item of
machinery
(1) Add back VND4,000 million
(2) Deduct VND4,000 million
(3) Do not adjust
Russell plc included VND144,400 million relating to redundancy costs (paid to
employees who were employed from 2018 to now, received an amount equal to their annual
salary for each working year until resignation)
(4) Add back VND144,400 million
(5) Deduct VND144,400 million
(6) Do not adjust
A. (1) and (4)
B. (2) and (5)
C. (3) and (4)
D. (2) and (6)

45.
Which of the following items is/are non deductible in arriving at the trading income
of a private company which manufactures furniture?
A. Unrealised foreign exchange loss on account receivales
B. Gift of a VND550,000 bottle of wine to a customer
C. Interest on a loan taken out to purchase shares in another company
D. Replacement of roof tiles on the company's head office building

46.
Walters Ltd has taxable total profits of VND230,000 million for the year ended 31
March 2020. However, this figure is before the effect of the following items, which were
omitted from the financial statements.
Select the effect of each item on Walters Ltd's taxable total profits.
Qualifying donations to charity
(1) Increase
 (2) Decrease
(3) No effect
Recovery of previously written off trade debts
(4) Increase
(5) Decrease
(6) No effect
A. (1) & (5)
B. (2) & (4)
C. (3) & (6)
D. (2) & (6)

47.
Which of the following case is not true when we calculate CIT taxable turnover in
FCT?
A. For international delivery services from Vietnam to abroad is the whole turnover
earned by foreign contractors
B. For lease of machinery, equipment and means of transportation is the whole turnover
earned by foreign contractors
C. For the transfer of reinsurance to abroad is the charges from the transfer of
reinsurance to abroad earned by foreign contractors (including reinsurance
commission and indemnity expenditure to customer as agreed). D. Treasury bill
CIT- Weighted average of
Face No. of bills held taxable = ( - purchase price of
bills ) x
value at maturity date turnover hold at maturity

48.
Duy Tien Co is in the project investment phase from 2020, which is expected to be
completed by 2023, during this period the company does not generate any other business
activities. In 2020, the company incurs interest expenses related to loan engagements for
investment activities. At the same time, it receives interest income from temporary
investment of surplus fund (which are contributed by shareholders). In 2020, interest income
is greater than the interest expense What is the difference accounted by Duy Tien Co?
 A. The company should account all income from deposit interest into income from
financial activities and calculates corporate income tax payable.
B. The company offset income from deposit interest with interest expense from
investment activities, the excess is recognized as income from financial activities to
calculate corporate income tax payable
C. Company offset income from deposit interest with interest expense from investment
activities, the excess is accounted for as a reduction value of investment project. D.
There are no correct answers

49.
In 2020, Hoa Lan, a limited liability company generates a revenue of 500 billion VND
from the transfer of land, the revenue from selling of apartments is 1000 billion VND and
revenue from leasing premises is 3 billion VND. In 2020, Hoa Lan incurs expenses in the
administrative department in the main office, including the salary of the manager, gas, car,
telephone, stationer.... which is 7 billion VND.
When doing corporate income tax finalization, how will these administration
expenses be calculated?
A. Since the company cannot separately account expenses of the administration to each
specific activity, the board of directors has the right to decide to allocate all these
expenses to the activity which has highest revenue.
B. Since the company cannot separately account the expenses of the administration to
each specific activity, the general expenses are allocated according to the ratio of
revenue between real estate activities to the total revenue of the company.
C. Since the company cannot separately account the expenses of the administration to
each specific activity, the company is not allowed to allocate the administrative
expense to three activities.
D. Since the company cannot separately account the expenses of the administration to
each specific activity, the administration expenses are allocated as the ratio of the cost
between real estate to the total cost of the company.

50.
Trang An Hospital was established in 2000, the main hospital's building were built on
the leased land from state, with land using right for 50 years since 2000, in accordance with
the business license granted. The construction building was completed in 2002.
 How are the depreciation costs calculated for the building?
A. Building is depreciated for 48 years from 2002 including the value of the construction
plus the corresponding land using rights.
B. The building is depreciated up to 30 years according to the value of the construction
due to the fact that after 30 years, all buildings must be upgraded to maintain their
current condition for operating.
C. The building is depreciated separately according to the value of construction works and
does not include the value of land using rights, the depreciation period is specified in
Circular 45/2013.
D. The building is amortized for 50 years from 2002 including the value of the
construction plus the corresponding land using rights.
Part C: Corporate Income Tax Section B
Part C: Constructed Response Question: 15 questions
1. Lam Son Ltd
Lam Son Ltd is a company established ten years ago in Vietnam, with diversified
activities and over 1,200 employees. In its fiscal year ended 30 November 2020, Lam Son Ltd
purchased and constructed various assets for use as follows:

Usage Description Value Estimated Notes commencement (VND useful

date million) life
(years)
1 January 2020 Library for staff 5,760 10
1 March 2020 Swimming pool 6,400 8
for staff
1 March 2020 Equipment and 2,000 4 50% of the value is interior of the
equipment, and 50% of sports centre the value is for the
interior of the
sports centre
15 April 2020 Pools and tanks 1,600 10 70% is for the use by all
for clean water staff of Lam Son Ltd and storage the
remaining 30% for
use by residents living
nearby
1 June 2020 Equipment See note 5 Payment to be made by acquired
by five annual payments of finance lease VND1,200
million. The from a local total interest portion of finance company
the whole lease is (Lam Son Ltd is VND1000 million not the
owner in
the record)

In addition to the above items, on 1 April 2020 Lam Son Ltd also received a yacht and a
fourseater car with a market value of VND22,000 million and VND2,000 million (excluding
value added tax (VAT)), respectively, from a client as settlement of a debt for goods purchased
from Lam Son Ltd in 2019. Lam Son Ltd expects to sell the yacht, but will use the car in its
business and has assigned it a useful life of eight years.
 Required:
(a) Calculate (in VND millions) Lam Son Ltd’s deductible depreciation expense for
corporate income tax (CIT) purposes with regard to each of items 1 to 5 in the fiscal year
2020. (7 marks) (b) Briefly explain whether Lam Son Ltd can deduct a depreciation expense in
respect of the assets (yacht and car) received as settlement of the debt for CIT purposes and
calculate (in VND millions) the deductible amount, if any, in the fiscal year 2020. (3 marks)
(Total: 10 marks)
 2. HDG JSC
HDG JSC (HDG) is a foreign invested company in Vietnam, whose main operations are
to provide strategic management consulting services to corporate clients in Vietnam and
overseas.
HDG’s income statement (I/S) for the year 2020 shows that it earned profits before tax
of
VND120,000 million. During the preparation of the company’s 2020 corporate income
tax (CIT) finalisation return, the chief accountant noted the following issues to be taken into
account. All amounts are stated exclusive of any applicable value added tax (VAT), except
where specifically stated otherwise:
(1) HDG marks up 60% of the costs incurred to calculate the fees charged to clients
(i.e. for every VND200 cost incurred, the profit would be VND120). However, the company
also issues invoices (and charges VAT) in advance to clients based on the estimated costs to
be incurred for the jobs. In a recent tax audit for 2019, the local tax authorities requested
and allowed (in writing) HDG to apply the following mechanism for CIT purposes: –
recognise revenue for CIT purposes when the invoices are issued to clients; and – accrue the
costs corresponding with the revenue (per the mark-up set by the company) recognised in
advance into deductible expenses, and finalise the calculation for CIT when the job is
completed.
During 2020, HDG had the following jobs which were undertaken across two years:

Job Status Revenue Amount Notes

credited to invoiced in
I/S in VND VND
millions millions
Job Started in 2019: 1,400 2019: 2,000 Costs corresponding to the
A 2019, 2020: 3,600 2020: 3,000 revenue invoiced were allowed completed
to accrue in the 2019 CIT in 2020 return.
Job Started in 2020: 1,400 2020: 3,600 In 2020 the costs and revenue
B 2020, to be 2021: 5,200 were recognised in the I/S completed based on
the mark-up set by the
in 2021 company, and included in the
profit before tax of
VND120,000 million.
Job Started in 2020: 0 2020: 3,000
C 2021
(2) During 2020, HDG incurred VND1,800 million for non-business related expenses
and intends to exclude all of this amount from deductible expenses. Of this amount, VND800
million was attributable to staff welfare costs (including weddings/funerals, vacation, support
for transportation during National holidays, etc). However, 20% of these welfare costs were
not supported by documents and another 10% were paid in cash (however, the individual
amounts paid in cash did not exceed VND10 million for each payment). In 2020, the average
monthly salary of HDG’s employees substantially exceeded VND800 million.
(3) In 2020, HDG recovered an amount of VND1,000 million from bad debts which
had been written off in its 2019 I/S. The write off was recorded as an expense in the 2019 I/S
and the recovery recorded as income in the 2020 I/S (i.e. included in the profit before tax of
VND120,000 million). However, during the tax audit in 2019, the expense for the write-off
was rejected for deductibility by the tax authorities due to insufficient evidence.

Required:
Calculate HDG JSC’s taxable income and tax liability (in VND millions) for corporate
income tax (CIT) purposes for the year ended 31 December 2020, indicating the required
adjustments to the profit before tax of VND120,000 million.
Note: You should list all of the items specifically referred to in notes 1 to 3, indicating by
the use of ‘0’ any item for which no adjustment is required.
(Total: 15 marks)

3. FINANT Ltd
FINANT Ltd is a foreign invested company located in Tan Binh Industrial Park in Ho Chi
Minh City. Although the industrial park was no longer an incentivised area in
2019–2020, FINANT Ltd was still entitled to the tax incentives stated in the investment
certificate at the time of its establishment when the incentives for companies established in
industrial parks were still available.
In 2019, FINANT Ltd was entitled to the special tax rate of 15% with a 50% reduction
for the original investment as specified in the investment certificate. In 2019, FINANT Ltd
invested VND100,000 million in a new production line, which qualified as expansion
investment under the corporate income tax (CIT) regulations. FINANT Ltd’s total historical
costs of fixed assets (including the new production line) at the fiscal year-end of 31 December
2019 was VND300,000 million.
 In 2019, the taxable income declared by FINANT Ltd was VND148,000 million, of which
other non-operating taxable income was VND80,000 million.
In 2020, the incentive period of the company expired and FINANT Ltd became subject
to the common tax rate. According to its draft financial statements, FINANT Ltd had
accounting profits before tax of VND240,000 million in 2020. The following issues which were
recorded in the accounting profits are noteworthy for the purposes of the company’s
corporate income tax (CIT) finalisation:
1. Accrued wages and allowances of VND18,000 million were not paid before the
deadline for CIT finalisation. FINANT Ltd’s total actual salary fund in 2020 was
VND105,000 million. No provision for salary fund was made as at 31 December 2020.
2. Purchases without invoices amounted to VND6,600 million, of which VND2,300 million
were purchases of depletions from households who issued FINANT Ltd with lists of the
purchases under form 01/TNDN.
3. Machinery bought in 2017 with a historical cost of VND288,000 million and an
estimated useful life of five years ceased to be used from 1 June 2019 for maintenance.
In 2019, FINANT Ltd expected that this maintenance would take 13 months, but the
maintenance was in fact completed on 31 August 2020 and the machinery was put into
use again from 1 September 2020. In the draft financial statements, this machinery was
depreciated over 12 months in 2020.
4. Uniform expenses (supported with valid documents) were VND780 million paid in cash,
and VND390 million made in kind. FINANT Ltd had an average of 120 employees during
the year 2020.
5. A profits share of VND40,000 million was received from a business co-operation
contract (BCC) which FINANT Ltd had entered into. These profits were after deducting
CIT at the rate of 20%, which was declared and paid by the operator.

From 2021, the foreign investor’s headquarter company is considering charging

FINANT Ltd for the cost of the IT support services it provides. The charge would include a
specific charge for the costs incurred in respect of the service requests made by FINANT Ltd,
and a lump sum charge which would be allocated to all the investor’s subsidiaries based on
the judgement of the headquarter company and which could vary from year to year.

Required:
(a) Calculate the taxable income of FINANT Ltd in the year 2019 from the original
investment, expansion investment and other activities, and the total corporate income tax
 (CIT) liability of FINANT Ltd for the year ended 31 December 2019. (5 marks)
(b) Calculate the taxable income and the tax liability which FINANT Ltd should
declare in its CIT return for the year ended 31 December 2020.
Note: You should start your computation with the accounting profit of VND160,000
million and list all of the items specifically referred to in notes 1 to 5, indicating by the use of
‘0’ any item for which no adjustment is required. (6 marks)
(c) Briefly explain the THREE principle conditions for expenses to be deductible by a
company in Vietnam according to the prevailing regulations, and state, giving reasons,
whether or not the charge for IT support services to be made by the headquarter company
are likely to be deductible by FINANT Ltd in the year 2017. (4 marks)
(Total: 15 marks)

4. WEBOOK JSC
WEBOOK JSC, a joint stock company in Vietnam operating in the field of developing
online
learning courses, was established in 2018 with four founding shareholders. Since its
establishment, WEBOOK JSC has achieved remarkable growth, however, to expand
further additional capital investment is needed. The founding shareholders have successfully
issued additional shares in the company to an angel investor for VND100 billion. The four
founding shareholders actively manage the day-to-day business of the company and the
angel investor will supervise but not participate in the management of WEBOOK JSC’s
day-to-day operations.
The following items have been reported in the financial statements of WEBOOK JSC for
the year ended 31 December 2020:
1. Payments of VND700 million made to individual freelance lecturers who are registered
as business individuals. No invoices were available, however, WEBOOK JSC properly
prepared the ‘Lists of goods and services purchased’ as required. Of the above
payments, 65% are attributed to lecturers who have revenue in excess of VND100
million in the year 2020. All the payments were in excess of VND20 million and made in
cash.
2. WEBOOK JSC’s employees are allowed to study selected courses on a free-of-charge
basis. In 2020, 320 free-of-charge courses, with a total market value of VND220 million,
were provided to employees. 80% of these courses were work-related training but the
remaining 20% were not work related.
 3. Expenses of VND90 million were incurred on negotiating with the angel investor and
issuing the additional shares.
4. Allowances of VND200 million were paid to each of the founding shareholders and of
VND150 million to the angel investor. Proper receipt documents are available.
5. Courses with a value of VND240 million were donated to some national schools, and of
VND80 million to a non-licensed private education fund operated by the angel investor.

Required:
(a) Briefly state the principles, according to the prevailing regulations, to be applied
when determining whether a Vietnamese company can deduct the cost of goods and services
purchased from business individuals who have revenue below VND100 million per year. (3
marks)
(b) Calculate the adjustments WEBOOK JSC should declare in its corporate income
tax (CIT) return for the year ended 31 December 2020 in respect of each of items 1 to 5
above.
Note: You should indicate by the use of ‘0’ any item for which no adjustment is
required. (7 marks)
(Total: 10 marks)
5. INTREX Co
INTREX Co is the parent company of a group of companies operating in diversified
industries. INTREX Co contributes capital to companies in the group and participates in their
operations management, and undertakes financial investments by purchasing and selling
shares in the group companies.
During 2020, INTREX Co completed the following transactions:
(1) On 31 March 2020, INTREX Co sold its entire 30% capital contribution in
INTREXSecoin Ltd, a joint venture limited liability company between INTREX Co and Secoin (a
foreign company), to Secoin for USD8 million. The exchange rate on 31 March 2020 was
VND23,100–23,200 (i.e. the bank is buying and selling 1USD at VND23,100 and
VND23,200, respectively). At the time of the capital transfer, INTREX-Secoin Ltd was
using VND as its functional currency for book-keeping purposes.
The joint venture was set up with a total capital contribution of USD15 million in
February 2018 when the exchange rate was VND18,000 for 1USD. The capital contribution in
the joint venture remained unchanged up to the date of sale, and the audited financial
statements of INTREX-Secoin Ltd as at 31 March 2020 showed the capital contribution using
the exchange rate at the time of contribution.
 (2) In October 2020, INTREX Co sold 60% of the total shares of EVG JSC (equivalent
to 80% of its total shareholding) to BIT Co, a foreign investor, for VND180 billion. EVG JSC was
established in 2018 as a joint stock company with a share capital of VND150 billion, of which
INTREX Co contributed 45% at par value. In January 2020, INTREX Co purchased an additional
30% of the shares in EVG JSC, for VND90 billion. BIT Co settled VND50 billion of the purchase
price in October 2020, and the remaining VND100 billion in March 2021, together with late
payment interest of VND6 billion.

INTREX Co incurred transfer expenses of VND220 million and VND170 million

(supported by proper documents) for the transfer of the capital in INTREX-Secoin Ltd and the
shares in EVG JSC, respectively. INTREX Co obtained written confirmation from the tax
authorities to apply the first-in-first-out (FIFO) mechanism for determining the historical cost
of the EVG JSC shares.

Required:
(a) Briefly explain the principles to be applied when determining the selling price and
historical costs denominated in foreign currency for corporate income tax (CIT) purposes
where a capital contribution is transferred and:
(1) the target company uses a foreign currency as its functional currency; or
(2) the target company uses VND as its functional currency. (6 marks)
(b) Calculate (in VND millions) the CIT liabilities to be declared by INTREX Co for the
transfer of the INTREX-Secoin Ltd capital contribution in 2020. (4 marks)
(c) Calculate (in VND millions) the CIT liabilities to be declared by INTREX Co for the
transfer of the EVG JSC shares in 2020. (5 marks)
(Total: 15 marks)
 6. Livest Co
Livest Co is a foreign invested company, established in Vietnam in 2014. According to
the regulations at the time it was licensed to operate, Livest Co was entitled to two years’
corporate income tax (CIT) exemption plus a further three years’ 50% tax reduction, with the
same circumstances being required as per the current regulations for the tax holiday to
commence. The tax returns of the company from the year of establishment to date showed
the following results:
Year Taxable income (tax losses) Year Taxable income (tax losses)
(VND millions) (VND millions)
2014 (70,000) 2015 (40,000)
2016 (30,000) 2017 (10,000)
2018 16,000 2019 28,000
During 2020, the local tax authorities conducted a tax inspection of the company
relating to the period from 2014 to 2019. The investigation resulted in the adjustment for
some items which reduced the tax losses in 2014 and 2015 by VND12,000 million for each
year; and also reduced the tax losses of 2016 and 2017 by VND10,000 million and VND2,000
million respectively.
In 2020, the company generated taxable income of VND45,000 million according to the
draft tax return.
You should assume all the taxable income/tax losses were generated from Livest Co’s
main business operations.

Required:
(a) Briefly state the principles for carrying forward a loss incurred by an enterprise in
Vietnam according to prevailing corporate income tax (CIT) regulations. (2 marks)
(b) Determine the tax incentives which Livest Co would apply in the years 2018 and
2019. (3 marks)
(c) Calculate the amount of tax losses which can be utilised and offset against
taxable income in each year for the period 2018 to 2020, and the remaining tax losses which
can be carried forward to 2021 by Livest Co. (5 marks)
(Total: 10 marks)

7. Insuranio Co
 Insuranio Co is a limited liability company, established in Vietnam, and specialising in
the manufacture of consumer products. The company’s draft financial statements show profit
before tax of VND80,000 million for the year ended 31 December 2020.
During a review of the draft financial statements, and before preparing the tax return
of the company, the chief accountant of the company noted the following items which may
potentially need adjustments in the tax return:
(1) Insuranio Co purchased a machine for VND96,000 million on 31 March 2018. The
original useful life of the machine was decided to be eight years (the regulated useful life
schedule for the machine is from 8 to 12 years). On 1 October 2020, the company decided
that the remaining useful life of the machine would be four years. The depreciation expense
included in the draft financial statements reflects the original useful life of the machine.
(2) Insuranio Co rented a house at a cost of VND100 million per month from an
individual from May 2020. The house was used as a showroom for the company’s products.
Insuranio Co paid a deposit at the beginning of May 2020, based on two months’ rent in
advance, and paid the rent at the beginning of each month. The lease contract states that
Insuranio Co is responsible for the individual’s deemed personal income tax (PIT) and value
added tax (VAT), each tax being calculated at 5% of the rent. In the draft financial statements,
Insuranio Co has recorded the rent deposit, rent payments and tax payments as expenses.
(3) In the 2019 financial statements, Insuranio Co made a provision of VND8,500
million, being 17% of the salary fund actually paid out in 2019. By 1 July 2020, Insuranio Co
had paid VND6,500 million out of the provision. The remaining VND2,000 million was
forfeited (i.e.
not paid) and no adjustment has been made for this in the draft financial statements.
The amount of salary fund actually paid during 2020 (excluding the above wage provision for
2019) increased by 50% from 2019. This amount, when divided by the total number of
employees, is equivalent to an average of VND6·25 million per employee per month.
Insuranio Co intends to make a similar provision of 17% of the salary fund actually paid
during 2020. This amount is planned to be paid within the first quarter of 2021. This provision
has not yet been made in the draft financial statements, however, it can be included in the
audited financial statements.
(4) In 2020, the premium expenses for voluntary pension insurance for employees
totalled VND16,000 million. The benefits were clearly stated in the collective labour
agreement of Insuranio Co.
 Required:
Calculate (in VND millions) the corporate income tax (CIT) liability to be declared by
Insuranio Co for the year ended 31 December 2020, based on the profit before tax in the
draft financial statements and the above information.
Note: You should start your computation with the profit before tax of VND80,000
million in the draft financial statements, and list all of the items specifically referred to in (1)
to (4) above, indicating by the use of ‘0’ any item for which no adjustment is required.
(Total: 15 marks)
 8. Fances Co
Fances Co is a Vietnamese company which operates in various industries, contributes
capital to various projects and invests in the shares of listed companies.
In 2020, Fancest Co received the following information regarding its investments in
jointly operated projects in Vietnam.
Each project separately records and distributes profits after tax to investors based on
their relevant share in the project:
Project Operating Other Fances Co’s Tax incentives
profits income share (on operating profits only)
before tax before tax
(2020) (2020)
(VND (VND
million) million)
Binh An 1,600,000 100,000 70% The project is entitled to
50% tax reduction on
operating profits before
tax, and 15% tax rate for
the whole life of the
project
Hoa Sen 900,000 55,000 60% The project is entitled to
tax exemption on
operating profits before
tax
Dai 970,000 70,000 40% None
Duong

In 2020, Fances Co also received total dividends amounting to VND200,000 million

from investments in listed companies in Vietnam. In addition, Fances Co received VND80,000
million representing its share of profits before tax and its own expenses from a business
cooperation contract in Vietnam which it invested in with PST Co, another Vietnamese
company. Fances Co incurred own expenses (fully supported by documents) of VND65,000
million earning that profit share.
Required:
(a) Briefly explain the treatment of income from investments (received both
before and after tax) by a Vietnamese company according to prevailing corporate income
tax (CIT) regulations. (3 marks)
 (b) Calculate the total amount of tax exempt income of Fances Co in 2020. (6
marks) (c) Calculate the total tax liability of Fances Co from non-exempt investment
income. (1 mark)
(Total: 10 marks)
9. SANIC Co
SANIC Co is a company with diversified operations in various industries including
farming. In June 2020, the company prepared its draft corporate income tax (CIT) return for
the fiscal year ended 31 March 2020. The draft CIT return is detailed below and may contain
errors:
Items Amount Notes
(VND
million)
Accounting profit before tax 26,800
Add: gain on disposal of machine 350 Please see note (1) below.
Add: depreciation of facilities for 980 VND200 million of this figure is
employees attributable to the kindergarten;
VND350 million relates to a
sports centre for morning and
afternoon exercises; VND180
million relates to a clinic; and the
remaining amount relates to a
library
Add: 100% of the cost of goods for 1,800 Following inspection, an
trading, destroyed in a warehouse insurance company paid SANIC
flood in March 2020 Co compensation in April 2018
based on 60% of the cost of
goods. The compensation money
is not reflected in the accounting
profit figure above.
Add: expenses without supporting 2,500 VND1,800 million of this figure
invoices relates to the purchase of
farming products directly from
farmers. These were covered by
Form 01/TNDN; however, the
company accountant is
concerned this documentation is
not sufficient for tax purposes
Add: school fees excess 400 Please see note (2) below
Add: costs for conducting a feasibility 500 The project was abandoned
study for a project later abandoned immediately before its
commercial launch due to
technical issues. Recovery is not
possible.
Add: summer trip for employees to 2,000 The trip was equally sponsored
Da Lat in September 2019 for team by SANIC Co and a trade union.
building activities The company paid the full
invoiced amount of VND2,000
million and recognised this as an
expense in the accounting
records. Reimbursement from
the trade union of VND1,000
million was recorded as other
income.
Adjusted profits before tax 35,330
Tax (20%) 7,066

Detailed notes:
(1) The machine was purchased on 1 January 2018 at a cost of VND7,200 million
and had an expected useful life of four years at that time. It required major repair work
during the period from 1 January 2019 to 31 March 2020 and it was not used during this
entire period.
Following this, the machine was sold and generated an accounting gain which was
added back in the CIT return. For accounting purposes, the machine was depreciated as
normal during the repair period. However, the company’s accountant is not sure if the
depreciation expense is deductible for tax purposes. Therefore, the gain on disposal was
added back as a prudence measure.
(2) The company agreed to pay school fees for the children of four executives of the
company, who are all Vietnamese individuals. According to all labour contracts, total school
fees which are to be borne by the company are capped
at VND350 million per year, per employee. However, the total fees paid by the
company to schools during the year amounted to VND1,800 million, and the excess was
recovered from the individual executives. The total expense of VND1,800 million has already
been recognised in the accounting profit for the year ended 31 March 2019.
 However, the excess has not been recognised because it was received in May 2020.
SANIC Co’s accountant thinks the excess recovered from the executives should be
non-deductible.

Required:
Calculate (in VND millions) the corporate income tax (CIT) liability to be declared by
SANIC Co for the year ended 31 March 2020, based on the above information.
Note: You should start your computation with the profit before tax of VND26,800
million, and list all of the items specifically referred to in the table and the notes above,
showing their correct treatment and indicating by the use of ‘0’ any item for which no
adjustment is required.
(Total: 15 marks)
 10. HYDRON Co
HYDRON Co is a Vietnamese company operating and investing in various industries.
On 1 April 2019, HYDRON Co set up a joint venture, BA Co, with another company in
Vietnam, and contributed the following capital in kind (i.e. a capital contribution in the form
of assets) to BA Co:
Assets Net book value as at Agreed contribution Agreed remaining
transfer date (VND value useful life (years)
million) (VND million)
Land use 10,000 120,000 Indefinite
right
Office 12,000 15,000 20
building
Unfortunately, due to conflict in operational strategy between the partners, the joint
venture did not work out and on 30 September 2020, HYDRON Co sold its entire capital
contribution in BA Co to the joint venture partner for VND150,000 million.
HYDRON Co’s intention is to defer any taxable gain(s) arising from the capital
contribution for as long as the regulations allow.

Required:
(a) Briefly explain the calculation and treatment of the taxable gains/losses arising
on the transferor due to a revaluation of assets contributed as capital in kind by the
transferor to a Vietnamese company according to prevailing corporate income tax (CIT)
regulations. (4 marks)
(b) Determine the taxable gains HYDRON Co should declare in its CIT returns for
the years ended 30 September 2019 and 30 September 2020 in relation to each relevant
asset. Note: Your answer should clearly indicate the type of income in relation to each gain.
(6 marks)
(Total: 10 marks)
 11. BLC Co
BLC Co is a foreign invested company headquartered in a location which has difficult
socioeconomic conditions in the Yen Bai Province. BLC Co has a manufacturing facility in its
headquarters, and another manufacturing facility in the Cao Bang province. The products
manufactured at both facilities are identical and are sold to all provinces in Vietnam. In the
fiscal year ended 31 December 2020, the company is entitled to corporate income tax (CIT)
exemption for the income arising from its location in Yen Bai.
In 2020, BLC Co’s audited accounting profit before tax was VND38,600 million. BLC Co
cannot separately account for its income from each facility, however, it can separately record
the units produced and sold by each facility during 2020, as shown below:
Yen Bai facility Cao Bang facility
Production and sales 50,000 units 30,000 units

All products were sold at the same price of VND1 million per unit during the year 2020.
Additional information relating to the year ended 31 December 2020:
(1) To facilitate the production process, on 1 May 2020 BLC Co purchased various
tools and instruments which did not qualify as depreciable assets. The total purchase costs
for these items amounted to VND4,730 million (inclusive of value added tax (VAT) at 10%)
which was expensed gross of VAT in the 2020 statement of profit or loss. However for tax
purposes, the company wishes to amortise the expenses over a period of 24 months.
(2) BLC Co has two levels of personnel: management level and staff level. On
average, each person at management level is in charge of five staff level employees. The
company purchased voluntary life insurance for all of its personnel at both levels. The fee for
each person at management level is VND80 million, which is double the fee for staff level
employees. The total life insurance policy expenses paid in 2018 were VND5,600 million.
(3) The company recorded total remuneration expenses of VND15,600 million in its
statement of profit or loss, which represents 13-months’ worth of salaries. All of the
expenses were fully paid in 2020 except for one month’s salary which was accrued as a Tet
payment, and paid in January 2021 despite this payment specifically relating to 2020
performance.
(4) The uniform expenses paid in cash by the company amounted to VND1,400
million and qualified welfare expenses for staff were VND2,380 million for the year (both
amounts are exclusive of VAT).
(5) In 2020 the company made a severance payment of VND1,200 million to its
retired employees. The payment was not reflected in the statement of profit or loss because
the amount was fully recognised through provisions in previous years (BLC Co has also
properly adjusted for those provisions for tax purposes in prior years’ tax returns).

Required
Calculate (in VND millions) the CIT liability that BLC Co should declare in its tax return
for the year ended 31 December 2020.
Notes:
1. You should start your computation with the profit before tax figure of VND38,600
million, and list all of the items specifically referred to in the table and the notes in the
scenario, showing their correct treatment and indicating by the use of ‘0’ any item for which
no adjustment is required.
2. You should also take into account the tax incentives BLC Co is entitled to in the
context that it cannot separately account for the incentivised and non-incentivised income.
(Total: 15 marks)
 12. FORESH Co
FORESH Co, a limited liability company incorporated in Vietnam, is a joint venture of
LANDAS Co, a company incorporated in Singapore, with SNS Co, a company incorporated in
Vietnam. LANDAS Co contributed 80% of the capital of FORESH Co.
LANDAS Co is the 100% subsidiary of GUP Co, a company incorporated in the British
Virgin Islands (BVI). In 2019, GUP Co decided to restructure the group, which
involved LANDAS Co transferring its entire shareholding in FORESH Co to GUP Co, so
that GUP Co now directly holds the investment in FORESH Co.
As the above transaction was an intra-group transfer and as there was no valuation
available for determining the market value of FORESH CO, GUP Co instructed LANDAS Co to
transfer the capital of FORESH Co at the same USD amount as its original capital contribution
to FORESH Co to ensure that no capital gain would arise in USD. The exchange rate at the
time of transfer was VND 23,500 to USD 1.
FORESH Co's functional currency is VND. An extract from FORESH Co's prepared
financial statements, as at the transfer date, is as follows:
VND million
Share capital (equivalent to USD 25 500,000
million)
Retained earnings 750,000
Equity 1,250,000

Required
(a) Briefly explain the tax treatment of a capital gain arising on the transfer of a
capital contribution in a Vietnamese limited liability company from one foreign company to
another foreign company, according to prevailing corporate income tax (CIT) regulations. (5
marks) Note: Your answer should explain how the transfer price, taxable gain and CIT
liability are determined, and which party would be responsible for the tax declaration
(b) Determine the corporate income tax (CIT) liability arising on the transfer of the
capital contribution in FORESH Co from LANDAS Co to GUP Co, on the assumption that the
tax authorities in Vietnam accept the transfer price as requested by GUP Co. (3 marks) (c)
On the assumption that the tax authorities in Vietnam do not accept the transfer price as
requested by GUP Co, estimate the potential corporate income tax (CIT) liability which the
tax authorities can impose in relation to the transfer based on the information provided. (2
marks)
(Total: 10 marks)
 13. TECHIP CO
TECHIP Co is a limited liability company incorporated in Vietnam operating in the
supply of scientific equipment and related services. In the latest draft income statement of
TECHIP Co for the fiscal year ended 31 December 2020, the profit before tax figure amounted
to VND 138,000 million
The board of directors of TECHIP Co think the accounting profits may need various
amendments and they also want to know the potential tax liability for the year. TECHIP Co is
subject to the standard corporate income tax (CIT) rate without any tax incentives
The following information is relevant for estimating the tax liability
(1) The revenue in the draft income statement includes VND 21,000 million, being
collections received from a package of services provided to BTC Co By 31 December 2020,
TECHIP Co had completed the services, but only 70% of the contract value had been invoiced
paid and recognised in the accounts. TECHIP Co earned a gross margin of 25% from these
services and all costs incurred in carrying out these services have been included in the draft
income statement.
(2) The cost of sales in the draft income statement consists of VND 4,500 million,
being the full three-year rental payment made in advance on 1 April 2020 for equipment
which TECHIP Co leased from FVN Co under a three-year operating lease agreement
commencing on that date.
(3) According to the labour contract, TECHIP Co would cover up to VND 500 million
for school fees for the daughter of the general director, a Vietnamese citizen. The
employment costs in the draft income statement include payment of VND 720 million to the
international school the general director's daughter attends TECHIP Co has since collected
the excess from the general director in the year ending 31 December 2021, but recognised
the collection as other receivables and other income within the draft profits for the year
ended 31 December 2020
(4) Equipment in TECHIP Co's inventory valued at VND 50,000 million, was damaged
in a flood in the warehouse on 1 July 2020. The equipment was ordered by a client for
delivery on 15 July 2020 at a selling price of VND 60,000 million As it was damaged, TECHIP
Co had to incur repair expenses of VND 1,000 million, and then agreed to sell the repaired
equipment to the client for VND 45,000 million. The insurer agreed to compensate TECHIP Co
50% of the shortfall between the inventory value and the sale price, but this compensation
had not been received by 31 December 2020. The draft profits before tax figure accounted
for the whole value of the equipment written off by TECHIP Co, as well as the repair expenses
and the sale price.
(5) The draft profits included an expense of VND 3.000 million, being the annual
amortisation of a licence fee which TECHIP Co purchased for VND 15,000 million in January
2019. The amortisation amount was calculated based on the contractual period of the licence
agreement.
However, according to the licence agreement at the expiry of the current term, TECHIP
Co has the right to extend the license period over ten more years, free of charge
According to recent guidance by the tax authorities, for tax purposes, a licence should
be amortised over the aggregate period, including any extended period. It is likely that
TECHIP Co will exercise the right to extend the licence agreement
(6) In 2020, TECHIP Co made the following foreign exchange gains and losses, all of
which have been recorded in the draft income statement: A realised net loss on cash at bank
of VND 900 million
- An unrealised loss on cash at bank of VND 800 million
- An unrealised loss on trade payables of VND 1,500 million
- An unrealised gain on trade receivables of VND 1,300 million

Required
Calculate (in VND millions) the corporate income tax (CIT) liability which TECHIP Co
should declare in its tax return for the year ended 31 December 2020.
(Total: 15 marks)
Note: You should start your computation with the draft profit before tax figure of
VND138,000 million, and list all of the items specifically referred to in the scenario,
showing their correct treatment and indicating by the use of ‘0’ any item for which no
adjustment is required.

14. Fundly Co
In January 2020, Fundly Co, a limited liability company with two members, was
established in Vietnam by Mr Nam Bui. The main function of Fundly Co is to administer Mr
Bui’s investments, to invest in potential targets and provide finance between the companies
owned by Mr Bui.
 The initial chartered capital of Fundly Co was VND600 billion, to be contributed in two
equal instalments over the two years 2020 and 2021. Mr Bui duly fulfilled his contribution for
2020 on 1 February 2020.
In April 2020, Fundly Co set up a new joint venture named VarSub Co (VSC) in which
Fundly Co will hold 70% of the shares and another investor will hold the remaining 30%.
According to its charter, VSC’s charter capital will be VND500 billion, of which 100% of
their share should be contributed by each party by at the latest 31 March 2020.
On the establishment of VSC, Fundly Co contributed capital of VND150 billion from its
own funds and on 31 March 2020 it contributed a further VND100 billion which it borrowed
from EXBank on that date. The interest rate charged on the loan by EXBank is 9% per annum.
However, on 20 March 2020, the other investor who had failed to contribute any capital on
their part, announced that they could not contribute any capital. To keep up with its
investment schedule, on 31 March 2020, VSC took out two loans from two different banks, of
VND200 billion and VND100 billion at annual interest rates of 10% and 10.5%, respectively.

Required:
(a) State the general rules regarding the deductibility of the interest expenses on loans
borrowed to finance investment in another company, and loans to finance business
operations.
(3 marks)
(b) Calculate (in VND millions) the capital contributions required, the shortfall in capital
contributions, and the deductible and non-deductible interest expenses, if any, of Fundly Co
and VarSub Co, for the year ended 31 December 2020. (7 marks)

(Total: 10 marks)

15. Spenda Co
Spenda Co is a foreign invested retailer, with headquarters in Hanoi and has operated a
chain of retail stores in various provinces in Vietnam since 2016. Due to extensive investment
in expanding its stores, Spenda Co has accumulated losses in recent years, including in 2020
when its audited financial statements showed an accounting loss before tax of VND2,800
million. Following a tax audit carried out in mid-2020 by the Hanoi tax authorities for periods
up to 31 December 2019, various adjustments have been made to Spenda Co’s tax
declarations, resulting in some of the loss-making years becoming profitable for tax purposes.
In 2020, the board of Spenda Co has insisted that in order to avoid any negative tax impacts,
all possible adjustments should be reflected in the tax return.
A careful review of the accounting loss in 2020 has revealed the following issues which
may potentially be adjustable for tax purposes. All amounts are stated exclusive of any
applicable value added tax (VAT), except where specifically stated otherwise.
(1) Spenda Co purchases various perishable items (e.g. milk, foodstuff, etc) from
suppliers for resale. The company’s policy is that any item unsold at the expiry date specified
by the supplier is collected and destroyed. During the year 2020, the value of the destroyed
items reflected in the costs of goods sold amounted to VND1,300 million.
(2) Spenda Co frequently issues water and soft drinks from stock for consumption,
which are not for sale. The value of consumption for these purposes in 2020 was: – For the
further processing of fresh foods or juices for sale: VND350 million
– For business meetings with suppliers, stakeholders, etc: VND200 million
– For the company’s summer vacation and staff use: VND50 million
All of these amounts were reflected in the financial statements as accounting expenses
in the relevant categories on their purchase from suppliers.
(3) Spenda Co has an agreement with its parent company whereby the parent
company frequently sends experts to Vietnam to support the training of staff, to transfer their
knowledge and to share their experiences. The parent company does not charge a fee for the
services of these experts but Spenda Co has to bear all of the experts’ accommodation costs
in Vietnam, including for some of the experts and their families to travel in Vietnam after the
work is completed. In 2020, these accommodation costs amounted to VND1,900 million,
which included VND460 million for the accommodation of some of the experts and their
families while travelling. The market price of the training, etc received by Spenda Co in 2020
has been estimated at VND16,000 million.
(4) In April 2020, Spenda Co paid VND2,550 million 2019 incentive bonuses to
employees of which it recognised VND300 million as an accounting expense in 2020 because
in its 2019 financial statements and tax returns, the company had only made a provision of
VND2,250 million for this payment. However, during the tax audit for 2019, the tax authorities
disallowed VND450 million as being in excess of the 17% provision cap, but agreed that
Spenda Co could deduct this amount for any actual payments made. In 2020 Spenda Co
decided not to make any provision.
(5) Each year in December, Spenda Co issues Lunar New Year gift vouchers, which
are valid for six months, to corporate clients, who after paying for the vouchers distribute
them as gifts to individuals. The individuals use the vouchers to pay for goods purchased from
Spenda Co’s stores. Spenda Co defers recognition of accounting revenue until the actual
redemption of the vouchers by the individuals. At the end of June in the following year,
Spenda Co recognizes any unredeemed vouchers as other income. The relevant figures for
2019 and 2020 are as follows:
2019 2020
VND VND
million million
Value of gift vouchers issued in December 12,000 15,000
Value of vouchers redeemed by the following 30 9,000 Unknow
June
Neither Spenda Co nor the tax authorities made any adjustment in the tax return and
tax audit minutes of 2019 for this item.
(6) In 2020, Spenda Co leased three apartments for its expatriate staff from
landlords who are all Vietnamese individuals. Rent payments on all three leases are made
every quarter. Details of the lease agreements are as follows:
Apartment Rent in 2020 Tax in 2020 Tax agreed to Payment VND million
VND million borne by method
A 720 80 RTM Co Bank transfer
B 660 66 Landlord Bank transfer C 800 80 Landlord Cash

The landlord of Apartment C went bankrupt during the year and only paid tax for the
first three months of the lease, so Spenda Co had to bear the whole of the remaining tax.
All expenses paid were recorded as accounting expenses in the audited financial
statements; all the payments have proper payment evidence, and Spenda Co obtained proper
tax payment confirmation from tax authorities for all tax payments made by the company.
Required:
Calculate Spenda Co’s revised taxable profit/allowable loss (in VND millions) for
corporate income tax (CIT) for the year ended 31 December 2020.
Note: You should start your computation with the accounting loss of VND2,800 million,
and list all of the items specifically referred to in notes 1 to 6, indicating by the use of ‘0’ any
item for which no adjustment is required.
(Total: 15 marks)
Part D: Foreign Contractor Tax Section A
Part D: Multiple Choice Question: 30 questions
1.
Public Training Co, an Singapore company, signed a contract with VSBC, a Vietnamese
company, to provide professional training for VSBC Co’s staff in 2020. The value of the
training agreement was USD150,000, gross of corporate income tax (CIT) and net of the value
added tax (VAT) portion of foreign contractor tax (FCT). The contract value was made up of
online courses (70%), whilst the remaining 30% was attributable to training courses which
took place in Vietnam. VSBC Co settled the contract value in full in 2020.
What is the amount (in USD), net of foreign contractor tax (FCT), Public Training Co
can receive from VSBC Co in respect of the above training agreement during the year 2020?
A. USD142,500 B. USD 45,000
C. USD151,590
D. USD144,000

2.
In 2020, Musika Co, a Japanese company, signed a contract to supply and install
sterilizing machine for Braun Co, a Vietnamese company. The contract price was USD3 million
gross of value added tax (VAT) and corporate income tax (CIT). Musika Co purchased goods
relating to this contract, valued at USD1·50 million, from Vietnamese suppliers.
What is the amount (in USD) of the corporate income tax (CIT) portion of foreign
contractor tax (FCT) which Braun Co would be required to withhold on the above contract
with Musika Co, assuming Musika Co applied the deemed method for FCT declaration?
A.
USD88,200 B.
USD60,000 C.
USD30,000
D. USD58,200

3.
Broxy Co is a company headquartered in Taiwan which provides logistic services. In
2020, Broxy Co provided document and handling services at Taiwan ports for the international
transportation activities of North Freight Co, a Vietnamese company. In 2020, Broxy Co
charged North Freight Co a fee of USD200,000 for these handling services. It was agreed by
both companies that this fee was net of any withholding tax in Vietnam.
What is the amount of foreign contractor tax (FCT) that North Freight Co should declare
and pay to the Vietnamese tax authorities on behalf of Broxy Co?
A. USD10,803
B. USD5,263
C. USD0
D. USD10,250

4.
In which of the following scenarios is the foreign company subject to foreign
contractor tax (FCT) in Vietnam?
(1) A company, established in Malaysia, which transferred the right to develop a
project in Vietnam to a Vietnamese company
(2) A company in Hong Kong which sold equipment to a company in Vietnam with a
one-year warranty clause in the contract stating that the risks to the equipment are
transferred at the Hong Kong port
(3) A company in Thailand which received compensation from a Vietnamese
company for late delivery of goods
(4) A company in Singapore which signed a contract to buy garment products from
TXT Co, a Vietnamese company, and instructed TXT Co to deliver the garments to PCS Co,
another Vietnamese company, under the on-the-spot-import-export mechanism
A. 1, 2, 3 and 4
B. 2 and 4 only
C. 2 and 3 only
D. 1, 3 and 4 only

5.
In 2020, NWC Co, a company incorporated in Vietnam, entered into a contract with OSL
Co, a foreign company incorporated outside Vietnam, to purchase a specialized robot for
USD1 million. The price is net of all withholding tax in Vietnam. The terms of delivery for the
robot were cost, insurance, freight (CIF) to Hai Phong Port, while tittle and risk to the goods
would be transferred at the uploading port in Singapore. According to the contract, OSL Co
would not provide any services, except for the guarantee and replacement of the robot within
two years in case of defects (the robot will be shipped back to Singapore for fixing or
replacement), NWC Co settled the full contract amount in 2020
What is the amount of the foreign contractor tax (FCT), under the deemed method for
the fiscal year 2020, which NWC Co is required to pay in relation to the contract amount
paid to OSL Co?
A.
USD10,101 B.
USD10,000
C. USD51,967
D. USD0

6.
In 2020, STP Co, a company incorporated in France, won a bid from PSL Co, a company
incorporated in Vietnam, to supervise the construction of PSL Co’s factory in Vietnam. The
supervision fee under the contract was USD650,000, inclusive of corporate income tax (CIT)
and exclusive of value added tax (VAT). To implement the contract, STP Co purchased goods
and services equivalent to USD50,000 from local suppliers
What is the amount of foreign contractor tax (FCT), corporate income tax (CIT) and
value added tax (VAT) in USD, which STP Co would be subject to in respect of the project in
Vietnam in the fiscal year 2020?
CIT VAT
A. Option 1 USD34,211 USD36,011
B. Option 2 USD30,000 USD31,579
C. Option 3 USD31,579 USD33,241
D. Option 4 USD32,500 USD34,211

7.
APL Co is a company incorporated in Singapore to distribute branded mobile phones. In
2020, APL Co sold 5,000 phones to VTD Co, a retail company incorporated in Vietnam, at a
unit price of USD600 (terms of delivery free on board (FOB) Singapore port, net of any tax in
Vietnam). The contractor specifies that the selling price of the phones in Vietnam shall be
determined by
 APL Co and that APL Co will not carry out any services in relation to phones in Vietnam.
VTD Co is authorised to conduct advertising activities for the phones in Vietnam at the
expense of APL Co. In 2020, VTD Co incurred advertising costs of VND1,175 million which
were offset against the amount payable to APL Co. All payments were settled in full in the
year ended 31 December 2020.
What is the amount of corporate income tax (CIT) as a portion of the foreign
contractor tax (FCT) liability which VTD Co should declare on behalf of APL Co from the
trading transactions in the fiscal year 2020?
A. USD29,798
B. USD30,000 C. USD0
D. USD30,303

8.
Sumi Co, a Germany company, signed a contract with a Vietnamese company, Company
Minh Anh, for the construction of a building in Vietnam. The contract value is USD39 million.
Sumi Co subcontracted part of the construction works with a value of USD13 million to
Company Vinamex, a Vietnamese company, and works with a value of USD8·5 million to
Company Chanhai, a Taiwanese company, adopting the deemed method for foreign
contractor tax (FCT). Sumi Co also purchased goods for the works with a value of USD2.5
million from Vietnamese suppliers.
What is the amount of the foreign contractors’ taxable revenue from the contract for
the purposes of FCT?
A. USD39 million
B. USD17·5 million
C. USD26 million
D. USD15 million

9.
Which of the following transactions would be subject to foreign contractor tax (FCT)
in Vietnam?
(i) Repair of a Vietnamese internet cable offshore
(ii) Online training for the employees of a Vietnamese company where the server is hosted
overseas
(iii) An intermediary arrangement for a Vietnamese company to provide services in
Singapore (iv) Granting of rights to a Vietnamese company to use the international brand
name of a world famous product in Vietnam
A. i and ii
B. ii and iv
C. i and iii
D. iii and iv

10.
Shanghai Co, a Chinese company, signed a contract with a Vietnamese project owner
for the supply, installation and testing of compressor system. Shanghai Co subcontracted all
the compressors supply value to a Vietnamese subcontractor Ba Anh Company and performed
the installation and testing activities itself for project.
What would be the foreign contractor tax (FCT) rates applicable to Shanghai Co under
the deemed method?
Corporate income tax Value added tax
(CIT) (VAT)
A. 2% 3%
B. 5% 5%
C. 1% Exempt
D. 10% Exempt

11.
Lameda Co, a foreign company based in Singapore, hired space in a bonded warehouse
in Vietnam. The storage space was used for:
– the temporary storage of materials for Lamevie Co, a Vietnamese company, prior
to their further processing by Lamevie Co; and
– the storage of finished goods for other companies in Vietnam prior to their
distribution in Vietnam.
 In the case of the finished goods, the costs of transportation from the bonded
warehouse to the distributors’ warehouse in Vietnam was paid for by the distributors but
reimbursed by Lameda Co.
What are the Vietnamese foreign contractor tax (FCT) implications for Lameda Co
from the above transactions?
With Lamevie Co With other distributors
A. Subject to FCT Subject to FCT
B. Subject to FCT Not subject to FCT
C. Not subject to FCT Subject to FCT
D. Not subject to FCT Not subject to FCT

12.
Eli Co, who is located Malaysia, delivers electronic items to a Vietnamese Company and
authorizes Nguyen Anh Co to perform some services, such as delivery, distribution, marketing,
advertising for selling electronic products, while Eli Co is still the owner of goods delivered to
Nguyen Anh Co, they still take responsibility for the cost, quality of product. Eli Co impose
selling prices for electronic products.
What tax status of Eli Co?
A. Eli Co is subject to FCT
B. Nguyen Anh Co is subject to FCT
C. Eli Co is not subject to FCT
D. No one is subject to FCT

13.
Cheapkit Co, who is located in Vietnam, signs a contract to import computers and
speakers with Machi Co who is located overseas. Goods are delivered at a Vietnam’s border
gate.
Machi Co bears all responsibility and costs related to the goods until they arrive at the
Vietnam’s border gate; Cheapkit bear responsibility and costs related to the receipt and
transport of goods from the Vietnam’s border gate.
The contracts prescribes that the goods come with a one-year warranty by Machi Co.
Other than that, Machi Co does not provide any services related to such goods in Vietnam.
 What tax status of Machi Co?
A. Machi Co is subject to FCT because of one-year warranty service
B. Machi Co is subject to FCT because goods are delivered at a Vietnam’s border gate
C. Machi Co is subject to FCT because Machi Co bears all responsibility and costs related
to the goods until they arrive at the Vietnam’s border gate D. Machi Co is not subject to
FCT

14.
Besthand Co of Hong Kong provides material handling services at a port in Hong Kong
for AM Co in Vietnam. AM Co pays Besthand Co for material handling services at the Hong
Kong port.
What tax status of Besthand Co?
A. Besthand Co is subject to FCT because it provides service to AM Co
B. AM Co is subject to FCT because it pays Besthand Co
C. Besthand Co is not subject to FCT
D. Both Besthand Co and AM Co are not subject to FCT

15.
Hoang Long, a Vietnamese Company signs a contract with Vanesa Company in
Singapore according to which Vanesa will (i) run advertisements for sale for products of Hoang
Long in Singapore market, and (ii) run advertisements on internet for sale of products in
Vietnamese market. Hoang L ongCompany will pay Vanesa in Singapore for advertising
services.
Are ad services (i) and (ii) subject to Vietnamese FCT?
A. (i) and (ii) are subject to FCT
B. (i) and (ii) are not subject to FCT
C. (i) is subject to FCT, (ii) is not
D. (ii) is subject to FCT, (i) is not

16.
RED Co, a Vietnamese real estate developer, signed a contract in June 2020 with TLA Co,
a Hong Kong company.
 The contract was for TLA Co to provide advertising and intermediary services to Hong
Kong investors to purchase apartments developed by RED Co in Vietnam. TLA Co’s services are
carried out partly in Vietnam and partly in Hong Kong. According to the contract, RED Co is
required to pay a fixed fee of USD200,000 (net of any tax in Vietnam) to TLA Co for 12 months
of services, payable in two equal instalments in September 2020 and March 2021.
What is the amount (in USD) of the corporate income tax (CIT) portion of foreign
contractor tax (FCT) RED Co would be liable to pay in Vietnam in 2020 based on the above
contract with TLA Co?
A. USD10,526
B. USD5,540 C. USD0
D. USD5,263

17.
XAL Co is a foreign airline which has an office in Vietnam to sell airfares. In the fourth
quarter of 2020, XAL Co earned gross revenue, i.e. before the deduction of any charges or
refunds, of USD250,000, based on receipts and records. Of this amount, USD200,000 was for
passenger transportation, and the remaining amount related to cargo transportation. Airport
charges of USD5,000 were collected from these fares on behalf of the domestic airports. XAL
Co also paid refunds of USD7,000 to passengers who returned their fares during the quarter.
What is the total amount of taxable income (in USD) which XAL Co should declare for
the corporate income tax (CIT) portion of the foreign contractor tax (FCT) in the fourth
quarter of 2020?
A.
USD188,000 B.
USD238,000 C.
USD245,000
D. USD193,000

18.
In July 2016, MGT Co borrowed USD10 million from a foreign bank at an interest rate of
5% per annum for four years (MGT will bear any FCT on the interest). It is specified in the loan
agreement that where MGT cannot repay the loan on the specified date, MGT would be
subject to late payment interest. In October 2020, MGT paid back the loan plus USD250,000
interest and USD40,000 for late payment interest.
 What is the amount of the CIT portion of FCT (rounded to 0 decimal) to be declared
and paid by MGT Co for the above transaction?
A.
USD13,300 B.
USD14,500 C.
USD13,974
D. USD15,263

19.
Shiple Co acts as an agent of V-Express Co, a foreign marine shipping. According to the
agent contract, Shiple Co, on behalf of V-Express Co, receives goods to be transported abroad,
issues bills of lading, collects charges.
Rushes Co of Vietnam hires V-Express Co (via Shiple Co) to transport goods from
Vietnam to United State of America (USA) for USD100,000.
Shiple Co hires ships from Vietnamese or foreign companies to carry goods from
Vietnam to Singapore for USD 20,000. From Singapore, goods shall be transported to the USA
by the ships of V-Express Co.
What is taxable revenue subject CIT of V-Express Co?
A. USD
100,000 B. USD
80,000
C. USD 120,000
D. USD 97,000

20.
Thu Thiem , a Vietnamese company signs a contract to hire Big One company in Taiwan
as broker. Big One will promote and introduce Thu Thiem’s product in Taiwan or on the
international market, and (ii) for transfer of Thu Thiem’s real estate in Vietnam.
Are broking services (i) and (ii) subject to Vietnamese FCT?
A. (ii) is subject to FCT, (i) is not
 B. (i) is subject to FCT, (ii) is
C. (i) and (ii) are subject to FCT
D. (i) and (ii) are not subject to FCT

21.
Hoa Lac Co, operate in education in Vietnam signs a contract with Sunway University of
Malaysia (i) for provision of training for Vietnamese lecturers at Sunway University , and (ii) to
provide training for Vietnamese trainer in Vietnam in the form of online training.
Are training services (i) and (ii) subject to Vietnamese FCT?
A. (i) and (ii) are subject to FCT
B. (i) and (ii) are not subject to FCT
C. (i) is subject to FCT, (ii) is not
D. (ii) is subject to FCT, (i) is not

22.
Viet Hung Co in Vietnam signs a contract to buy a production facility for a iron and steel
factory from Jungo Company in Korea. The total contract value is USD 150 million, including
USD 110 million of machinery and equipment (some of them are subject to 10% VAT) and USD
40 million for services of installation guide, supervision, warranty, and maintenance.
What is VAT liability of Viet Hung in Vietnam?
A. USD150 million is subject to VAT
B. USD110 million is subject to VAT
C. USD40 million is subject to VAT
D. Total contract value is not subject to FCT

23.
Viet Hung Company in Vietnam signs a contract to buy a production facility for a
cement factory from Jungo Company in Korea. The total contract value is USD 150 million,
including USD 110 million of machinery and equipment (some of them are subject to 10%
VAT) and USD 40 million for services of installation guide, supervision, warranty, and
maintenance.
What is CIT liability of Viet Hung in Vietnam?
A. Only USD110 million is subject to CIT
 B. Only USD40 million is subject to CIT
C. USD110 million and USD40 million are subject to CIT at separate CIT rates D. Total
USD150 million is subject to one CIT rate

24.
Sydicate, a foreign contractor signs a contract with a Binh Thanh entity to supervise the
construction of reinforced concrete factory Z1534. The contract value is USD 400,000
exclusive of VAT (but inclusive of corporate income tax). Furthermore, the Binh Thanh
Company in Vietnam provides accommodations and workplaces for managers of Sydicate,
which are valued at USD 60,000 exclusive of VAT.
According to the contract, the Binh Thanh is responsible for paying VAT on behalf of the
Sydicate in Vietnam.
What is taxable amount subject to VAT?
A. USD 484,211
B. USD 421,053 C. USD 60,000
D. USD 412,371

25.
Vonka, a germany company, signs a contract to build alloy steel factory in Ninh Binh
with a Vietnamese Company, Vinh Thuy. The total contract value is USD 20 million inclusive of
VAT. According to the main contract, Vonka shall delegate part of the construction (stipulated
in the main contract signed with Vinh Thuy) to Vietnamese Subcontractor Ha Giang, which is
valued at USD 3 million exclusive of VAT.
Furthermore, during the construction process, Vonka buys building materials (bricks,
cement, sand, etc.), other goods and services such as stationery, car rental and hotel rooms
for experts, etc. to serve the contract execution amounted to USD 1 million What is taxable
amount subject to VAT?
A. USD20 million
B. USD19 million
C. USD17 million
D. USD16 million

26.
 EXPRESS, a Hong Kong company provides postal services from Hong Kong to Vietnam
(inbound) and from Vietnam to Hong Kong (outbound).
What are VAT treatments?
A. Both inbound and outbound revenue are subject to VAT
B. Both inbound and outbound revenue are not subject to VAT
C. Inbound revenue is subject to VAT, outbound revenue is not.
D. Outbound revenue is subject to VAT, inbound revenue is not.

27.
Anaka, a russian contractor, who does not follow Vietnamese accounting system (VAS),
signs a contract with Company Bao Loc in Vietnam to provide machinery and equipment with
installation and test run services for USD 15 million. The contract does not separate the value
of machinery and equipment from the value of services.
What is VAT liability of Foreign contractor Anaka?
A. Total contract value of USD 15 million is not subject to VAT
B. Total contract value of USD 15 million is subject to VAT at 2% C. Total
contract value of USD 15 million is subject to VAT at 3%
D. Total contract value of USD 15 million is subject to VAT at 5%

28.
Which of the following items is subject to VAT under the FCT contract? A.
International delivery services from Vietnam to abroad
B. Foreign airlines
C. Foreign shipping lines
D. Interest rate swap transaction with a foreign party

29.
Bottom Co from Canada signs a contract with a Hoang Gia Co to supervise the
construction of galvanised steel factory Z. The contract value is USD 395,000 exclusive of VAT
and CIT. Furthermore, the Vietnamese entity provides accommodations and workplaces for
managers of
Foreign Contractor Rock Bottom, which are valued as USD 45,000 exclusive of VAT and
CIT.
 According to the contract, the Hoang Gia Co is responsible for paying VAT and CIT on
behalf of Rock Bottom Co.
What is taxable amount subject to CIT?
A. USD
463,158 B. USD
453,608
C. USD 415,789
D. USD 46,392

30.
In the 1st quarter of 2020, Singapore Airline earns the revenue of USD 200,000 relating
to provide services in Vietnam, including USD 165,000 from passenger air tickets from
Vietnam to Singapore and return, USD 15,000 from airway bills, and USD 10,000 from
miscellaneous charges orders; USD 4,000 of airport fees is collected on behalf of the State;
expense of USD 6,000 is paid for returned tickets.
What is taxable amount subject to CIT for Quarter I of Singapore Airline in Vietnam? A.
USD 180,000 B. USD 165,000 C. USD 200,000
D. USD 190,000

Part D: Foreign Contractor Tax Section B

Part D: Constructed Response Question: 10 questions
1. YZ-Trading Co
Mark Madeline is the chief financial officer (CFO) of YZ-Trading Co, which is established
in
Vietnam as a distributor of various products in Vietnam for foreign suppliers. At the end
of 2020, after attending a tax update by a tax consulting firm, Mark became concerned about
the foreign contractor tax (FCT) risks from some contracts with foreign suppliers which
YZTrading Co renewed in 2020. When the contracts were originally signed (all before 2019),
FCT had never been an issue, as the foreign contractors were viewed as having no business
activities in Vietnam.
On reviewing the contracts, Mark identified the following clauses as potentially
exposing YZTrading Co to having to bear FCT for the foreign suppliers.
Foreign supplier Product Concerning provisions
OCB Co (a US Virtual reality OCB Co bears the risks of the goods until
company) devices the time the devices arrive at the
Vietnam border gate. YZ-Trading Co is
responsible for customs clearance and
transportation from the Vietnam border
gate to its own warehouse.
OCB Co has the right to determine the
selling price of the products each time
in Vietnam.
OCB Co gives a guarantee period of one
year for faulty products. YZ-Trading Co is
to ship back the faulty goods to OCB Co
overseas for replacement.
OCBN Co (a Swiss Luxury watches OCBN Co bears the risks of the goods
company) until the time the watches arrive at
YZTrading Co’s bonded warehouse in the
port, at the border gate. YZ-Trading Co is
responsible for customs clearance.
OCBN Co retains ownership of the
luxury watches until they are sold to a
third-party buyer.
OCBN Co bears the costs of advertising
the watches incurred in Vietnam. Subject
to the instructions of OCBN Co,
YZTrading Co signs contracts with the
advertising firms and makes advance
payments and then invoices these back
to OCBN Co.
In addition to the above, YZ-Trading Co also has the following arrangements with its
parent company (YZ-International Co) which is headquartered in Singapore:

Foreign supplier Services Description

ADV Co (located Advertising in As a group policy, YZ-Trading Co is
Singapore) required to share advertising costs with
various other subsidiaries of YZ-
International Co in the region. The
parent company enters into a contract
with ADV Co (which indicates YZ-Trading
Co and other subsidiaries as the
participants to the contract) and pays
advertising expenses centrally to ADV
Co, then invoices YZ-Trading Co and the
other subsidiaries their allocated fee.
The advertising is conducted via the
internet and the allocation to YZ-Trading
Co is mainly for the display in the
Vietnamese language.
TNL Co (located in Training YZ-International Co has signed a master
the UK, with branches agreement with TNL Co for various
in training courses (which identifies
Vietnam) YZTrading Co and certain other
subsidiaries as the participants to the
master agreement). TNL Co organises
the courses for YZ-Trading Co and the
other subsidiaries of YZ-International Co
in Asia. Some courses are organised in
Vietnam specifically for YZ-Trading Co,
other courses are organised in other
countries for both YZ-Trading Co and
other subsidiaries

Required:
(a) Analyse the concerning provisions in the agreements with foreign suppliers, and
advise Mark whether YZ-Trading Co will be required to withhold and pay foreign contractor
tax (FCT) on behalf of the foreign supplier from the activities in the agreements with OCB Co
and OCBN Co respectively. If withholding of tax is
required, advise Mark of the LIKELY APPLICABLE FCT rate(s). (6 marks)
(b) State, giving reasons, whether ADV Co and TNL Co would be subject to FCT in
Vietnam in respect of the advertising and training services provided in relation to YZ-Trading
Co under the agreements signed with YZ-International Co in Singapore.
Note: You are not required to specify the rates of withholding in part (b). (4 marks)
(Total: 10 marks)
 2. CNB Co
CNB Co is a European company specialising in machinery for the pulp and paper
industry. In 2020, CNB Co received a request for proposal (RFP) from SGP JSC, a company in
Vietnam, for the construction of a paper factory in Dong Nai, Vietnam.
The RFP requires that bidders quote a price which is gross of the corporate income tax
(CIT) portion and net of the value added tax (VAT) portion of the foreign contractor tax (FCT)
payable in Vietnam.
Based on its experiences from prior projects in Vietnam, CNB Co estimated that the
value net of all withholding taxes which it would expect to receive from the project would be
as follows:
Item Value net- Notes of-tax
USD
Machinery and 50 million This amount can be broken down into:
equipment machinery and equipment with a value
of USD45 million, and a one-year
guarantee with a value of USD 5 million.
CNB Co estimated that it would
purchase spare parts for the machinery
and equipment with a value of USD7
million from CNBVN, an affiliate of CNB
Co in Vietnam.

Design and engineering 9 million

services
Construction and 25 million CNB Co will sign a contract to
installation subcontract the installation works
valued
at USD5 million to CNCVN, a subsidiary
of CNB Co in Vietnam.
Supervision 5 million
Commissioning 2 million
Technical training 4 million To be performed in Vietnam by
personnel dispatched from Europe by
CNB Co
Total 95 million

Required:
 (a) State whether the cost of the spare parts to be purchased from CNBVN and the
value of the services to be subcontracted to CNCVN will be deductible from taxable revenue
when determining the foreign contractor tax (FCT) liability of CNB Co. (2 marks)
(b) Calculate (in USD millions, rounded to two decimals) the contract price to be
quoted by CNB Co as required in the request for proposal (RFP) and the potential FCT which
will be withheld from the payments made to CNB Co if the parties agree to break down the
value of each item in the contract. (6 marks)
(c) Calculate (in USD millions, rounded to two decimals) the contract price to be
quoted by CNB Co as required in the RFP and the potential FCT which will be withheld from
the payments made to CNB Co if the parties agree to state a lump sum price in the contract.
(2 marks)
(Total: 10 marks)
 3. TSP Co
TSP Co, a Vietnamese company, entered into the following transactions with foreign
partners in the year 2020:
Transaction 1: In March 2020, TSP Co leased a specialised vehicle from LUX Co, a
Germany company, for the period from 1 April to 31 December 2020 for USD800,000 net of
all withholding tax in Vietnam. The rental covered the following expenses for which LUX Co
obtained documents and presented them to AM Co:
• expenses of USD10,000 for negotiating the contract with TSP Co; • vehicle
insurance of USD20,000 per annum; and
• transportation costs to Vietnam of USD25,000.
The operation of the vehicle requires special skills and LUX Co assigned an expert to
Vietnam to operate the vehicle from 1 April to 30 September 2020. LUX Co has sufficient
documents to prove that it paid this expert USD15,000 per month.
Transaction 2: In November 2020, TSP Co entered into an agreement to act as the
shipping agent in Vietnam for D-Line, a Danish maritime shipping line. According to the
agency agreement, TSP Co is responsible for receiving goods from Vietnamese customers for
international shipping, issuing bills of lading and collecting freight on behalf of D-Line in
Vietnam.
In December 2020, D-Line accepted an order from MC Co, a Vietnamese customer, to
ship goods from Vietnam to Brazil for a freight cost of USD100,000 plus a surcharge of
USD10,000 for over-sized goods (both amounts inclusive of all taxes in Vietnam). As
requested by D-Line, TSP Co leased a vessel from a Vietnamese company to transport the
goods from Vietnam to Singapore (a hub of D-Line in Asia) from where the goods would be
shipped on to Brazil.
The shipping freight cost from Vietnam to Singapore was USD20,000.

Required:
(a) Calculate (in USD) the corporate income tax (CIT) portion of the foreign contractor
tax (FCT) which TSP Co should declare in its FCT return for 2020 in respect of the leasing
contract with LUX Co. (5 marks)
(b)
(i) Briefly explain the principle to be applied when determining the taxable revenue
for a shipping line such as D-Line. (2 marks)
(ii) Calculate (in USD) the FCT which TSP Co should declare in its FCT return for 2020
on behalf of D-Line in respect of the shipping order from MC Co. (3 marks)
(Total: 10 marks)
 4. Agoda Co
Agoda is a company headquartered in Hong Kong providing an online travel booking
platform. Subscribers to the platform (i.e. clients) can book hotel rooms worldwide, at a rate
which is lower than the usual quoted price of the hotel.
In 2020, Agoda entered into an agreement with SQR Co, a luxury hotel company in
Vietnam. As part of the agreement, SQR Co will provide a 20% discount from the quoted
price to clients who book rooms at the hotel via Agoda. In addition, SQR Co will pay Agoda a
referral fee of 15% of the room charge paid by clients. The referral fees receivable by Agoda
will be net of any Vietnamese withholding tax. The agreement provides two different
mechanisms for collecting money from Agoda clients:
– Clients can pay rent for a booked room to Agoda via credit card or other online
payment mechanism (such as PayPal). Agoda then settles the residual rent after deducting
the referral fees to SQR Co; or
– Clients can pay the rent directly to SQR Co for each booking made with Agoda,
and SQR Co pays the referral fees due to Agoda.
In 2020, SQR Co received USD4·76 million from Agoda and VND91,200 million directly
from clients for room bookings made through Agoda.
SQR Co recently obtained confirmation from the local tax authorities that the activities
of Agoda would be treated as ‘services’ for foreign contractor tax (FCT) purposes in Vietnam.

Required:
(a) Calculate (in VND million) the foreign contractor tax (FCT) which SQR Co should
declare on its FCT return for 2020 in respect of the agreement with Agoda. (6 marks)
(b)
(i) State the circumstances in which Agoda may be exempt from the corporate income tax
(CIT) portion of FCT in Vietnam in accordance with the double tax agreement (DTA)
between Hong Kong and Vietnam.
Note: You should assume the DTA follows the general guidance regarding
implementation of double tax treaties in Vietnam. (2 marks)
(ii) Briefly explain the initial procedures to be implemented for the DTA exemption to apply.
(2 marks)
Exchange rate VND23,500 to USD 1
(Total: 10 marks)
 5. ALF Co
ALF Co is a company with global operations and is headquartered in Ireland. The
company provides various online services, most notably search engines and cloud services. A
key source of income for ALF Co is the sale of online advertisement services for companies
and websites, under the service package name of G-Ads.
In 2020, ALF Co appointed BVN Co, a Vietnamese company, to act as its distributor in
Vietnam in order to expand its G-Ads services. Under the distribution agreement, BVN Co
identifies customers in Vietnam who have the need for G-Ads, enters into contracts for
advertising with the customers and collects fees on behalf of ALF Co. The collected fees are
then remitted to ALF Co by BVN Co after deducting their service fee based on 20% of the
collected amount. The remittance is also net of any withholding tax which may be applicable
to ALF Co in Vietnam.
In 2020, BVN Co remitted a net amount of USD24million to ALF Co. In addition, BVN Co
are liable to pay an amount of USD250,000 to ALF Co for using its cloud services in 2019.
However, the distribution agreement allows this amount to be offset with an amount of
USD500,000 which is due to be paid by ALF Co to BVN Co towards their initial expenses
incurred in promoting the G-Ads service in Vietnam. Both parties would finalise any
remaining amount due in 2021.
In addition, during 2020, ALF Co collected substantial fee income for the provision of
cloud services to various corporate subscribers in Vietnam. According to its standard
contract with users, ALF Co requires any withholding tax in Vietnam to be borne by the
user. Note: You should assume that the tax authorities in Vietnam accept cloud services as
‘software services’.

Required:
(a) Briefly explain whether the services (G-Ads and cloud services) provided by ALF Co to
users in Vietnam would be subject to foreign contractor tax (FCT), and the administrative
and payment requirements for this tax.
Note: No calculations are required in this part. (3 marks)
(b) Calculate (in VND million) the FCT which BVN Co should declare on its FCT return for
2019 in respect of its payment of the net amount of USD24 million to ALF Co. (3
marks) (c) Determine whether BVN Co should declare FCT in 2019 for the fee of
USD250,000 for cloud services provided by ALF Co, and calculate (in VND million) the total
FCT liability, if any. (4 marks)Exchange rate VND23,500 to USD 1
 (Total: 10 marks)

6. SGB Bank
SGB, a foreign bank located in Singapore, entered into an interest swap contract with
VNB, a Vietnamese bank, based on a loan of USD100 million. The effective period of the
contract was two years from 1 March 2017 to 28 February 2020 and it provided that the
'losing party' (i.e. the party which has the unfavourable interest movement) would make a
settlement to the other party at the beginning of each six-month period, starting on 1 March
2018. The settlements made throughout the contract period are shown below:
Period ‘Losing party’ Amount settled
(USD million)
1 March 2016 to 31 August 2018 VNB 5
1 September 2016 to 28 February 2019 SGB 9
1 March 2017 to 31 August 2019 SGB 4
1 September 2017 to 28 February 2020 VNB 5
According to the interest swap contract, any settlement will be net of foreign contractor
tax (FCT) in Vietnam.

Required
(a) Explain how the FCT is determined in Vietnam with regard to the interest swap
contract, including the taxable revenue amount and tax rates: (i) when SGB settles to VNB;
and (ii) when VNB settles to SGB.
(4 marks)
(b) Calculate (in USD) the FCT liability which VNB is required to declare in its FCT return
in relation to the transactions for the years 2018, 2019 and 2020, providing a brief
explanation if no tax liability arises. (6 marks)
(Total: 10 marks)

7. VCC Co
VCC Co is a company incorporated in Vietnam, operating in the high technology sector.
VCC Co declares value added tax (VAT) under the deduction method and all of its input VAT is
creditable. During 2020, VCC Co has been planning the building of a virtual reality training
system in Ho Chi Minh City, and has been negotiating with GLE Co, a German contractor, for a
turn-key contract to construct the system GLE Co has provided VCC Co with the following
quotation
USD million
Supply of equipment 40
Construction and installation 8
Supervision, guarantee and other services 2
Software (royalty) 5
Training for operations (overseas) 1
The above quotation figures are net of foreign contractor withholding tax (FCT). GLE Co
has indicated that it is willing to follow any contractual arrangement that can help VCC Co to
achieve an optimum withholding tax position in Vietnam
VCC Co is considering the following options with regard to the contract price.
Option 1 An itemised contract, where the value of each item would be stated
separately in the contract
Option 2 A lump sum price contract

You should assume that the software (royalty) is not subject to VAT in Vietnam and the
lump sum price contract is accepted by tax authorities to be categorised as "construction,
assembly and installation where the tender includes the supply of materials, machinery and
equipment in the construction work".

Required
(a) Calculate (in USD) the foreign contractor tax (FCT) liability for VCC Co if it selects
option 1, the itemised contract. (5 marks)
(b) Calculate (in USD) the FCT liability for VCC Co if it selects option 2, the lump sum
price contract (3 marks)
(c) Advise VCC Co which contract price option is lower from a foreign contractor tax
(FCT) perspective and explain which option VCC Co should select. (2 marks)
(Total: 10 marks)

8. C-S Co
C-S is a foreign invested company located in Bac Ninh Province. It has recently
approached foreign contractors for quotations regarding a turn-key contract for the
construction of a wheat mill in Vietnam.
 C-S received the following itemised quotation from a German contractor, GH Co, for the
estimated value of the works (net of Vietnamese withholding tax) as follows:
– Supply of machinery and equipment (fully imported): USD10,000,000
– Design services: USD2,000,000
– Construction and installation works: USD2,900,000
– Supervision services: USD500,000
– Testing services: USD400,000
– Training (all to be conducted overseas): USD500,000
GH Co also advised that they will not have any permanent establishment in Vietnam
and they would not apply Vietnamese Accounting Standards for this contract.
GH Co is prepared to consider the following alternatives for delivery of the contract:
(1) To sub-contract all of the supplies (machinery, equipment, constructions and installation)
to Vietnamese sub-contractors and only carry out the services themselves.
(2) To carry out all of the works (supplies and services) themselves.
If alternative (2) is adopted, C-S would consider entering into a lump sum price
contract, instead of an itemised contract (with full break-down as above) if this resulted in a
lower foreign contractor tax liability.

Required:
(a) Calculate the foreign contractor tax (FCT) payable by C-S if GH Co sub-contracts
all of the supplies under the contract (alternative (1)). (3 marks)
(b) Calculate the FCT payable by C-S if GH Co carries out all of the work under the
contract (alternative (2)) if:
(i) the contract value is quoted as a lump sum price; and (3 marks)
(ii)the contract value is itemised as per the original quotation. (4 marks) Note: All
calculations should be made in USD millions rounded to two decimals.
(Total: 10 marks)

9. TBC Co
On 1 January 2020, Vietnamese treasury bills with a face value of VND100,000 and a
term of six months were issued for VND95,000 per bill. After being issued, Vietnamese
treasury bills are posted on the Ho Chi Minh City Stock Exchange (HNX).
TBC Co, a professional investment institution based in Singapore, effected the following
transactions in the treasury bills issued on 1 January, between 2 January and 1 July 2020 (i.e.
the maturity date of the bills):
Transaction date Buy/ Sell Number of bills Price
2 January 2020 Buy 250,000 85,000
1 February 2020 Buy 100,000 80,000
15 March 2020 Sell 120,000 81,000
15 April 2020 Buy 100,000 82,000
15 May 2020 Sell 50,000 81,500

Required:
(a) Calculate the volume of treasury bills held by TBC Co on the maturity date. (1
mark) (b) Calculate the weighted average buying price (in VND millions) of the treasury bills
held by TBC Co on the maturity date, using the first-in-first-out (FIFO) method. (5 marks)
(c) Calculate (in VND millions) the taxable revenue and corporate income tax (CIT)
portion of the foreign contractors tax (FCT) payable by TBC Co in 2020 from:
(1) the sales of listed treasury bills; and
(2) the redemption of the treasury bills at their maturity date.
Note: Income from treasury bills listed in the Stock Exchange held by an investor for
redemption at the maturity date would be treated as income from interest for FCT purposes.
(4 marks)
(Total: 10 marks)

10. Han Fun Ltd

Han is the project director for a new Ice Skating Stadium that will be built in Ho Chi
Minh City by her family company, Han Fun Company Limited. Her father, the chairman of the
company, has instructed her to obtain bids for the construction of the stadium from
reputable international companies.
After a competitive tender process, Han has a shortlist of three foreign contractors
who may undertake the project. All three of the foreign contractors has satisfied the technical
criteria, so the decision must be based solely on the total cost of the project. All three bidders
have submitted a price of USD 20,000,000, excluding foreign contractor tax (FCT) which is to
be paid by Han Fun Company Limited. The three bids were broken down as follows (all figures
in USD):
JapanCo Limited FrenchCo Limited KoreanCo
Limited
Design 3,000,000 2,000,000
 Supply of imported 13,000,000
10,000,000
equipment
Installation 3,000,000
Construction of building 2,000,000 20,000,000
Local materials costs 1,000,000 5,000,000
Local subcontractor
1,000,000
costs

Required:
(a) Calculate the foreign contractor tax (FCT) that would be payable by Han Fun
Company Limited in the case of each of the three bids, including the breakdown between
corporate income tax (CIT) and value added tax (VAT) for each bidder. (14 marks)
(b) Based on your calculations in (a) above advise Hanh which contractor to select as
the successful bidder. Justify your advice. (2 marks)
(c) State, giving reasons, whether or not Hanh should consider advising the
successful bidder to register to apply the Vietnamese Accounting System (VAS). (4 marks)
(Total: 20 marks)
Part E: Value Added Tax Section A
Part E: Multiple Choice Question: 50 questions
1.
In 2020, HAN Co, a Vietnamese company, sold goods to MGN Co, another Vietnamese
company, for a total contract value of VND 4,840 million, inclusive of 10% value added tax
(VAT). According to the contract, MGN Co is required to make payment within two months of
the invoice date or pay interest of 2% of the contract value per month, for each month of
delay. MGN Co paid the invoice three months after HAN Co issued it on 31 May 2020
together with interest on late payment.
What is the amount of total output value added tax (VAT) (in VND millions, rounded
to one decimal) DFC Co is required to declare in 2020 as a result of the above transactions?
A. VND440.0 million B. VND448.8 million C. VND493.7 million
D. VND484.0 million

2.
RFD Co is a Vietnamese company headquartered in Hanoi. In December 2020, the
company had net output value added tax (VAT) of VND2,000 million from its business
operations in Hanoi. The company also had input VAT from two investment projects, both of
which were in the construction period and had not generated any revenue. Project A is
located in Hanoi and incurred input VAT of VND1,500 million. Project B is located in Vinh Phuc
province and incurred input VAT of VND400 million.
What is the correct treatment for the input value added tax (VAT) incurred by RFD Co
in respect of the two investment projects (assuming the relevant documents for a VAT
refund are in place)?
Input VAT of Project A Input VAT of Project B
A. Claim refund for VND1,500 million Claim refund for VND400 million
B. Claim refund for VND1,500 million Offset VND400 million with net output VAT of
VND2,000 million from operations of headquarter
C. Offset VND1,500 million with net Claim refund for VND400 million output VAT of
VND2,000 million from operations of headquarter
D. Offset VND1,500 million with net Offset VND400 million with the
output VAT of VND2,000 million VND500 million, being the remaining from
 operations of headquarter amount of net output VAT after offsetting input VAT
of project A

3.
Japa Co is a new foreign invested company which was established and began trading in
Vietnam by the end of 2019.
The company’s fiscal year end is 31 December 2020. Japa Co is eligible to declare value
added tax (VAT) on a monthly basis.
Which of the following combinations correctly describes the deadlines for settling
the taxes which Japa Co will be subject to in 2020?
Value added tax Provisional Business registration
(VAT) corporate income tax fee
(CIT)
A. The last day of the The 30th day of the The 90th day of the
month next quarter next year
B. The 30th day of the The 90th day of the The 10th day of the
next month next quarter next year
C. The 20th day of the The last day of the The 30th of the next
next month next quarter year
D. The 30th of the next The 30th day of the The 30th of the next month next
quarter year

4.
In 2020, PCA Co, a Vietnamese company, received compensation in cash of VND1,500
million from an insurance company for damage to goods caused by a fire. According to the
insurance policy, the compensation does NOT cover any value added tax (VAT) on the
purchase of the goods. The insured goods were purchased by PCA Co for VND1,870 million
(inclusive of VAT 10%).
What is the amount of output value added tax (VAT) and creditable input VAT (in VND
millions) ISC Co is required to declare in 2020 as a result of the above transactions?
Output VAT Creditable input VAT
A. VND150 million VND0 million
B. VND0 million VND170 million
 C. VND0 million VND0 million
D. VND150 million VND170 million

5.
On 30 June 2020, STG Co, a Vietnamese company, identified the value added tax (VAT)
declaration it made for April 2020 was under-declared by VND1,500 million. It should be
noted that 21 May 2020 was a Monday, and there had been no tax audit at STG Co in 2020.
What is the late payment interest (in VND) which STG Co is required to settle on 30
June 2020, assuming the under-declared value added tax (VAT) was settled on that date?
A.
VND12,300,000 B.
VND15,000,000 C.
VND20,000,000
D. VND18,000,000

6.
Which of the following cases that is deducted VAT according to the VAT laws?
(i) Goods (including goods purchased externally or produced by the enterprise itself)
which are used by an enterprise for advertising and promoting in any way the
production and trading of goods and services subject to VAT
(ii) Goods or services purchased by a business establishment for production or
business of goods or services to be provided to foreign organizations and
individuals or international organizations for humanitarian or non-refundable aid
(iii) Goods and services used for the production or trading of goods and services not
subject to VAT
(iv) Goods/ services which are lost or damaged due to a natural calamity, fire
A. (i) and (iv) only
B. (ii), (iii) and(iv) only
C. (i), (ii) and (iv) only
D. (i), (ii), (iii) and (iv)

7.
 In 2020, Rich Co, a Vietnamese company, allocated goods to promotional purposes.
The goods had associated input value added tax (VAT) of VND3,000 million and, 65% of them
were purchased whilst 35% were produced using materials procured by Rich Co during 2020.
All promotion programmes were duly registered with the authorities. According to Rich Co’s
2020 accounting records, 75% of Rich Co’s revenue was taxable for VAT purposes, whilst the
other 25% was VAT exempt. The company cannot separately account for the input VAT
relating to the goods used for promotion.
What is the final amount of creditable input VAT that Rich Co should declare in 2020?
A. VND2,250
million B. VND780
million
C. VND1,300 million
D. VND2,000 million

8.
NTV Co is a Vietnamese company headquartered in Hanoi which has a manufacturing
dependant branch in the Ninh Binh province. The branch only performs manufacturing
activities and maintains accounting records. All sales are generated in Hanoi and all products
are subject to value added tax (VAT) at 10%.
Which of the following correctly describes the VAT filing and payment requirements
of NTV Co in the Ninh Binh province for tax administration purposes?
A. No VAT filing and no payment is required
B. VAT filing and payment is due, using the credit (deduction) method
C. Payment of VAT is due at a rate of 2% of revenue, based on the value of the products
D. Payment of VAT is due at a rate of 1% of revenue, based on the value of the products

9.
In 2020, CDC Co, a company incorporated in Vietnam, purchased a four-seated car for
the General Director. The quoted price of the car was VND 2,178 million (inclusive of value
added tax (VAT)) CDC Co obtained a 20% discount off the quoted price from the car dealer.
The sales invoice from the dealer shows both the quoted price and the discount
What is the amount of creditable input VAT (rounded to the nearest VND million)
which CDC Co should claim for the car in the fiscal year 2020?
 A. VND 198
million B. VND 158
million C. VND 174
million D. VND 218
million

10.
On 1 January 2020, company Ceramic Co purchased a 16-seat car for VND2,860 million
(including value added tax (VAT)) with proper invoices. The car will be depreciated for five
years.
What is the amount of the adjustment for non-deductible expenses which Ceramic
Co should make for the car in its tax return for the year 2020?
A. VND0 million
B. VND252 million C. VND200 million
D. VND230 million

11.
Dong Phong Co, a Vietnamese company applying the value added tax (VAT) deduction
method, provided services to a foreign customer for VND300 million and charged VAT at 5%
on the invoice. In a tax review by a consultant, it was identified that the VAT rate used on the
invoice should have been 10%, however, Dong Phong Co can no longer claim back the
undercharged VAT from the foreign customer.
What is the amount of additional output VAT which Dong Phong Co will need to pay
to the tax authorities?
A. VND13.6 million
B. VND15 million C. VND20 million
D. VND30 million

12.
Nicky Co, a foreign contractor, entered into a contract with Petrol, a Vietnamese
company, to supply services in relation to oil exploration. Nicky Co wants to apply the
deduction method for the declaration of value added tax (VAT) in Vietnam. In November
2020 when the tax code application was still in progress, Nicky Co incurred input VAT of
USD35,000 for its operations in Vietnam. Also during that time, Petrol made a progress
payment to Nicky Co of USD400,000 (net of VAT at 10%) for the services. In December 2020
when the tax code was available, Nicky Co incurred a further USD58,000 input VAT for its
operations in Vietnam.
What is the amount of Nicky Co’s deductible input value added tax (VAT) in 2014?
A.
USD93,000 B.
USD58,000 C.
USD35,000
D. USD53,000

13.
SHM Co, a Vietnamese company, has three separate sales outlets. In December 2020,
each of the outlets issued an invoice for the sale of one ton of construction materials to three
separate customers as follows. The sale of construction materials is subject to value added
tax (VAT) at the rate of 10%.
– Invoice 1: selling price VND30 million, VAT VND3 million
– Invoice 2: selling price VND27 million, no VAT as the selling price is inclusive
– Invoice 3: selling price VND15 million, no VAT because the construction materials were
given to the customer for free as part of a promotion which has been registered with the
authorities
What is the output value added tax (VAT) which SWR Co should have declared in
December 2020, if no amendments were made to the invoices?
A. VND3 million
B. VND7.2 million
C. VND5·7 million
D. VND4·2 million

14.
The following is not a taxpayer under VAT regulation
A. Individual engages in trading
B. Cooperative
 C. Branches of the export processing companies that are established to trade goods and
do the tasks related to goods trading in Vietnam D. Overseas branches of local firm

15.
The following good or service is exempted from declaring and paying VAT
A. Transfer project of investment in manufacturing or trade of goods/services subject to
VAT to other companies or cooperatives
B. The goods forwarded through Vietnam’s territory
C. Imported machinery, equipment, parts, and supplies serving scientific research and
technological development which can not produce domestically
D. Capital and security transfer between 2 entities

16.
Which of the following statements is correct in respect of taxable price for VAT purpose? A.
Taxable prices of goods and services used for sales promotion is market value
B. When transferring real estate, taxable price is the transferring price minus (-)
deductible land value under the transferring contract
C. VAT-exclusive remunerations or commissions on brokering assessment, brokering
compensation examination, claiming compensation from a third person (including the
costs) earned by the insurer are taxable prices
D. Taxable price for sub-lease machine where it is not yet domestically produced, is
allowed to deduct the amount of lease paid to overseas party

17.
Which of of the following statements is not correct in respect of VAT deductible?
A. Non deductible VAT input of 9-seater or less cars (except for those that are used for
cargo transport, passenger transport, tourism or hotel services) is not allow to add in
the cost of car
B. Input VAT on the goods used as gifts, used for sale promotions or advertising serving
the manufacture of sale of taxable goods is deductible.
C. The VAT paid under a decision on tax imposition made by a customs authority is
deducted in full.
 D. The duration of claiming VAT input last until the closure of the business

18.
Which of the following statements is correct in respect of VAT refund?
A. An organisation having accoumulated VAT deductible for 12 months or 4 quarter
continuously are allowed to refund VAT if the amount of accumulated deductible is
300 millions or more
B. When a taxpayer using credit method has a new project (except for housing for sale) in
another province that has not been in operation, this project has not been inaugurated
and registered, the taxpayer shall make a separate declaration of tax on the project
and get refund when accumulated VAT input is 300 millions or more
C. If the taxpayer purchases goods to export, refundable input VAT on exported goods is
calculated as follows:
Input VAT on exported goods/services = (Input VAT that remains after deduction in the
tax period x Total revenue from export in the tax period / Total revenue from selling
goods/services in the period)
D. Procedure for refund before investigation is used for refund of ODA project

19.
Tax payer Hung Yen has a tax debt of 200 million dong of VAT for the amount declare
for August 2018. The due date is 22/9/2018(due to 20/9/2018 and 21/9/2018 is the
weekend). On 20/8/2020, the tax payer paid the amount of tax to the state budget. The late
payment is count from 23/9/2018
What is the amount of fine due to late payment?
A. 61.8 millions
B. 41.88 millions
C. 68.16 millions
D. none of the above value

20.
On 20 December 2020, A Dong Co buy product with the total value of 50 millions from
Bich Co Cau, invoice on the same date and payment made on 26 December 2020 by bank
transfer. A Dong does not know that the Bich Cau’s account is not yet registered with the tax
authority.
 What are the consequences for A Dong in this case (if any).
A. A Dong is not allowed to claim VAT input and get penalties due payment to the
unregistered bank account
B. A Dong is allowed to claim VAT input but get penalties due payment to the
unregistered bank account A. For amount of sales of lower than 100.000d
C. A Dong is not allowed to claim VAT input but no penalties D. A Dong is allowed to claim
VAT input and no penalties

21.
Which of the following statements is correct in respect of VAT refund?
A. An organisation having accumulated VAT deductible for 3 months continuously are
allowed to refund VAT if the amount of accumulated deductible is 300 millions or more
B. When a taxpayer using credit method has a new project the same location with current
busines, it can get refund when accumulated VAT input is 300 millions or more
C. If the taxpayer purchases goods for both export and sales in Vietnam, it can claim VAT
refund of net VAT above 300 millions.
D. The ODA project can claim VAT refund without minimum cap for claim

22.
Xuha Co has a headquarter in Hanoi two dependent production unit P and Q in Ha
Nam and Nam Dinh accordingly. P has accounted separately while Q is dependent for
accounting purpose. The product of Xuha is at 10% rate of VAT.
What is VAT provisional paid for P & Q?
A. Both unit pay 2% on total sales
B. P has to issue invoice and pay VAT on the actual amount of product issued, Q pay 2%
on total sales
C. VAT for P is paid in full at Ha Nam, VAT and declaration for Q is made at Hanoi (at the
headquarter location)
D. Non of the above options is correct

23.
Australi is a foreign company established in Vietnam.
Which of the following activities of Australi is chargeable for VAT purpose?
 A. Forward processing
B. Perform services in overseas for a Vietnamese company
C. Transfer of land use right
D. Promotion items on a marketing campaign already registered with the competent
authority

24.
Zebra Ltd (ZPL) is VAT registered trader in HaiPhong. ZPL’s main customer, Hydrogen Pte
Ltd (HPL), a Singapore-incorporated company in Vietnam was wound up by a court order on 1
June 2020.
ZPL made the following sales to HPL on credit and has reported the transactions in its
VAT return for the relevant quarter:
(i) VND100,000 million (exclusive VAT) for goods which were delivered to HPL’s warehouse
in Vietnam on 2 January 2020 and for which an invoice was issued on the same day;
(ii) VND50,000 million (exclusive VAT) for sales of goods which were delivered to the
warehouse of HPL’s subsidiary in China on 2 December 2019.
HPL has not paid ZPL for these sales. As HPL has been wound up, ZPL has written off
the trade debt owing by HPL in its accounts for the quarter ended 30 June 2020.
What is the amount of VAT bad debt relief which Zebra Ltd can claim in the quarter
ended 30 June 2020?
A. VND10,500 million
B. VND7,000 million
C. VND3,500 million
D. VND0 million

25.
Aspire Ltd, a VAT registered company, incurred the following expenses in the quarter
ended 30 June 2020:
Cost VAT
VND VND
million million
Parking charges - SLW 123 1,200 120
Trade association subscription 1,000 100
 Golf club subscription – for directors 2,000 200
What is the amount of input VAT which Aspire Pte Ltd can claim for the quarter
ended 30 June 2020?
A. VND220
million B. VND420
million C. VND120
million
D. VND200 million

26.
Atlas Ltd (AL), a VAT registered trader, commercial company in Vietnam, has the
following transactions for the quarter ended 30 September 2020:
- On 1 September 2020, AL received a security deposit from a customer totally VND1,000
million. This deposit is refundable.
- On 21 September 2020, AL issued an invoice for VND2,000 million to a customer – Changi
Company. The goods were delivered to the customer’s warehouse in Malaysia on 1
October 2020.
What is the amount of output VAT chargeable by Atlas Ltd for the quarter ended 30
September 2020?
A. VND205 million
B. VND0 million
C. VND140 million
D. VND65 million

27.
Zara Ltd has retained all its business records for VAT filing purposes since its
incorporation on 1 January 2013. The company filed its first VAT return for the quarter ended
31 March 2013.
Until which date must Zara Ltd retain its business records in respect of its VAT return
for the quarter ended 31 March 2013?
A. 31 December 2018
B. 31 March 2023
C. 31 March 2033
 D. 31 December 2023

28.
Low Equipment (LE), a VAT registered trader in Vietnam, sold a fully automated
computing system for VND100,000 million to a customer. LE allowed the customer to trade in
an old computing system for VND10,000 million, leaving VND90,000 million left to pay. To
entice early payment of the remaining amount within 15 days, LE offered a 5% prompt
payment discount. However, the customer paid after the 15-day discount period.
What is the amount of output VAT Low Equipment should charge on this transaction?
A. VND9,500
million B. VND8,550
million
C. VND9,000 million
D. VND10,000 million

29.
Ti Trading Ltd operates in Vietnam, has suffered the following losses of its canned food
inventory during 2020:
- Lost inventory, with value added tax (VAT) of VND160,000,000 due to a rainstorm
- Stolen inventory, with VAT of VND24,000,000, due to poor warehouse security
- Scrapped inventory, with VAT of VND32,000,000 due to being past its expiry date What is
the amount of irrecoverable input value added tax on the loss of inventory?
A. VND72,000,000
B. VND56,000,000 C. VND0
D. VND24,000,000

30.
YLL Department Store in Hanoi is offering a promotion whereby each walk-in customer
can receive a coupon of VND 100,000. The coupon can be redeemed if a customer spends
over VND2 million. Ms Hao received a coupon and paid VND3.2 million for a kettle which had
a selling price of VND3.3 million, value added tax (VAT) inclusive. The cost of the kettle was
VND2.2 million (excluding creditable input VAT).
What are the VAT implications for YLL Department Store concerning the above
transactions?
 A. Input VAT of VND0.22 million creditable; Output VAT of VND0.3 million
B. Input VAT of VND0.11 million creditable; Output VAT of VND0.32 million
C. Input VAT of VND0.22 million creditable; Output VAT of VND0.32 million
D. Input VAT of VND0.22 million creditable; Output VAT of VND0.1 million

31.
Alpha Limited a company operates in Hue, lost its inventory during a heavy rainstorm
in August 2020. The purchase cost of the inventory was VND100 million excluding value
added tax (VAT) of VND 10 million. The normal selling price of these goods would have been
million VND150 million (excluding VAT). The insurance company has made a compensation
payment of VND20 million to Alpha Limited.
What is the amount of irrecoverable input VAT on the inventory lost during the
rainstorm?
A. VND0 thousand
B. VND 8,000 thousand
C. VND3,586 thousand
D. VND16,000 thousand

32.
Which of the following are deemed sales for value added tax (VAT) purposes?
(1) The sale of a package of shampoo together with a sample of hair conditioner
(2) A sample of hair conditioner given to the walk-in customers to a department store
(3) Finished goods delivered to a warehouse in another city for storage
(4) Fixed assets contributed as a capital injection to a subsidiary
(5) Accountancy services provided free-of-charge to a non-government organisation for
charity purposes
A. All of the above
B. 1 and 3 only
C. 2, 3 and 4 only
D. 2 and 4 only

33.
 DPN Ltd, an export processing company, apart from manufacturing for exportation, is
also licensed to import goods for sale or for exportation, and the company must establish a
branch to do this task. This branch shall independently keep accounting records, declare and
pay separate VAT on such task instead of including it in the VAT on manufacturing for
exportation.
Which of the following correctly describes the VAT declaration and payment?
A. DPN Ltd declares all the taxes which include also the taxes incurred by the branch
B. The branch which is not related to tax-exempt exported goods, does not have to
declare and pay
C. The branch accounts, declares and pays taxes separately, does not account for
production activities for export.
D. There are no correct answers

34.
Pastes Co signs a contract to raise pigs with Filed Co, under which Pastes Co receives
remuneration of VND100,000 million from Filed Co or sells pigs to company B for
VND100,000 million. After that, Filed Co processed into pork and sold VND300,000 million.
Which of the following correctly describes the VAT payment?
A. Pastes Co pays the output VAT on the revenue of VND100,000 million
B. Pastes Co pays the output VAT on the remuneration of VND100,000 million
C. Filed Co pays the zero output VAT because the selling price is equal to the payment for
pig raising
 Filed Co pays the output VAT on the revenue of VND300,000 million.

35.
In March 2019, Apat Ltd, which pays VAT using deduction method, pledges its
machinery and equipment as collateral to take a loan at XBank, which is due in one year (the
deadline is March 31, 2020). On March 31, 2020, Apat defaults on the loan and has to
transfer the collateral to XBank. Apat must follow the prescribed procedure for collateral
transfer. XBank sells the collateral to recover the debt.
Which of the following correctly describes the VAT payment of XBank? A. The
bank pays VAT according to the value of the collateral sold.
B. The bank does not have to pay VAT because the sold collateral is not subject to VAT.
C. The bank pays VAT on the amount of the irrecoverable lost loan.
D. Both bank and Apat Ltd must pay output VAT.

36.
In April 2020, X Ltd contributed capital in the form of machinery and equipment to the
creation of joint-stock company Y. The company X Ltd’s contribution is valued at VND4.5
billion, which is equal to 25% of company Y’s total capital. In November 2020, company X sold
this capital contribution to ABC Foundation for VND6 billion.
On which value company X should pay the VAT?
A. Company X pays the VAT on the value of VND6 billion
B. Company X pays the VAT on the value of VND4.5 billion
C. Company X is not required to pay the VAT
D. Company X pays the VAT on the value of VND1.5billion

37.
In July 2020, Vegatable.ly Co sells goods to Carrot Co for totally price is VND880 million
(included VAT). According to the contract, Carrot Co shall pay in instalments for 02 months
with an interest of 1.5% of the total payment per month. After 02 months, Vegatable.ly Co
received from Carrot Co an amount that includes VND880 million in price and VND13.2
million in interest (VND880 million x 1.5% x 1 months).
What is the revenue which Vegatable.ly Co should declare and pay the value added tax
(VAT)?
 A. VND800 million
B. VND893.2 million
C. VND880 million
VND13.2 million

38.
WaterWard Co manufactures bottled water. The VAT-exclusive price of a bottle on the
market is VND8,000. When WaterWard Co produced 500 bottles for the staff children's
soccer tournament in the summer of 2020.
WaterWard Co have to
A. Declare and calculate the output VAT on 500 bottles at the selling price
B. Exemption from the output VAT declaration
C. Declare and calculate the output VAT on 500 bottles at the factory price
D. Declare and calculate the output VAT on 500 bottles at the 0 price

39.
In 2020, Hose Co, a real estate company, is allocated with land by the state to build
houses for sale. Land levy is VND50 billion (before deducting compensation for land clearance
and land levy reduction). Land levy is reduced by 20%. Compensation for land clearance is
VND25 billion.
What is the amount of deductible land value for calculating the value added tax (VAT)? A.
VND25 billion B. VND10 billion
C. VND35 billion
D. VND5 billion

40.
VN-JP is a joint-stock company specialized in infrastructure for industry and services.
VN-JP leases land from the state and pays a lump sum of land rent to build infrastructure of
an industrial park; the lease period is 50 years. The land area is 400,000m2, the rent paid
once for the entire lease period is VNĐ93,000/m2. The company is not exempted or reduced
land rent.
After investing in the construction, VN-JP signs a lease contract for the investor Nhat
Minh with the lease period of 20 years, the leased land area is 27,000m2, the rental unit
price at the time of signing the contract is VND800,000/m2 for the whole period, the price
includes VAT). What is the estimated amount of VAT for the lease contract with Nhat Minh?
A. VND2,160
billion B. VND1,560
billion
C. VND1,872 billion
Exemption from VAT

41.
Si Phon Co signs a contract to process 200,000 pairs of soles. The payment for
processing is 900 million VND. The contract specifies that soles will be sent to Liter Co
in Vietnam to produce complete shoes.
In this case, which of the following correctly describes the VAT declaration of Si Phon
Co?
A. Calculate tax according to the 5% VAT on the revenue of VND900 million
B. Calculate tax according to the 0% VAT on the revenue of VND900 million
C. Calculate tax according to the 10% VAT on the revenue of VND900 million D.
Exemption from VAT

42.
Marshy Co has project of investment in a coffea plantation and incurs input VAT during
infrastructural development stage. Marshy Co does not have raw materials to manufacture
taxable products (including the unprocessed products or processed products that are subject
to VAT) but have a project to build a factory to produce coffee beans (that are subject to VAT).
Which of of the following statements is correct in respect of VAT regulation?
A. If Marshy Co sells all of the coffee beans, which is not subject to VAT, input tax shall not
be deducted.
B. If Marshy Co guarantees that keep using the farming products to manufacture taxable
products, Marshy Co may deduct the input VAT in full.
C. If Marshy Co uses part of the coffee beans for manufacturing taxable products, and sell
the rest, input VAT on fixed assets may be deducted in full. Input VAT on goods and
 services shall be deducted according to the ratio of revenue from selling taxable goods
and services to the total revenue. D. All three answer are correct

43.
Mobi Co, a telecommunications company, sells prepaid cards for mobile phones. The
company registers sales promotion in accordance with the commercial law in the form of
selling cards at reduced prices from April 1, 2020, through April 20, 2020. Accordingly, a
prepaid card with the face value of VND 100,000 (inclusive of VAT) is sold for VND80,000 in
the sales promotion period. Company N sold 2,000 cards with the value of VND100,000.
 What is the amount of VAT which Mobi Co is require to pay for 2,000 cards sold in the
sales promotion period?
A. VND200
million B. VND160
million C. VND145
million
D. VND180 million

44.
Lucky draw, a casino business in Do Son, provides a money exchange service for
gambling cards, which players can exchange for money back at the end of the game.
Figures of October 2020 of Lucky draw enterprises showed that:
- Cash amount collected from customers for token exchange at counters before playing
games: VND245 billion.
- Cash amount paid to customers for tokens returned after playing games: VND186 billion.
What is the amount of VAT which Lucky Draw is required to pay in October 2020?
A. VND245 billion
B. VND59 billion
C. VND22.3 billion
D. VND53.64 billion

45.
Hanoi Tourist Co performs an all-inclusive package tour contract with Singapore. In the
third quarter of 2020, there are 100 tourists for 7 days in Vietnam with a total payment of
USD150,000. The Vietnamese side has to pay for airfares, meals, accommodation, and
sightseeing tours under the agreed program, of which the airfares from Thailand to Vietnam
and vice versa cost USD35,000. The applicable exchange rate is USD1 = VND23,100.
What is the taxed price of the contract which Hanoi Tourist Co is required to pay?
A. VND241.5 million
B. VND265.65 million
C. VND346.5 million D. VND80.85 million
 46.
An An, a company specialized in producing embroidery thread, has a head office in
Quang Nam. In February 2020, An An has a new investment project in Quang Nam which is at
the investment project and makes separate declaration of input VAT amounts for this project.
In August 2020, the project’s input VAT amount is VND600 million, the payable VAT amount
for the company’s ongoing production and business activities is VND800 million. What is the
amount of payable VAT in the tax period of August 2020?
A. Refund VND600 million and pay VND800 million
B. Clear its investment project’s input VAT amount of VND600 million against the payable
VAT amount of VND800 million, so company has to pay VND200 million
C. Company is not considered for VAT refund and has to pay VND800 million D. Pay
VND600 million

47.
Binh Minh Co has a head office in Dien Bien. In September 2020, it has a new
investment project in Son La, which is at the investment stage and has neither commenced
operation nor made business and tax registration. The company separately declares input VAT
amounts for this project in Dien Bien in the VAT declaration form for investment project. In
October 2020, the investment project’s input VAT amount is VND600 million; the payable VAT
amount for the company’s ongoing production and business activities is VND250 million.
What is the amount of payable VAT in the tax period of October 2020?
A. Pay the amount of VND250 million in tax, and the VAT of the investment project
remains intact until the project is completed and apply for refund.
B. Consider VAT refund for the investment project of VND600 million and pay VND250
million in tax.
C. Consider VAT refund for the investment project of VND350 million after clearing the
input VAT and the payable tax.
D. Company is not entitled to VAT refund

48.
Line by Line, a telecom company, which has a head office in Ho Chi Minh City, operates
postpaid telecommunication services in Hanoi and established a subsidiary account branch in
Hanoi to pay VAT by deduction method (the branch is not self-employed and does not issue
invoice). The revenue of this service of the entire company in September 2020 was VND200
billion including VAT, the revenue in Hanoi was VND88 billion including VAT.
What is the amount of VAT that Line by Line has to declare and pay in September 2020? A.
Declare the revenue of VND181.8 billion before tax, the payable tax of VND18.2 billion and
pay them all at the head office
B. Declare the revenue of VND181,8 billion before tax, and the VAT of VND18.2 billion at
the head office and pay VND1.6 billion at the Hanoi branch
C. Declare the revenue of VND101,82 billion before tax and the VAT of VND10,18 billion at
the head office. Declare and pay the VAT of VND8 billion at Hanoi branch
D. Declare the revenue of VND181,8 billion before tax, and the VAT of VND16.6 billion at
the head office and pay VND1.6 billion at the Hanoi branch
49.
AP Co, a joint-stock company purchases materials for the production of animal feed and
has declared and credited input VAT upon such purchase in October 2020 which is VND100
billion. In that month, 65% of the produced animal feed is sold to the market and 35% is used
for animalrearing activities of the company.
What is the amount of AP’s deductible input value added tax (VAT) in October 2020? A.
VND100 billion
B. VND35 billion
C. VND65 billion
D. VND0

50.
Consuly Co provides Slush Co with consultancy, survey and feasibility
report making services for an investment project in China. The contractual value
received by Consuly Co is VND15 billion inclusive of VAT for the services provided in Vietnam.
Under this contract, it is impossible to determine turnover generated in Vietnam and turnover
generated in China. Consuly Co has calculated expenses arising in China (survey and
exploration expenses) of VND7.5 billion and expenses arising in Vietnam (summarization and
reporting expenses) of VND4.5 billion.
What is the amount of VAT-exclusive turnover from the services provided in Vietnam?
A. VND13,64 billion
B. VND9,55 billion C. VND6,82 billion
 D. VND5,11 billion

Part E: Value Added Tax Section B

Part E: Constructed Response Question: 15 questions
1. HOANG HA Co
HOANG HA Co is a company established in Vietnam, whose main activities include the
manufacture and trading of consumer products.
HOANG HA Co had the following transactions during 2020:
(1) HOANG HA Co purchased materials from a supplier in 2019, for which an invoice with a
value added tax (VAT) amount of 2,400 million was issued in January 2020. The invoice
was paid in May 2020 via a bank, but HOANG HA Co forgot to claim the input VAT.
(2) During 2020, HOANG HA Co purchased a 30-seater bus for transporting its employees
for 1,500 million (exclusive of VAT), and a four-seater car for the general director costing
VND2,500 million (exclusive of VAT).
(3) In January 2020, HOANG HA Co purchased 500 gifts on Tet holiday for a total value of
VND2,950 million (exclusive of VAT) as promotional gifts to clients. The promotion
program was registered with the relevant tax authorities.
(4) HOANG HA Co purchased goods with an invoiced value of VND 18,000 million (exclusive
of VAT). The whole of this inventory was damaged during its transportation to the
company’s warehouse. The insurer agreed to compensate HOANG HA Co for the VAT
incurred in respect of 30% of the goods due to the accident.

The standard rate of VAT is applicable to all of HOANG HA Co’s VATable sales and
purchases.

Required:
(a) Describe the difference between ‘zero rated’ supplies and ‘exempt’ supplies. (3
marks) (b) Calculate the creditable and/or non-creditable input value added tax (VAT) with
regard to each of items (1) to (4), and briefly explain the reasons for their treatment.
Note: You should present your answer in the form of a table with the following
columns: Item number; Amount exclusive of VAT; Creditable input VAT; Non-creditable input
VAT; and Brief explanation. (7 marks)
(Total: 10 marks)
 2. VSBS Co
VSBS Co (VSBS) is a newly established foreign invested company operating in trading
activities. VSBS is considering launching a number of promotion campaigns for its products in
Vietnam as follows:
– Campaign 1: Offer customers one product for free when the customer buys a
pack of ten during three months.
– Campaign 2: Sell products to customers at a reduced price for a week. The
reduced price would be 45% of the normal selling price, which is equal to the cost of the
goods sold. – Campaign 3: Provide customers with a voucher which allows them to buy VSBC
products for free every time the customer buys products with a value in excess of VND2
million. – Campaign 4: Issue some products such as TVs, or HD players, for demonstrative
display, then allow employees (or customers) to purchase these products at a 40% discount
after three months.

Required:
(a) For Campaign 1, advise VSBS Co of the value added tax (VAT) implications (output
VAT and input VAT) and invoicing requirements if:
(i) the campaign is registered with the relevant competent authorities as a promotional
activity; and
(ii) the campaign is not registered. (4 marks)

(b) For Campaign 2 and Campaign 3, advise VSBS Co of the VAT implications (output
VAT and input VAT) and invoicing requirements, if the campaigns have both been registered
with the relevant competent authorities. (4 marks)

(c) For Campaign 4, advise VSBS Co of the output VAT implications and invoicing
requirements. (2 marks)
(Total: 10 marks)

3. REALTIME Co
(a) REALTIME Co is a chain of retail stores operating in Vietnam, which has been
registered for issuing electronic invoices since early 2020.
 REALTIME Co expects to receive a tax audit in 2021 and the newly appointed tax
manager has concerns about the invoicing requirements in the following cases:
Case 1: Customer Hoai Anh Company, a regular customer, ussualy buys products
exceed VND200,000 but he refuses to request invoices. Is REALTIME Co required to issue
invoices to Customer Hoai Anh Company?
Case 2: Manay customer from small office near by REALTIME purchases good has a
value of less than VND200,000, so REALTIME Co has no obligation to issue an invoice unless
specifically requested by small office. Is REALTIME Co required to do anything else? Case 3:
REALTIME Co issued an invoice to Customer Cuc Phuong Co. When the invoice was handed to
Customer Cuc Phuong Company, the parties identified that although the tax code shown on
the invoice was lack of one figure, the address of the customer was also incorrect. Is
REALTIME Co required to issue a revised invoice mintues?

Required:
Explain the invoicing requirements for each of the cases 1 to 3 above as asked about by
the chief accountant. (5 marks)

(b) Also, in 2020, REALTIME Co paid for the expenses in relation to the establishment of
a branch in a different province. Before the branch was opened (and obtained a tax code), all
invoices were addressed to REALTIME Co’s tax codes and addresses (with the specific
authorisation issued to REALTIME Co by the legal representative of the branch). The total VAT
amount in respect of these invoices amounted to VND130 million. Invoices for some of these
expenses with VAT amounting to VND20 million were paid by REALTIME Co from a bank
account which was intended to be transferred to the branch later. This bank account has not
been registered with the tax authorities as REATIME Co’s bank account.

Reuired
Explain the VAT treatment of the payments made on behalf of the branch, for both
REALTIME and its branch, and calculate the amount of the deductible input VAT for REALTIME
Co and/or the branch in respect of the expenses for which invoices were issued to REALTIME
Co. (5 marks)
(Total: 10 marks)

4. NSN Co & BBH Co

 (a) NSN Co operates a golf course in Tam Đao, Vinh Phuc province. The company’s
information regarding golf course income for the period ended 31 December 2020 is as
follows:
– Membership fees from players: VND6,000 million
– Sales of tickets for golf training ground: VND2,000 million
Note: The collections are inclusive of value added tax (VAT) at 10% and special sales tax
at 20%.
Required:
Calculate the taxable revenue for value added tax (VAT) purposes and the output VAT
which NSN Co should declare for the period ended 30 December 2020. (3 marks)

(b) BBH Co is the manufacturer of pharmaceutical products. The company’s

manufacturing facility and headquarters are located in Hanoi. The company has dependent
branches in various provinces in Vietnam, including Vinh Phuc. The whole group adopts the
deduction method for VAT declaration purposes.
Required:
Briefly describe the invoicing requirements for both BBH Co and the dependent branch
in Vinh Phuc province (i) when BBH Co issues goods to the branch; and (ii) when goods are
sold by the branch. (7 marks)
(Total: 10 marks)
 5 ITC Co
The following scenario relates to requirement (a) only.
ITC Co is a Vietnamese company operating in the computer and accessories industry. In
2020, the company undertook the following transactions:
(i) Purchased 100 laptops, valued at VND30 million each (exclusive of value added tax
(VAT) at 10%).The laptops were issued as follows:
- 50 laptops to staff for business operation purposes;
- 15 laptops to staff as rewards for high performance;
- 35 laptops to clients for promotional purposes, however the company omitted to register
the promotion programme with the relevant authorities; and
(ii) Built a 'creative centre' for staff to encourage them to generate new ideas, at a cost
of VND13,200 million (inclusive of VAT at 10%).
Note: You should assume that all the above expenses are supported by proper
documents and that payments were made via the bank.

The following scenario relates to requirement (b) only.

ELI Co is a Vietnamese company. The company’s management is aware of Decree
119/2018/ND-CP regarding electronic invoices (e-invoices) and is considering applying
to use e-invoices from the fiscal year 2019. The management has raised the following
questions:
(i) What is an e-invoice with the tax authority’s identification code (e-invoice with TIC)?
(ii) What are the three types of e-invoices?
(iii) Does ELI Co need to request a VAT e-invoice from the vendor for sales below
VND200,000, since an invoice for this type of sale was not required under previous VAT
invoice regulations?
(iv) Can ELI Co print out e-invoices for its use, instead of storing them on the server, and if so,
for what purposes (if any) would such printed e-invoices be valid?
(v) Provided that ELI Co is a low risk taxpayer, what are the key conditions which need to be
met for the company to use e-invoices without the tax authority’s identification code?

Required
(a) Calculate the output VAT or creditable input VAT which ITC Co should declare for
each of the transactions, and briefly explain the reason for the VAT treatment of each one. (5
marks)
(b) Briefly respond, in accordance with Decree 123/2020, to the queries raised by
ELI Co’s management.
 Note: You are not required to quote the Article number or Decree wordings in your
answer. (5 marks)
(Total: 10 marks)
6. MINOR Co
MINOR Co is a company incorporated in Vietnam, which operates in the mining of iron
for processing to clinker for exports. In 2020, the company records showed the following
costs, excluding value added tax (VAT) where applicable, with regard to the export of clinker
VND million
Direct material costs 600,000
Direct labour costs 300,000
Direct overheads – of which energy 275,000
costs are 25,000
Selling costs 135,000
General and administration costs 345,000
Interest expenses 260,000
The input VAT incurred by MINOR Co in 2020 amounted to VND170,000 million
According to a recent written response to MINOR Co, the tax authorities confirmed
that the company’s product is to be treated as ‘natural resources which are sourced
domestically’.

Required
(a) Briefly explain the value added tax (VAT) treatment of exported natural resources
which are sourced domestically. (5 marks)
Note: You should refer to the tax rate (exempt of zero-rated), the creditability and
refundability of input VAT and the composition of production costs in the determination of
the ‘threshold’ ration between the value of natural resources and the total production costs
(b) Calculate the ratio and the refundable input value added tax (VAT) which MINOR Co can
claim for 2020. (5 marks)
Note: Your ratio calculation should indicate by the use of ‘0’ any costs which should be
excluded
(Total = 10 marks)

7 RBP Co
 (a) RBP Co, a company established in Vietnam, processes rubber products, including
rubber latex (i.e. unprocessed rubber materials, which are a VAT-exempt supply), and
processed rubber products (which are a VAT-taxable supply).
RBP Co currently has the following two investment projects in Vietnam, both of which
commenced operations in 2020:

Project 1: whereby RBP Co invested in a rubber plantation to farm rubber latex for
both domestic sale without processing (i.e. VAT exempt) and for input into a newly built
rubber processing factory (i.e. VAT taxable).
Project 1: whereby RBP Co invested in a rubber plantation to farm rubber latex for
domestic sale without processing (i.e. VAT exempt) only.
The following information relates to the two projects for the year 2020 (the first year
of operation):
Project A Project B
VND billion VND billion
Valid input VAT for investment in fixed assets 200 40
(plantation and factory)
Valid input VAT from operating in the first year 20 6 of
operations
Revenue from domestic latex sales 40 10
Revenue from sales of processed rubber products 36 0

Required:
For each of Project A and Project B, state, giving reasons, how much of the input value
added tax (VAT) relating to (i) the investment in fixed assets and (ii) operations, is deductible.
(6 marks)

(b) RBP Co has received the following invoices:

Invoice VAT input Additional information
amount VND
million
1 100 The payment for this invoice went to a bank account
which, due to a mistake, RBP Co had not registered
with the tax authorities at the time of payment.
2 250 Due to a dispute between the parties, this invoice
was not issued until 100 days after the goods had
been delivered to RBP Co.
3 80 This invoice, which was manually written by seller,
contains blank spaces without crossing
4 10 This invoice, which was issued by a supermarket,
contains no seller’s chop. Required:
State, giving reasons, for each of the invoices (1) to (4) whether the input VAT will be
deductible or non-deductible to RBP Co. (4 marks)
Note: You are recommended to use a table format for the most effective presentation
for both parts (a) and (b) in this question.
(Total: 10 marks)
 8 Bach Vi Co, Cam Tu Co and Hung Vuong Co
(a) Bach Vi Co sold a sterilization filter system. The system was delivered and
installed to the buyer on 31 May 2020, but according to the contract, the title of the system
would only be transferred to the buyer upon completion of testing by the buyer and both
party signing on the inspection minute. The inspection was completed on 5 June 2020 and
full payment was made to Bach Vi Co on 16 June 2020.

Required:
State, giving reasons, when for the purposes of value added tax (VAT) Bach Vi Co is
required to issue an invoice for the sale of the filter system. (2 marks)

(b) Cam Tu Co, a Vietnamese company, operates several petrol stations in Hue City.
The petrol stations are also convenience stores where food, drinks and various other items
are sold.

Required:
For the purposes of value added tax (VAT):
(i) State when it is compulsory for Cam Tu Co to issue an invoice to a customer
whose purchases have a value of less than VND200,000. (1 mark)
(ii) Explain the requirements for the issuance of invoices by Cam Tu Co in the case
of a customer whose purchases have value of more than VND200,000 and who does not
require an invoice, for the sale of:
(1) petroleum; and
(2) other items sold by the convenience stores. (3 marks)

(c) Hung Vuong Co (HV) provides internet ADSL services. HV entered into a contract
with Customer Bich Hoa Company in May 2020, under which HV is required to set up a
leased line for Bich Hoa Company, and then provide internet services for a monthly fixed fee
of VND10 million (inclusive of value added tax (VAT)). Under the contract, the service period
for fee calculation is: from the first day to the last day of the month.
HGV collected the set up fee for the leased line of VND15 million from Customer in
advance on 5 May 2020 and then completed the leased line set up on 25 May 2020. Bich Hoa
officially commenced using the line from 26 May 2020.

Required:
 (i) State the general value added tax (VAT) regulatory requirements regarding the
point in time when a service provider is required to issue an invoice, and the point in time
when HV
Co is required to issue the invoice for the set up fee to Customer A. (2 marks)
(ii) Calculate the total output VAT which HV Co should charge in the VAT invoice(s)
issued to Bich Hoa Company in May 2020 under the above contract. (2 marks)
(Total: 10 marks)
 9 Beauty Ltd
Mr Ha, the Tax Manager at Beauty Limited, take a vacation to European in November
2020.
He has asked you to complete the company’s VAT declaration for the month of October
2020, as he will be on holiday when the declaration must be filed.
.
Mr Ha supplies you with a list of transactions for this period and tells you to assume
that all of the amounts include VAT (where applicable) and that the company has obtained
legitimate VAT invoices for all expenditure.

Expenses (VND) Income (VND)

Sales 91,785,600,000
Purchase of goods for trading 880,000,000
Salaries 178,000,000
Consultant fee 33,000,000
Rent 66,000,000
Repair of equipment 2,200,000
Sale of an old computer in the local market 3,000,000
Provisional personal income tax (PIT) 11,000,000
Purchase of a new computer 45,000,000
Sale of old staff uniforms (exported to Japan) 10,000,000
Telephone and internet 9,500,000
Stationary 2,000,000
Water and pantry 5,100,000
Electricity 6,000,000
Personal gift on Middle of Autum 11,000,000
Interest on loan 12,000,000
Bank charges 355,000

Required:
For each of the transactions listed, state the VAT treatment and calculate the VAT
content and the amount that can be claimed or declared by Beauty Limited together with
the overall VAT payable by Beauty Limited for the month of October 2020.
(Total: 10 marks)
 10. Vinamex Ltd
(a) Vinamex Enterprises Limited (Vinamex) is a leading supplier of numerous goods
imported from Malaysia, Thailand and the Singapore. The company also operates a real
estate business in Vietnam.
XYZEL’s activities in the year 2020 included the following:
1. The import of tobacco products subject to special sales tax.
2. The import of alcohol products subject to import duty and special sales tax.
3. The sale of goods subject to instalment payments.
4. The sale of goods where the invoice stated the payment price including the value added
tax (VAT).
5. Agency and broking activities involving the sale of goods and services for commission.
6. Goods processing.
7. The sale of residential apartments where the taxable price included the value of land as
provided by the peoples’ committee.

Required:
In the case of each of the seven listed activities, state how the taxable price for
calculating the VAT payable will be determined.
(Total: 10 marks)
 11. Hanh Nguyen Ltd
Hanh Nguyen Ltd (Hanh Nguyen) is an enterprise established under the Law on
Enterprise in
Vietnam. It provides security services to State owned enterprises, enterprises under the
Enterprise Law, enterprises under the Law on Foreign Investment in Vietnam and also to
companies outside of Vietnam.
Hanh Nguyen currently has a value added tax (VAT) code and uses the tax credit
method to determine its VAT liabilities. Nguyen had the following transactions during the
financial year ending 31 December 2020:

Date service Date invoice Value Service Provided (VND)

provided issued
1 25 March 2020 2 April 2020 100,000,000 Training course conducted in Vietnam.
2 25 June 2020 30 June 2020 190,000,000 Training course (VND 172,500,000) and
separate course books (VND
17,500,000) conducted in Vietnam
3 30 June 2020 7 July 2020 18,000 Training course conducted in Singapore
SGD for a company that is contemplating
investing in Vietnam for the first time.
The Singaporean company currently
has no legal presence in Vietnam.
4 Every month Last day of 300,000,000 Monthly security service fee revenue
month from a Finland in Vietnam.
5 Every month First day of 90,000,000 Rent expense
month
6 Every month 25th 200,000,000 Wages to staff
7 10 December 1 December 100,000,000 Development of a new software program
2020 2020 for staff to log and report their
daily activities
All monetary amounts are stated exclusive of any applicable VAT and all invoices
referred to are tax invoices.

Required:
(a) Compute the output VAT payable and input VAT credit available for Nguyen Ltd’s
June VAT accounting period, giving brief explanations for the exclusion of any of the items
listed. Exchange rate on 30 June 2020 : sell SGD 1: VND 17,000 buy SGD 1: VND 17,500
on 07 July 2020 : sell SGD 1: VND 17,800 buy SGD 1: VND 17,900

(9 marks)
(b) State the conditions and procedures that must be complied with for a credit or
refund of input VAT in relation to the export of goods or services. (6 marks)
(Total: 15 marks)
 12. Ronadol Limited
Ronadol Limited (Zingo) is a consumer finance company which has recently started
operating in Vietnam. Ms Mai, Ronadol’s Chief Accountant, will go to overseas attending a
training course in November 2020. As she will be at the training course at the time when the
declaration must be filed Ms Lan has asked you to prepare Ronadol’s value added tax (VAT)
declaration for the month of November 2020.
Ms My Lan supplies you with the following list of payments and receipts for the month
of November 2020, which is Ronadol’s first operating month. She also tells you that all of the
amounts include VAT (where applicable), and that the company has obtained legitimate VAT
invoices for all expenditure.
Expense Income VND
VND
Interest income 15,000,000,000
Other fee income 10,000,000
Sale of old furniture 4,000,000
Purchase of computer equipment 4,500,000,000
Salaries 700,000,000
Mobile phone bill 30,000,000
Electricity bill 8,900,000
Rent 190,000,000
Management fee from the head office in Paris 120,000,000
(gross of tax) 21,000,000
Provisional personal income tax 15,000,000
Stationary 21,000,000
Telephone and internet 30,000,000
Interest on loan 1,100,000
Bank charges

Required:
Calculate the amount of value added tax (VAT) that Ronadol Limited can claim or must
declare for the month of November 2020
Note: you should list all of the individual items referred to in the question, clearly
indicating the VAT rate applicable or the fact that VAT is not applicable (N/A) in each case.
(Total: 15 marks)
 13. PT Soft JSC
Ms Hoang Lan is the Chief Accountant of PT Soft JSC, a company specialising in the
provision of customised hardware and software solutions for businesses. The following is a
summary of invoices and bills that T-Soft JSC received or issued in the month of June 2020
(sorted by date of receipt/issuance).
Item Date of Date of Issued by Description VND amount Additional
number receipt/ invoice (exclusive of information issue value added
tax (VAT))
1 1 June 13 April Gia Hung Purchase of ten 150,000,000 Bank
transfer/VAT
2020 2020 Co new laptops for invoice
new employees
2 4 June 15 Bach Repair of air- 2,000,000 Cash/Sales invoice 2020 March Khoa Co
conditioners
2020
3 7June 7 June PT-Soft Disposal of five 25,000,000 Cash receipt/VAT
2020 2020 JSC used laptops invoice
4 8 June 15 Tran Anh Purchase of file 250,000,000 Bank transfer/VAT
2020 October Co server system invoice
2019
5 9 June 12 Quang Purchase of a 2,000,000,000 Bank transfer/VAT
2020 February Minh Co five-seater invoice
2020 BMW car
6 15 June 15 June PT-Soft Sale of 700,000,000 Bank transfer/VAT
2020 2020 JSC customised invoice
software to
Hong Anh Co
7 15 June 15 June PT-Soft Sale of 200,000,000 Bank transfer/VAT
2020 2020 JSC associated invoice
computer
hardware to
Hong Anh Co
8 19 June 16 June Sunsoft Training 300,000,000 Bank transfer on 2020 2020 Co (a US
services (converted 21 June 2020.
company) conducted in from USD) Foreign contractor
Vietnam tax (FCT) declared
on 22 June 2020
9 20 June 20 June PT-Soft Sales of special 3,000,000,000 Bank
transfer/VAT
2020 2020 JSC computer invoice
hardware
to CFS Co, an
export
processing
enterprise
10 23 June 15 May Cool-All- Purchase of new 50,000,000 Cash
2020 2020 Day Co air conditioners payment/VAT
invoice
Note: all suppliers and customers referred to are Vietnamese organisations unless
stated otherwise. Required:
(a) Calculate the amount of output VAT and input VAT applicable to each of items 1 to
10 issued/received by PT-Soft JSC in the month of June 2020.
Note: you should list all of the items by number and for each item state the amount
exclusive of VAT, the applicable VAT rate, output VAT/input VAT and where appropriate, give a
short explanation for the treatment. (10 marks)

(b) Assuming PT-Soft JSC can separately account for the input VAT on VAT-exempt and
VAT-taxable items, and that all the input VAT for the month of June 2020 relates to both
VAT-exempt and VAT-taxable activities:
– for each item of deductible input VAT identified in your answer to part (a), state, giving
reasons, whether apportionment between exempt and taxable activities will be
required; and
– calculate the total amount of deductible input VAT that PT-Soft JSC will declare in its
June 2020 VAT return. (5 marks)
(Total: 15 marks)

14. Company A
 (a) Circular 153/2020/TT-BTC dated 28 September 2020 (Circular 153) provides detailed
guidance on the issuance and usage of invoices.
Required:
State the types of invoices (as stipulated in Circular 153) that the seller is required to
issue in each of the following cases:
Case 1: Company A sold goods to Company B. Both companies are incorporated in
Vietnam and are deduction method taxpayers.
Case 2: Company A provided marketing services for Company C, a Hong Kong Company.
Company C has no permanent establishment or entity presence in Vietnam.
Case 3: Company D sold foreign currency to Company A for making an overseas
payment for imported goods. Company D is licensed for foreign currency trading.
Case 4: Company E, acting as an agent for Company Z, a foreign airline, collected freight
from Company A for international transportation.
Case 5: Company F, the operator of a circus, sold tickets to customers for a show. (5
marks)

(b) Describe the THREE cases, as stipulated in Circular 123/2020/TT-BTC dated 19

October 2020 on value added tax (VAT), where settlements for goods and services with a
transaction value in excess of VND20 million are deemed as being made via a bank in order for
the input VAT to be deductible, despite the buyer not actually paying the seller via a bank. (3
marks)

(c) Explain, in each of the following cases, the value added tax (VAT) and corporate
income tax (CIT) implications (if any) of the input VAT amount:
(i) A villa that a life insurance company purchased to use as its head office.
(ii)A villa constructed by a construction company to use as a sample for customers’
consideration, which was destroyed by fire before it could be used. The villa was insured
for fire, and the insurance company agreed to pay a compensation amount which covered
all of the costs (including VAT) of constructing the villa.
(iii) A villa that a construction company constructed and then sold to its chief executive
officer (CEO) at a significant discount below its market value as a reward for his excellent
past performance. (4 marks)
(Total: 12 marks)

15. Minh Nhat Co

 Minh Nhat Co (Minh Nhat) is a company incorporated and resident in Vietnam. Minh
Nhat is a value added tax registered company specialising in market research services. Its
business is subject to value added tax (VAT) at the standard rate of 10%.
Ms Do Lan Anh, the Tax Accountant of Minh Nhat, requires advice in respect of the
following transactions:
(a) Minh Nhat needs to issue an invoice to a Malaysia company for market research
services on the Vietnam cement industry.
Required:
Advise Lan Anh on the VAT rate that should be applied to the invoice and of any other
issues and/or conditions that she should be aware of when applying such a tax rate. (4 marks)

(b) In February 2020, Minh Nhat purchased office equipment from a local supplier and
received a VAT invoice for VND330 million (including VAT at 10%). According to the contract,
Minh Nhat was required to make payment for the equipment in May 2020. Minh Nhat
declared input tax of VND30 million in its February 2020 VAT return. However, in May 2020
when payment was made, only VND275 million of the VND330 million was paid via a bank,
and the remaining amount of VND55 million was paid in cash.
Required:
Advise Lan Anh on the conditions for the credit of the input tax on the equipment and
the input tax treatment that should be applied in this case. (4 marks)

(c) Lan Anh had noticed that one purchase VAT invoice issued by the stationery
supplier has been lost when being delivered by post to Minh Nhat’s office. Required:
Advise Lan Anh on the administrative procedures to be followed in order to record the
input tax on such an invoice. (2 marks)
(Total: 10 marks)
 ANSWER BANK

Part A: The Vietnamese tax system and Section A

its administration
Part A: Answers
1. B
Not related parties before June 2020, Related parties from June 2020
According to Article 5.1(a) of Decree No. 132/2020/ND-CP regarding Transfer Pricing
(effective from 20 December 2020 and applicable for finalisation of the year 2020),
‘one enterprise directly or indirectly holds at least 25% of the contributed capital of the
owner of the other enterprise …’ would be related parties.

2. B
According to Article 18, Decree No. 132/2020/ND-CP dated November 05, 2020
regarding Transfer Pricing (effective from 20 December 2020 and applicable for finalisation of
the year 2020).

3. C
1 and 2 only
According to Article 6, Decree No. 132/2020/ND-CP dated November 05, 2020

4. A
According to Clause 1, Article 19, Decree No. 125/2020/ND-CP dated October 19, 2020

5. D
(1), (2) and (3)
The relationship of parent and subsidiary is related party as the shareholding is more
than 25%. Also, according to Article 5, Decree No. 132/2020/ND-CP, all of the transactions fall
within the definition of related party transactions.

6. C
 This is the rate for late payment regardless within or outside 90 days arcording to
Article 59, Law No. 38/2019/QH dated June 13, 2019

7. D
According to Article 4, Decree No. 125/2020/NĐ-CP dated October 19, 2020

8. D
According to Article 4, Decree No. 125/2020/NĐ-CP dated October 19, 2020

9. D
The net foreign exchange gains/losses after offsetting are allocated over a period of up
to five years from the project being put into use – point 2.22, Article 6 of Circular
78/2014/TT-BTC.

10. B
First tax year: 21 April 2019–20 April 2020: 130 + 64 = 194 days (more than 183 days):
resident Second tax year: 1 January–31 October 2020: 64 + 110 = 174 days (less than 183
days): nonresident

11. C

12. B
Point e.1, part 2, Article 26 of Circular No. 111/2013/TT-BTC.

13. A
According to Clause 2, Article 8, Decree No. 125/2020/ND-CP dated October 19, 2020
Time limit for imposition of penalties for administrative violations against regulations
on taxrelated procedures shall be 02 years from the date of commission of these violations.
The date of commission of an administrative violation against regulations on tax
procedures shall be the date succeeding the statutory deadline for completion of regulatory
tax-related procedures under laws on tax administration

14. C
15. C
The individuals that earn income from both business and wages shall submit the
terminal declaration to the Sub-departments of taxation where the business is located

16. D
According to Article 14, Decree No. 126/2020/ND-CP

17. B
According to Article 57, Law No. 38/2019/QH14 dated June 13, 2019
Overdue tax, fines and late payment interest that are yet to subject to enforcement

18. B
According to Article 110 and Article 113, Law No. 38/2019/QH14 dated June 13, 2019

19. D
According to Clause 2, Article 10. Decree No. 125/2020/ND-CP dated October 19, 2020

20. D
Foreigner working in Vietnam claiming family allowance for children leaving overseas

21. A

22. B

23. B

24. C

25. B

26. D
27. D

28. C

29. D
According to Article 13, Decree No. 125/2020/ND-CP dated October 19, 2020

30. C
Recently incurred tax, late payment interest and fines.
According to Article 57, Law No. 38/2019/QH14 dated June 13, 2019

31. A

32. C

33. B
According to Article 7, Decree No. 125/2020/ND-CP dated October 19, 2020

34. D
According to Article 15, Decree No. 125/2020/ND-CP dated October 19, 2020

35. D
According to the Article 42, Law No. 38/2019/QH14 dated June 13, 2019, there are
several case where tax authorities calculate the tax liability for the tax payers

36. C
According to Article 88, Law No. 38/2019/QH14 dated June 13, 2019

37. D
According to Article 79 Law No. 38/2019/QH14 dated June 13, 2019 and Circular No.
111/2013/TT-BTC
38. B

39. B
According to Article 9, Circular No. 78/2014/TT-BTC

40. D
According to Article 31, Decree No. 126/2020/ND-CP
41. D
According to Article 29, Decree No. 126/2020/ND-CP
The tax authorities has the right to disclose information on mass media is the taxpayer
fail to submit tax return within 90 days from the deadline of tax submission

42. D

43. A
In this case the taxpayer is not required to pay the 100 million VND in VAT as well as
late payment interest. Instead, the taxpayer shall decrease the non-deductible VAT of January
2020, which is 100 million VND in the VAT declaration of July 2020 (if the deadline for
declaring tax has not passed) or August 2020 or the month in which the adjustment is made
(box “Decrease in deductible VAT of previous periods).
Hoang Ha Co shall submit a dossier to the tax authority, which consists of:
+ A VAT declaration of January 2020 that reflects the decrease of 100 million VND in
VAT that remains after deduction;
+ A written explanation for such decrease in the tax period January 2020 (form
01/KHBS); + Supporting documents (if any).

44. B
According to Article 17, Decree No. 125/2020/ND-CP dated October 19, 2020

45. A

46. C
 According to Clause 2, Article 20, Decree No. 125/2020/ND-CP dated October 19, 2020

47. B
According to Point b, Clause 1, Article 21, Decree No. 125/2020/NĐ-CP dated October
19, 2020

48. C
According to Point g, Clause 4, Article 24, Decree No. 125/2020/ND-CP dated October
19, 2020

49. A
Option 1:
Both real estate and non-real estate companies are required to file ad-hoc tax
declarations for each transfer and tax finalisation, but only the real estate company is
required to make provisional quarterly payments for real estate transfer.

50. B
According to Point c, Clause 1, Article 4, Decree No.126/2020
Part B: Personal Income Tax Section A
Part B: Multiple Choice Question: Answer
1. C
VND258 million [((90*15 months/12 months – 11 – 8,8) – (29,8*(8% + 1.5% + *
1%))*35%) – 9.85]*12 months

2. B
VND317.25million (USD15,000*23,500*20%*4.5 months) = 317.25 million
Mr Ian Zong spent only 4.5 months in Vietnam for the first tax year (12 months from
first arrival) and therefore was non-resident – accordingly he would be subject to 20% flat
rate on the Vietnam-sourced income (i.e. income from secondment).

3. D
VND132 million [(11 million self-relief*12 months)
Ms Fiona Eldwin is 50 years old and would not qualify for the dependant deduction. The
cash support is taxable income in this case, but not a deduction.
Tutorial note: Cash support for fatal diseases is non-taxable; however, in this case cash
support is taxable because it is not for a fatal disease.

4. D
VND149.26 million [(20,000*23,500) = (70 million – 11 (personal relief) – 4,4 (son
relief))*35% – 9.85]
According to Resolution 954/2020/UBTVQH14 about deduction cap, and Circular
92/2015/TTBTC about overseas tuition fees for children of Vietnamese assignees working
abroad would be exempt from personal income tax (PIT).

5. A
VND786 million {[((200*12 + 360 + 46)/12 months – 11 – 4.4] – [(29.8*10.5%) *35% –
9.85]}*12 months
 Return tickets to Australia are fully taxable as Mr Hung Nguyen is Vietnamese. His
performance bonus in Australia is also fully taxable.

6. C
VND164.5 million ((3,300 million – 10 million)/2 persons*10%)
According to Article 15.1 (b) of Circular 111/2013, the taxable income of a promotion
prize is the total market value of the item (inclusive of VAT) in excess of VND10 million. The
deduction of VND10 million is per item, not per person.

7. B
VND504million ((300,000*128/365)*23,500 + 50 million)*20%
A non-resident in Vietnam is subject to the 20% tax rate on employment income by
proportioning days present in Vietnam over 365 days. Other income received in Vietnam,
such as the golf course membership, is taxable in full. No dependent relief is available (Article
18 of Circular 111/2013).

8. A
VND10 million (200,000 shares*10,000 par value*20%/2 dividend rate in cash*5% tax
rate)
According to Article 10 (point 3.c of Circular 111/2013 as amended by Circular
92/2015), only the dividend paid in cash is subject to PIT at the time of receipt. The dividend
payment rate would be calculated based on par value (VND10,000 per share), not market
price. The script dividend will be taxed (investment income) at the time of share disposal

9. D
VND31,2 million [((136 – 11 – 4.4 – (29.8 * 10.5%)) * 35%) – 9.85] = 31.2

10. D
VND539 million ((150,000 shares * 36,000 – 10 million) * 10%)
According to Article 16.1 (b) of Circular 111/2013, the taxable value where the
inheritance is non-listed shares is the book value of the shares immediately before ownership
registration as a result of the inheritance, minus deduction of VND10 million.
11. A
VND92.4 million (son (VND4.4 million * 12 months) + daughter (VND4.4 million * 9
months)) According to Article 9 of Circular 111/2013, point 1.d.1, a child above 18 years old
qualifies as a dependant if he/she is studying (in Vietnam or abroad) and has an average
income of less than VND1 million per month. A child below 18 years old qualifies as a
dependant, even if they have income of more than VND1 million per month.
12. C
VND343 million ((($35,000 + 35,000/12 + 5,500) * 23.5 – 11) * 35% – 9.85)
Note: All income is taxable in full (concessional treatment of 15% of gross income is not
applied for housing allowance in cash).

13. A
VND121 million [((300*16/12 – 11 – (4.4 * 3) – (29.8 * 10.5%)) * 35%) – 9.85] = 121
million

14. A
VND93 million (((1,870 – 10 million) * 10%) * 50%)
According to Article 15.1(b) of Circular 111/2013, the taxable value of the promotional
prize shall be the excess of the value of the prize over VND10 million before deducting any
expenses. The personal income tax (PIT) rate is 10%.
Tutorial note: Acceptable alternative calculation: ((1,870 * 50%) – 10 million) * 10% =
92.5 (rounds up to 93 million) due to ambiguity in regulations.

15. A
VND360 million (1,500 * 12 million * 2%)
According to Article 12.1 of Circular 111/2013 as amended by Circular 92/2015, in the
case of real estate transferred by an individual, if the contract price is lower than the price
determined by The People’s Committee at the time of sale, the taxable income shall be
determined using the price determined by The People’s Committee.

16. B
VND120 million
 (0.8 million * (100 hours * (150% – 100%)) + (100 hours * (200% – 100%)))
Tutorial note: The exempt income is the excess paid over the normal rate, e.g. overtime
paid at 150% of salary, the exempt part would be 50% and the taxable part 100%.

17. D
According to points g1, g5, g6, g7 of Article 2 point 2 of Circular 111/2013/TT-BTC

18. A
VND27,200,000 [((5000 * 3 – 3000) * 23,\500 – 10,000,000) * 10%]

19. B
VND8.52 million [(70 million – (11 million + 4.4 million * 2 + 29.8 million * (8·5% +
1%+1%))) *25% - 3.25]

20. B
VND102 million. Mr Albert is entitled to a full month’s relief in both the month he
arrived and the month he exited – 10 months relief in total. (in 2019: 4 months x 9 million +
2020: 6 months x 11 million)

21. A
Capped deduction VND1 million/month * 10 months = VND10 million.

22. D
360 million – [(360 million – 11 million) * 35% – 9.85 million] = 247.7 million.

23. D
According to Article 3 of Circular 111/2013 amended by Circular 92/2015/TT-BTC

24. A
 VND140,000
The exempt income is the excess paid over the normal rate, e.g. overtime paid at 150%
of salary, the exempt would be 50% and the taxable would be 100%.

25. C
According to Clause 2, Article 16 is amended in Circular 92/2015/TT-BTC about some
cases of tax statement, when a resident who earns income from wages is present in Vietnam
for fewer than 183 days in the first calendar year, and for more than 183 days in 12
consecutive months from the first day he/she arrives in Vietnam.
In the first tax year, the tax statement shall be submitted from the end of the 12-month
period of presence in Vietnam.
In the second tax year, the tax statement shall be submitted according to the calendar
year
26. D
Monthly assessable income = (60 – (11 + 2*4.4) – 29.8*10.5% = 37.07
PIT= 37.07 x 25% - 3.25 = 6.02

27. D
25.3 and 3.4
The monthly personal income tax payable by Mr. Binh:
- Converted income: 34 million + 2 million – (11 million + 3.13 million) = 21.87
million - Assessable income (according to Appendix No. 02/PL-TNCN): (21.87 million – 1.65
million VND)/0.8 = 25.3 million VND
- Personal income tax payable by Mr. Binh (according to Appendix No.
01/PL-TNCN): 25.3 million × 20% - 1.65 million = 3.4 million

28. C
32.71 and 4.93
Step 1: Calculate the house rent paid on Mr. Duong’s behalf that is included in converted
income:
• Converted income (exclusive of house rent): 34 million + 2 million – (11 million +
3.13 million) = 21.87 million
 • Assessable income (according to Appendix No. 02/PL-TNCN): (21.87 million – 1.65
million)/0.8 = 25.3 million
• Taxable income (exclusive of house rent): 25.3 million + 11 million + 3.13 million =
39.43 million/ month
• 15% of total taxable income (exclusive of house rent): 39.43million × 15% =
5.91million/ month
Thus the house rent included in the converted income is 5.91 million
VND/month Step 2: Calculate assessable income
• Converted income: 34 million + 2 million + 5.91 million – (11 million + 3.13 million) =
27.78 million/ month
• Assessable income (converted in accordance with Appendix No. 02/PL-TNCN): (27.78
million – 3.25 million)/0.75 = 32.71 million/month
• Personal income tax payable: 32.71 million × 25% - 3.25 million = 4.93 million /month

29. C
The monthly personal income tax payable by Mr. Tung:
- Converted income: 83 million + 20 million – (11 million VND + 2*4.4. million +
3.129 million ) = 80.071 million
- Assessable income (according to Appendix No. 02/PL-TNCN): (80.071 million –
9.85 million )/0.65 = 108.032 million
- Personal income tax payable by Mr. Tung (according to Appendix No.
01/PL-TNCN):108.031 million × 35% - 9.85 million = 27.96 million

30. B
382.8 and 56.8
Taxable income in the year earned by Mr.
Tuan - At Viettravel Co:
+ Converted income: 34 million + 2 million – (11 million VND + 3.13 million ) = 21.87
million + Assessable income (according to Appendix No. 02/PL-TNCN): (21.87 million – 1.65
million )/0.8 = 25.3 million Total for 2020: 25.3 million VND x 12 months = 303.6 million - At
Luxtravel Co:
 + Monthly assessable income (converted in accordance with Appendix No.
02/PL-TNCN): (12 million – 0.75 million )/0.85 = 13.2 million for 6months = 13.2 x 6 = 79.2
million
Total assessable income 2020 = 79.2 + 303.6 = 382.8
- Monthly assessable income: (382.8 million : 12 months) = 31.9
million - Personal income tax payable in the year:
(31.9 million × 20% - 1.65 million) × 12 months = 56.8 million .

31. D
According to Point c.2, Clause 1, Article 9, Circular 111/2013/TT-BTC

32. A
Incomes from capital investment (dividend divided, tax deduction at the rate of 5%) is
not required to pay tax. If Ms Hoa only has income from wages and remunerations in one
company, she can authorize that company to pay tax on her behalf.

33. C
According to Point c.2, Clause 1, Article 9, Circular 111/2013/TT-BTC
34. B
According to Article 15, Circular 92/2015/TT-BTC
The contributions to the voluntary pension fund and payment for voluntary pension
insurance are deducted from the taxable income. Nevertheless, the deduction shall not
exceed VND 01 million/month (VND12 million/year)

35. C
4.444
When making the transfer, Mr. Khai has to pay personal income tax on the income from
capital investment and the income from transferring securities:
- The personal income tax on the income from capital investment: (8,000 shares ×
VND10,000) × 5% = VND4,000,000
- The personal income tax (provisional) on income from transferring securities:
(8,000 shares × VND55,000) × 0.1% = VND440,000
 36. C
47 and 37
- Income from winning prizes = USD17,000 – USD15,000 = USD2000 x 23,500= VND47 million.
- Assessable income = USD2000 × 23,500 - VND10 million = VND37 million

37. A
1000 and 200
Based on the cash-in and cash-out, the incomes from prizes and assessable incomes
earned by Mr. Ngoc are calculated as follows:
- The income from the jackpot earned by Mr. Ngoc is the entire value of the jackpot:
+ Income from the prize = USD1000
+ Assessable income = USD1000 × USD/VND exchange rate - VND10 million.
- The income earned by Mr. Ngoc from winning prizes from the slot machine:
+ Income from winning prizes: = USD7500 - USD1000 - USD3000 = USD3,500.
+ Assessable income:= USD3,500 x USD/VND exchange rate - VND10 million.

38. C
A or B above
He can ask for receipt for each month or
He can ask for one receipt from Sep 2020 to Dec 2020 and one receipt from Jan 2020 to
April 2020
If the person does not sign a labor contract or signs a labor contract for less than 03
months, the person is entitled to request the income payer to issue the certificate of tax
withheld at source every time tax is withheld, or issue a single certificate of tax withheld at
source for multiple withholdings in the same tax period.

39. B
If the person signs a labor contract for more than 03 months, the income payer shall
issue only one certificate of tax withheld at source in a tax period.
40. A
VND89 million [((60*14 months/12 months – 11 – 3*4.4) – (29,8*(8% + 1.5%
+1%))*25%) –
3.25]*12 months

41. B
Foreigner working in Vietnam claiming family allowance for children leaving overseas

42. C
According to the Law on The Personal Income Tax, Mr Van An’s pension is tax-exempt
income, he doesn’t have to declare and pay tax

43. A
Income from doing professional accounting services

44. C

45. A
Total rental income in 2020 = 9 months x 20miilions = 180 millions
VAT = 180m x 5% = 9m; PIT = 180m x 5% = 9m

46. C
47. D
According to Article 23, Circular No. 92/2015/TT-BTC about refund of PIT

48. C
181 million VND
(1,400,000,000 x 50% – 11,000,000 x 12) = 568 million VND
Monthly assessible income = 568 million VND/12 = 47.33 million VND x 25% – 3.25
million VND = 8.58 million VND x 12 = 103 million VND
49. B
Total rental income in 2020 = 9 months x 30miilions = 270 millions
VAT = 270m x 5% = 13.5m; PIT = 270m x 5% = 13.5m

50. D
Part B: Personal Income Tax Section B
Part B: Constructed Response Question: Answer
1. Mr Nam Nguyen
Mr Nam Nguyen and Ms Linh Nguyen
(a) Taxing date

Where the contract does not specify that the buyer is responsible for 1.5
handling the tax filing and payment procedures, the taxing date is the
date the transfer agreement becomes effective (according to Article 17
of Circular 92/2015 amending Article 12 of Circular 111/2013).
Therefore, in this case, the taxing date would be 15 April 2020 0.5
2

(b) Personal income tax (PIT) liability of Mr Nam Nguyen as a result of the land transfer
Allocation of ownership

Where there is no specific provision about the allocation of ownership, 1

the ratio of taxable income shall be equally divided between the
owners (according to Article 17 of Circular 92/2015 amending Article 12
of Circular 111/2013).
Therefore, in this case the taxable income will be divided 50–50 between 0.5
Mr Nam Nguyen and Ms Linh Nguyen.
VND millions
Proceeds received by each owner 15,000 1
2 2
(100 million per m *300m *50%)
Tax (15,000*2%) 300 0.5
3

(c) PIT treatment of capital contribution made by Mr Nam Nguyen on 15 May 2020

No taxable income arises and so no tax liability is incurred in the case of 2

a capital contribution by shares (according to Article 11, point
2.c.4 of Circular 111/2013) as the tax liability is deferred until such time
as the contribution is sold.
 (d) PIT liability of Mr Nam Nguyen on the sale of the capital contribution on 1
September 2020
Amount
VND
million
For transfer of shares in ABC (25,000*400,000)*0·1% 10 1
For transfer of capital contribution in HD Co
• Selling price 78,000
• Original capital contribution
o Cash (from (b) above) (15,000) 0.5
o Shares (25,000*400,000) (10,000) (25,000) 0.5
Taxable gain 53,000 0.5
Tax at 20% 10,600 0.5
3
10
 2. Ms Hoa
(a) Personal income tax (PIT) liability on employment income for 2020

From From
JWM Co CNL Co
VND VND
million million
Annual salary (144*12)/(25*8) 1,728 200 1.5
Bonus (2*144) 288 0.5
Total taxable employment income 2,016 200
Monthly taxable income (2,016/12 months) 168.0 0.5
(200/8 months) 25.0 0.5
Self-deduction (VND 11 million) (11.0) 0.5
Dependent deduction (VND4.4 million*2 (8.8) 0.5
children)
Compulsory insurance [VND 29.8 million*(8% + (3.129) 0 1
1.5% +1%)]
Monthly assessable income 145.071 25
Monthly grossed-up income [(145.071 – 208.032 0.5
9.85)/0.65] 0.5
[25 – 1.65)/0.8] 29.188
Total assessable income (208.032*12 months + 2,729.89 0.5
29.188*8 months)
Monthly assessable income [(2,729.89/12 227.49 0.5
months)]
Annual tax liability (227.49*35% – 9.85)*12 months 837.22 1

(b) PIT liability on income from investments in 2020

Tax liabilities
VND million
Receipt of interest and cash dividend
Bond interest (150*5%) 7.5 0.5
Cash dividends (180*5%) 9 0.5
 Receipt of scrip dividend (10,000*20,000 shares) 0 1
Tutorial note: A scrip dividend is not taxed at the time of
receipt.
Sales of shares
TCL Co: Capital gain (180,000 shares 6.48 2.5
(W)*36,000*0·1%)
PDL JSC: Capital gain (120,000 + 20,000)*25,000*0.1%) 3.5 1.5
Scrip dividend taxed at sale (20,000 shares*10,000*5%) 1
Total 7
15
Working:
Number of shares of TCL Co
Total face value of shares held (dividend received/yield over face VND 1,800 million
value)
(180 million/10%)
No of shares held (Total face value of shares held/face value per 180,000 shares share)
(1,800 million/10,000)

3. Mr Felix Cooper
Mr Felix Cooper
(a) Deductions from taxable income in the year 2020
VND million
Self-deduction
(11*10 full months from March to December 2020) 110.0 1.5
Dependant deduction
Luong Le (4.4*5 months from August to December) 22.0 1.5

Lauren (4.4*10 months from March to December) 44.0 1.5

Insurance deduction
Voluntary (VND1 million (capped)*8 months from 8.0 1.5
May to December)
Donation 80.0 1
Qualified donation to charity fund 264.0
Total 7

Tutorial notes:
 1. Time apportionment of the self-deduction and dependant deduction is not
required under point c.1.2, part 1, Article 9, Circular 111/2013.
2. According to point d.1.3 of the same Article 9, a taxpayer’s child having income of
less than VND1 million average per month who is studying in a school, domestic or overseas,
qualifies as a dependant. Thus Lauren qualifies as a dependant from the time Felix came to
Vietnam, not just from September
3.According to Example 11 in Article 9 of Circular 111/2013 as amended by Circular
92/2015, the maximum deduction allowed for contributions to a voluntary insurance fund is
VND1 million per month, including contributions by both the employer and the employee.
The total contributions for Felix were VND3.3 million (2.5 million + 0.8 million), will thus be
capped at VND1 million per month.

(b) Tax treatments of royalty income

According to Article 13 of Circular 111/2013:
– A royalty shall be subject to personal income tax (PIT) at the rate of 0.5
5%
– The taxable royalty shall be the total contractual royalty minus 1 VND10 million,
regardless of the number of instalment payments.

VND millions Total

taxable royalty (USD80,000*23.5) – 10 1,870 1 million)
Tax (1,870 million*5%) 93.5 0.5

10
 4. Mr Phuc Tran
(a) Taxable and non-taxable employment income for the year 2020
Taxable in Non- Taxable
2020 taxable in in the
VND 2020 future
million VND VND
million million
Annual salary (650*12) 7,800 0.5
Two monthly additional salaries (650*2) 1,300 0.5
Incentive bonus (100,000 shares*0.048) 4,800 1
Car rental (20*12) 240 0.5
Medical insurance for family (240*5/6) 200 1
Medical insurance for himself (240/6) 40 1
Golf membership 200 0.5
Share options (50,000 shares*(0.045 – 1,750 1.5
0.010))
School fee for daughter 195 0.5
School fee for son (180* 95%)) 1
Total employment income 280 4,800 8

Tutorial notes:
1. A non-accumulative medical insurance fee for an employee is non-taxable. The
medical insurance fee for family members is taxable.
2. Tuition fees for children in Vietnam is a taxable benefit for Vietnamese
employees, even if it is waived and paid directly to the school by the employer. The value of
the benefit is the normal market fee, which in this case includes the 5% discount for the
second child, as this granted generally by the school to everyone (not only to employees).

(b) Personal income tax (PIT) liability on employment income for the year 2020
VND
million
Monthly taxable income (11,616/12 months) 968 0.5
Self-deduction (11.0) 0.5
Dependant deduction (4.4 million*2 children) (8.8) 1
Compulsory insurance [29.8 million*(8% + 1.5% + 1%)] (3.129) 1
Monthly assessable income 945.071
Annual tax liability [(945.071*35% – 9.85) = 320.92*12 months] 3,851.101
4
Tutorial note: The purchase cost of the shares when exercising the options deducted
from Mr Phuc Tran’s salary is not deductible for PIT purposes because it is his individual
investment.

(c) Treatments of investment income

Incentive bonus shares
If Phuc chooses to receive the shares, the investment income (capital gain) from
the 1 sale of the shares will become taxable when they are sold, and PIT will be
payable at the rate of 0.1% of the sales proceeds.
Tutorial note: If Phuc selects to receive cash, no investment income will arise
Shares purchased via the share option
The investment income (capital gain) from the sale of the shares will become
taxable 1 when they are sold on 31 December 2020, and PIT will again be payable at
the rate of 0·1% of the sales proceeds.
Dividends 1
Dividends are subject to PIT at the rate of 5% at the time of their receipt. 3
15

5. Mr Thien Nguyen
(a) Personal income tax (PIT) liability on employment income for 2020
From BOFF Co VND From KNB Co
million VND million
Annual salary (65*12)/(15*12) 780 180 1
Training allowance 108 360 1
Total taxable employment income 888 540
Monthly taxable income (888/12 months) 74 0.5
(540/12 months) 45 0.5
Self-deduction (VND11 million) (11.0) 0 0.5
Dependent deduction (VND4.4 million*1 son) (4.4) 0 0.5
Compulsory insurance [VND29.8 million*(8% (3.129) 0 0.5
+ 1.5% +1%)]
Monthly assessable income 55.47 45
Monthly grossed-up income [(55.47 – 70.89 0.5
5.85)/0.7] 0.5
[45–3.25)/0.75]
Total monthly assessable income (70.89 + 0.5
55.67)
Annual tax liability [(126.56*35% – 9.85)*12 months] 413.34 1

7
(b) Sale of apartment
According to Article 12 of Circular 111/2013 as amended by Circular 92/2015:
Where the contract provides that the buyer is responsible for declaring and paying 1.5
the tax on behalf of the seller, the taxing time is the time when the registration
procedures for the change in ownership are carried out.
Accordingly, the time when Mr Thien Nguyen would be subject to tax would be 20 0.5
December 2020.
Mr Thien Nguyen’s PIT liability on the sale is VND110 million (5,500 million* 2%) 1

Tutorial note: The purchase price is not relevant because PIT on a real estate transfer is
calculated at 2% of sales proceeds.

6. Mr Geogre Logan
(a) Residency status
Tax year 2019 2020
Basis period 1 August 2019 to 31 1 January to 31 1
July 2020 December 2020

Mr Geogre is tax resident in Vietnam in both the tax years 2019 and 2020 1
because he is present in Vietnam for more than 183 days in the basis
period for each of those years as follows:
1 August 2019 to 31 July 2020 (82 + 123) 205 days 0.5
1 January to 31 December 2020 (123 + 138) 261 days 0.5
(b) Personal income tax (PIT) liability
Tax year 2019 (1 August 2019 to
31 July 2020)
Monthly income:
Salary paid by PGS Co (gross (USD21,000*23,500) 493.5 1
amount)
Allowances from PGSVN Co 45.0 0.5
Housing benefits: lower of
- Actual (USD2,400*23,500) = 56.4 0.5
- 15% of income (493.5 + 45)*15% = 80.78 0.5
0.5
Total monthly taxable income
Deduction (self) (11.0) 0.5
Monthly assessable income 583.9
Monthly tax (583.9*35% – 9.85) 194.52 0.5
Annual PIT liability (194.52*12) 2,334.24 0.5

Tax year 2020 (1 January

2020 to 31 December 2020)
Annual income:
Salary paid by PGS Co (487.2*12) 5,846.4 0.5
Allowances form PGSVN Co (45*12) 540.0 0.5
Bonus (USD30,000*23,500) 705 0.5
Housing benefits: lower of
- Actual (USD2,400*23,500)*12 = 0.5
676.8
- 15% income (5,846.4+540+705)*15% = 0.5
1063.7
676.8 0.5
Total taxable income 7,768.2
Self-deduction (11*12) (132) 0.5
Dependant deduction (4.4*4) (17.6) 1
Annual assessable income
Monthly assessable income (7,618.6/12) 0.5
Monthly tax (634.88* 35% – 9.85) 212.36 0.5
Annual PIT liability (212.36*12) 2,548.32 0.5
Tax applicable to the overlap (212.36*7 months) 1,486.52 1
period (1 January to 31 July
2020)
Remaining PIT payable for the (2,548.32 – 1,486.52) 1,061.8 0.5
2020 tax year
12
15

Tutorial notes:
1. The deduction of tax in New Zealand has no implications to the tax treatment in
Vietnam (however, he may be able to claim credit for the tax paid in Vietnam in his home
country if this is allowed under the New Zealand tax regulations).
2. Thien Nam was adopted on 20 September, and a full month’s dependant
deduction is available for that month (i.e. a total four months in 2020).

7. Minh Le
(a) Tax treatments of prize
According to Article 2.2.e.1.7 of Circular 111/2013 as amended by Circular 92/2015:
A 1 prize in cash accompanied by a certificate of reward granted by the Government
shall be free of personal income tax (PIT).
The prizes in kind can be treated as prizes/gifts. According to Article 2.10 of the 1
Circular 111 above: prizes/gifts shall be taxable if these are securities,
capital contribution, real estate or registrable assets such as a car.
Accordingly, the car would be subject to PIT (at 10% of the excess over VND10 1
million) while the free-of-charge flights would be non-taxable.
3
Tutorial note: Candidates who had other valid arguments regarding the tax treatment of
the fights received full credit.

(b) Personal income tax (PIT) liability on employment income for 2020
 VND million

Salary (75*12) 900

Performance incentive (75*3) 225

Allowances (18*3) 54

Sign-on payment 3,201

Total taxable employment income

Monthly taxable income (4,380/12 months)

Self-deduction (VND11 million) (11.0)

Dependent deduction (VND4.4 million*2 parents) (8.8)

Compulsory insurance [VND29.8 million*(8% + 1.5% + 1%)] (3.1)

Monthly assessable income

Monthly tax liability (342.1*35% – 9.85)

Annual employment tax liability [109.9*12 months] 1318.8

Prize from car (900 million – 10 million)*10% 89

Total tax liabilities from all sources

Tutorial note: Sign-on payment: since the tax authorities instructed this payment
should be treated as employment income, the income would be taxed at the time of payment
from employer to employee according to Article 8.2 of Circular 111/2013 as amended by
Circular 92/2015 (and as confirmed in Official Letter 2151/TCT-TNCN issued by the General
Department of Taxation on 10 June 2014 – candidates are not required to know this
ruling). Accordingly, despite the fact that the payment is for two years’ term, it would be taxed
in the year of payment by employer.
 8. Mr Nobi Keita
(a) Taxable and non-taxable income for the year 2020
Non – taxable Taxabl
income e
VND incom
million e
VND
million
Annual income
Annual salary (USD35,000*23.5*12 months) 9,870 0.
5
Fixed bonus (USD35,000*23.5) 822.5 0.
5
Performance bonus (USD96,000*23.5) – to be taxable next year 2,256 1

Air fares:
– For Nobi to Japan (1,500*23.5) 35.25 35.25 1
– For family to Japan (1,500*3 persons*2 trips*23.5) 211.5 1
– For Nobi to visit Australia (2,500*23.5) 58.75 1
– Family to visit Australia (not borne by company) 0 0 0.
5
Tuition fees:
– Nobijaiko (USD15,000*23.5) 352.5 0.
5
– Nobisuke (USD15,000*50%* 23.5) 176.25 1
Car
– From home to work and vice versa (36*40%*12 months) 172.8 1

– Family usage (36*60%*12 months) 259.2 1

Relocation allowance (10,000*23.5) 235 1
3,310.75 11,174
.25
10

(b) Personal income tax (PIT) liability for the year 2020
VND million VND
million
Monthly taxable income A 931.19 0.
(11,174.25/12 months) 5
– 15% of gross income (931.19*15%) B 139.7 0.
5
– Actual housing cost C 49.35 0.
(USD2,100*23.5) 5
Monthly taxable housing D = min(B,C)
Total taxable income E=A+D
Deductions
– Self deduction F (11) 0.5
– Family deduction (4.4*2 persons) G (8.8) 1
– SHUI (29.8*10.5%) H (3.1) 0.5
Monthly assessable income I
Monthly tax liability K= 325.32 1
(957.64*0.35
– 9.85)
Annual tax liability L = K*12 3,903.89 0.5

15
 9. Mr Phu Phan
(a) Taxable income and tax liability for the calendar year 2020
USD VND
million
Annual salary (USD30,000*9 months) 270,000 6,345.0 1
Fixed bonus (USD60,000*9/12 months) 45,000 1,057.5 1
Variable bonus – taxable next year 0 0 0.5
Executive well-being fitness membership (USD120,000/18*9) 60,000 1,410.0 1
House allowance in cash (USD6,000*9) 54,000 1,269.0 1
– Kindergarten fee (not from employer) 0 0 0.5
Annual taxable income
Monthly taxable income 0.5
Self-deduction (11) 0.5
Dependent relief (2*3.6) 0.5
Monthly assessable income 0.5
Monthly tax liability (1,100.4*35% – 9.85) 375.3 0.5
Annual tax liability (375.3*9 months) 3,377.6 0.5

(b) Possible tax treatments of licence fee

The licence fee which may be received by Phuc during his presence in Vietnam would 0.5
be subject to personal income tax (PIT) in Vietnam in his hands.
By nature and as it is developed using Phuc ’s own personal time, the licence fee 1
should be viewed as a form of franchise fees/royalty fees which would be subject to
tax at 5% for the amount in excess of VND10 million
However, since the licence fee is paid by Phuc ’s employer, there would be a risk that tax 0.5
authorities in Vietnam may view this as part of employment income (subject to a much
higher tax rate of 35%).

10. ZLC Co
(a) Personal income tax (PIT) liability on employment income for 2020
Name Salary Allowance Bonus Taxable Taxable
overtime uniform
Anh 480 150 200 50 8
Thao 500 80 100 90 10
Chi 156 84 18 5 1
Giang 280 90 68 0 0
(1.) (2.)

Name Monthly taxable Self and SHUI Assessable Monthly

income dependant income tax

Anh 74 19.8 3.1 51.1 9.5

Thao 65 24.2 3.1 37.7 6.2
Chi 22 15.4 2.24 4.36 0.22
Giang 36.5 19.8 3.1 13.6 1.3
(3.) (4.) (5.)

Notes:
1. Overtime: only 50% is taxable.
2. Uniform: only the excess over VND5 million is taxable.
3. Personal deductions: self-relief VND11 million plus dependant relief VND4.4 million per
dependant.
4. SHUI (social, health, unemployment insurance): calculated at 10.5% (8% + 1.5% + 1%) on the
lower of:
– (salary + allowance + overtime + uniform)/12, or
– VND29.8 million
Note: The calculation for Chi is based on the actual remuneration because it is lower
than
VND29.8 million per month.
5. Tax calculation:
VND
million
– Anh: (51.1*25% – 3.25) 9.5
– Thao: (37.7*25% – 3.25) 6.2
– Chi: (4.36*5%) 0.22
– Giang: (13.6*15% – 0.75) 1.3
 (b) Tax treatment of social, health and unemployment insurance (SHUI) contributions
According to the regulations, the actual compulsory SHUI 1
contributions paid by employees are deducted from taxable income in
determining assessable income of an individual for personal income tax
(PIT) purposes.
The compulsory SHUI contributions paid by employees are capped
1 based on a salary of 20 times the minimum salary. The current cap
in 2020 is VND29.8 million.
2
15
 11. Mr Quach Pham
(a) Taxable income and tax liability for the calendar year 2020
VND
million
Employment income
Annual salary (VND40 million * 12 months) 480.0 0.5
Bonus (VND40 million * 2 months) 80.0 0.5
Gross website design fee 70.0 0.5
Gross training fee (VND324 million/(1 – 10%) 360.0 1.5
Annual taxable income 990.0
Monthly taxable income (990/12 months) 82.5 0.5
Self-deduction (11.0) 0.5
Dependent relief (2 * 4.4) (8.8) 0.5
SHUI (29.8 * 10.5%) (3.1) 0.5
Monthly assessable income 59.6 0.5
Monthly tax liability (59.6 * 30% – 5.85) 12.03 0.5
Annual tax liability on employment income (12.03 * 12 months) 144.36 0.5
Investment income and capital transfer income
Tax on dividend (200 million * 5%) 10 0.5
Tax on sales of shares (1,500 – 100) * 20% 280 1
8
Tutorial note: The website design fee and training fee must be combined into
employment income according to Article 26.2.c.4 of Circular 111/2013 as amended by Circular
119/2014, 151/2014 and 92/2015 – individual having employment income with one
organisation for more than three months and earning ad-hoc income from other sources
where personal income tax (PIT) was withheld at source at 10%: if the monthly average
income in the year is less than VND10 million, there is no need for tax finalisation. Where the
income is higher than VND10 million, tax finalisation to combine the income is required.

(b) Income from international online channel

According to Circular 92/2015, Article 7, an individual receiving
1 income from offshore organisations is subject to PIT where the total
amount is in excess of VND100 million a year.
Upon each receipt of income, the individual is required to declare tax
1 directly (at deemed rates of 5% value added tax (VAT) and 2% PIT on
income) to the local (district level) tax authorities where he/she resides.
 2
10
12. Ms Yen Nguyen
(a) Personal income tax (PIT) liability for 2020
From VS From
JSC WSU Co VND
VND million
million
Annual salary (50 * 4)/(40 * 8) 200 320 2
Petrol allowance (15 * 4) 60 0 1
Tet bonus 100 0 0.5
13th month salary (40 * 8/12) 1
Total taxable employment income
Monthly taxable income (360/4 months) 90.0 0.5
(346.7/8 months) 43.34 0.5
Self-deduction (VND9 million) (11.0) (11.0) 0.5
Dependent deduction (VND3.6 million * 2 children) (8.8) (8.8) 0.5
Compulsory insurance [VND29.8 million * (8% + 1.5% + 1%)] (3.1) 0.5
Monthly assessable income 67.1
Monthly grossed-up income [(67.1 – 9.85)/0.65] 88.08 1
[20.44 – 1.65)/0.8] 1
Total gross income from each source (88.08 * 4) | (23.49* 8) 352.32 1
Total monthly gross assessable income (352.32 + 187.92/12 0.5
Monthly tax liability (45.02 * 25% – 3.25) 1
Annual tax liabilities (8 * 12) 96 0.5

Tutorial note: Self and other deductions can be calculated for both sources of
employment income which Ms Yen Nguyen held in the year, and she is eligible to claim
deduction for the whole 12 months.

(b) PIT implications of selling shares

As the shares which Ms Yen Nguyen was awarded relate to her employment with
VS 1 JSC, the awards are subject to PIT. However, the calculation of the tax liability is
deferred until she sells the shares.
 Assuming she sells the shares in 2021, she will be subject to PIT on the share
awards, 1 based on the amount of the expense detailed in VS JSC’s records at the time
of award, at progressive rates of tax as employment income of 2021.
In addition, she is also subject to capital gains tax on selling the shares, at 0.1% of
1 selling price
(VND3,500 million x 0.1% = VND3.5 million).
3
15
 13. Mr Ngoc Tran
a) Investment income VND
million
Tax on transfer of securities 1,500.00 1
Gross proceeds from sale of actual share award (30,000 * 50,000 shares) 0.5
Personal income tax (PIT) liability (1,500 * 0.1%) (1.50) 0.5

Net proceeds 1,498.50

Tax on investment income (dividend)
Number of shares purchased by exercising options 1
(1,498.5 million/10,000) = 149,850 shares

Dividends received (100,000 awarded – 50,000 sold + 149,850 exercised) = 999.25 1

199,850 shares * VND5,000/share
PIT on cash dividend (999.25 * 5%) 49.96 1
5
Tutorial notes:
(1) The cashing share awards are employment income.
(2) The bonus shares received in March are not taxable in 2020 (the tax is deferred to the time
of sale).

(b) Income from employment

Amount
(million)
Salary (100 million * 12 months) 1,200.0 0.5
Employment income: upon sale of actual share award (50,000 1,250.0 1
shares * 25,000)
Cashing award ((28,000 – 25,000) * 500,000 shares) 1,500.0 1
Annual taxable income 3,950.0
Self-deduction (11* 12) (132.0) 0.5
Insurance deduction (29.8 * 10.5% * 12) (37.5) 0.5
Annual assessable income 3,780.5
Monthly assessable income (3,780.5/12 months) 315.0 0.5
Annual tax liability ((315 * 35% – 9.85) * 12 months) 1,204.8 1
5
10
 14. Mr Bert Walsh
(a) Taxable income, non-taxable income and non-income items in 2020
Taxable Income Nonincome
income not items
USD taxable USD
USD
Annual salary (25,000 * 9 months) 225,000 0.5
Incentives (25,000 * 2/12 * 9) 37,500 1
Incentives received in 2020 50,000 1
Tuition fee (1,500 + 1,000) * 9 months 22,500 1
Bus and meals (400 * 2 * 9 months) 7,200 1
Air fares borne by LDT for Bert and Jane in excess 10,500 1
of non-taxable fare (3,500 * 3 trips)
Air fare for Bert (3,500 * 1 trip) 3,500 1
Air fare from Bert’s income (3,500 * 4 trips) 14,000 1
Medical insurance (1,000 * 9 months * 3) 27,000 1
Medical insurance for Bert – exempt (1,000 * 9 9,000 1
months)
Utilities, etc received in cash (2,000 * 9) 0.5
Total taxable employment income 62,500 21,200
10

(b) Personal income tax (PIT) liability in 2020

USD USD VND
million
Taxable housing
– 15% of gross income (340,500 * 15%) 51,075 0.5
– Actual housing (600,000/50 years/12 * 9 months) 9,000 1
Taxable housing (lower of: 51,075 and 9,000) 9,000
Taxable income from (a) 340,500
Total taxable income (340,500 + 9,000) 349,500
Taxable income in VND(349,500 * 23,500) 8,213.3 0.5
Self-deduction (VND11 million * 9 months) (99.0) 0.5
Dependent deduction (VND4.4 million * 2 grand (79.2) 1
children * 9 months)
Annual assessable income
Monthly assessable income (8,035.1/9) 0.5
Monthly tax liability (892.8 * 35% – 9.85) 302.6 0.5 Annual tax liability
(302.6 * 9 months) 2,723.63 0.5

15
Tutorial notes:
(1) The tuition fees for Bert’s grandchildren are taxable in full (the exemption only
applies to children). (2) Bert’s wife is not a dependant because she is less than 55 years old.
 15. Mr Hung Tran
(a) Tax treatment of voluntary insurance payments
For non-accumulated voluntary insurance fees paid by an employer, such as
1 medical insurance, the fee is not taxable in the hands of the employee,
even if the insurer is a foreign company allowed to operate in Vietnam.
For accumulated voluntary life insurance fees paid by an employer: –
Where the insurer is a company incorporated in Vietnam: the insurer is 1
required to withhold personal income tax (PIT) at the rate of 10% of the
accumulated fee accrued to the employee at the time of maturity of the
insurance policy.
– Where the insurer is a foreign company (not incorporated in Vietnam): the 1
employer is required to withhold PIT at the rate of 10% of the fee at the time of
contribution.
3

(b) Taxable and non-taxable income for the year 2020

Taxable Non-
income taxable
VND income
million VND
million
Salary (400 * 9 months) 3,600 0.5
Bonus (400 * (3 + 9/12)) 1,500 1
Relocation in cash (non-taxable for Vietnamese under 200 1
Circular 92/2015)
Medical insurance 20 0.5
Life insurance (taxable but not in 2020) 100 1
Car for transportation (15 * 9 months) 135 1
Uniform in cash (15 – 5 non-taxable cap) 10 5 1
Return air fares (fully taxable as US is not his home 40 1
country)
Part C: Corporate Income Tax Section A
Part C: Multiple Choice Question: Answer
1. B
VND2,127 million (780/(1 + 10%)/3*9 months)
The monthly rental expenses net of value added tax (VAT) would be 780/(1 + 10%)/3
months = 236.36 million per month. Total rent period in the year would be nine months (not
12 months).

2. A
VND84,000 million
RENT RECEIVABLE
VND million VND million
b/d arrears 3,800 b/d advances 2,400
Deductible expense 84,000 Cash received 83,700
c/d advances 3,000 c/d arrears 4,700
90,800 90,800

3. A
VND11,800 million ((150,000 million – (130,000 million*70%)*20%)
Where the shares transferred were purchased (not the original capital contribution),
the purchase price shall be the value of the shares purchased based on share purchase
agreement (Article 14.2 of Circular 78/2014 as amended by Circular 96/2015). Note that
VND150,000 million were the proceeds from sales of 70% of the shares only.

4. C
VND7,000 million [(200,000 – 130,000)/10 years]
According to Article 7.14 of Circular 78/2014 as amended by Circulars 151/2014 and
96/2015, the revaluation gain from capital contribution in the form of non-amortisable
(indefinite term) land use right (LUR) shall be allocated up to ten years to other income.

5. B
 VND3,450 million ((9,000 – (1,500 persons * 5 million/person)) + ((15,500 –
9,000)*30%)) According to Article 6.2.6 of Circular 78/2014, as amended by Circular
96/2015, uniform expenses in cash can be deductible up to VND5 million/person/year, while
uniform expenses in kind can be deductible in full subject to proper documents.

6. C
VND0 million
Accumulated Depreciation: 10,800 million/36 months = 300 million/month*13 months
from
January 2019 to February 2020 = 3,900 million
Gains = 6,900 million proceeds – (10,800 million – 3,900 million) = 0

7. A
VND4,594 million (USD11 million*(23,100 – 21,000)-130,000,000))*20%
Since EMS Co is a limited liability company, the corporate income tax rate would be
20% on taxable profit. As HSK Co’s (the target company) functional currency is in VND,
according to Article 14.2 of Circular 78/2014 as amended by Circular 96/2015, the sale price
must be converted into VND using the USD buying rate of the commercial bank. Accordingly,
the taxable profit would be the difference in exchange rate.

8. B
VND35,2 million [USD1,5 million*23,500*0.1%]
As PNJ JSC is listed, Tangwang Co’s sale of shares in PNJ JSC is subject to tax under the
foreign contractor tax (FCT) mechanism, not as a transfer of a capital contribution under the
corporate income tax (CIT) regulations. The rate of 0.1% of proceeds would be applied.

9. C
VND0 million
According to Article 6, point 2.10 of Circular 78/2014 as amended by Circular 96/2015,
payments to employees (including overtime) are fully deductible where employees return to
work before the end of the allowed maternity leave period as a result of work requirements.
In this case, Ms Hang Nguyen is treated as if she was working overtime during 1 July to 20
August when she should have been on maternity leave. Accordingly, no adjustment is
needed.
10. C
According to Article 6, point 2.9 of Circular 78/2014 as amended by Circular 96/2015.

11. B
According to Article 7, Circular 78/2014/TT-BTC

12. B
VND 330 million
The irrecoverable debt written off as an expense in 2018 was denied for tax purposes,
accordingly the receipt of VND400 million is non-taxable income (an adjustment is required
but it is a deduction, not an add-back). However, the debt collection fee of VND80 million
was paid in cash and thus is non-deductible. The net adjustment is therefore 70 – 400 =
330million.

13. B
According to Article 8, Circular 78/2014/TT-BTC

14. B
VND 690 million
(92 days * (VND 25,000 million * 0.03%))
The interest is counted from the day following the deadline for corporate income tax
(CIT) payment (i.e. from 3 April 2020), to the date of the decision on 3 July 2020, i.e. 92 days
(28 days in April + 31 days in May + 30 days in June + 3 days in July = 92 days).

15. A
Option 1
EXT Co CIT liability VND0 million
NJR Co CIT liability VND0 million
According to Article 7.22 of Circular 78/2014 as amended by Circular 96/2015, where
the premium from capital contribution belongs to the company, it is not taxable on the
recipient.
16. D
VND 2,600 million
(15,000-13,000) * 10% + (19,000 – 7,000) * 20%) = 2,600 According to Example 19 in
Article 18, point 9 of Circular 78/2014, losses from prior years which cannot be identified
with any specific activities must be offset against the activity which is entitled to the most
favourable incentives first. Also the loss must be offset consecutively, against the first
available profit. Accordingly, VND13,000 million losses must be offset against VND15,000
million from software development activity, and the remaining profits subject to 10%
corporate income tax (CIT). The loss from securities trading can be offset against the
hardware trading profit, with the residual amount subject to the standard CIT rate of 20%.

17. D
VND 155.6 million
(1,600 million cap (exclusive of VAT) for depreciable amount of car/6 years * 7/12
months)

18. D
The correct answer is VND3,900 million
According to Article 6, point 2.2(e) of Circular 78/2014 as amended by Circular
96/2015, where non-current assets used for seasonal production are temporarily unused for
less than nine months, the enterprise is allowed to depreciate the assets during idle time. In
2020, A was unused for seven months so can be depreciated over 12 months for CIT purposes
and B was unused for ten months so can be depreciated for only two months.
Monthly depreciation for each: 18,000/2 items of equipment/5 years/12 months =
150
Accumulated depreciation: [A = 150 * (6 + 12)] + B = [ 150* (6 + 2)] = 3,900

19. A
Option 1:
Taxable revenue VND0 million Deductible expenses VND 2,342 million
According to Article 5 and 6 Circular 78/2014 as amended by Circular 96/2015, there is
no requirement to recognise taxable revenue in respect of the purposes listed in this case.
There is also no restriction on deductibility of expenses for internal consumption.
Accordingly, the full expense (580 million + 412 million + 1,350 million) is deductible.
20. C
VND12,000 million ((4 million shares * 15,000 – 0) * 20%)
According to Article 8.6 of Circular 78/2014 as amended by Circular 96/2015, dividends
received by corporate shareholders from local companies shall be exempt from CIT (including
all forms of distribution such as bonus shares). Subsequent sales of bonus shares would be
subject to 20% CIT (historical costs of the bonus shares are zero)

21. D
VND5,400 million (13,500million/(3 * 2 + 4) parts * 4 parts paid to non-active
members) Non-active members’ salaries are non-deductible (Article 6, point 2.6(d) of
Circular 78/2014 as amended by Circular 96/2015).

22. B
The priciple is “Payment with each time of invoice is VND20 million or more must be
made by non-cash mode with proper supporting documents”

23.
24. A
VND0 billion
Collections in advance from customers for which costs are not determinable and 1%
provisional tax is paid are not taxable income in the year of collection – Article 17, point 1 of
Circular 78/2014/TT-BTC.

25. D
The buyers will be responsible for making a capital gains tax declaration since they are
local entities. According to point 2, Article 16 of Circular 151, Hoang Mai Emurus Co is not
required to file a corporate income tax (CIT) finalisation at the time of conversion when it is a
conversion from a limited liability company to a joint stock company

26. C
VND1000 million (5 billion * 20%)
 The net losses from incentives and other income of VND2 billion cannot be offset with
the gains from real estate.

27. A
VND200 million (800 million/4 years)
Only the original lease allocation per the lease period is allowed – point 2.16 Article 6
of Circular 78/2014.

28. C
According to Article 6, point 2.4 of Circular 78/2014/TT-BTC

29. C
4,200 * 4/6 = 2,800. The expenses for four out of six board members who are involved
in daily management would be deductible.

30. B
Issuance cost for raising equity capital

31. C
If the salary provision fund of the previous year is not used up in full by the 30/6 of the
following year, the company has to reduce the salary fund of the later by such amount

32. B
If a company have a loss of foreign income, it must keep the loss overseas, carry
forward and offset with the profit of foreign income in the following years

33. A
If an enterprise fails to satisfy any of the conditions for enjoying tax incentives in a tax
year, it is not entitled to tax incentives in that tax year and that year shall be counted in its
incentive enjoyment period

34. A
 According to the provisions of Point 2.6, Article 4 of the Finance Ministry's Circular No.
96/2015 / TT-BTC dated June 22, 2015 amending and supplementing Article 6 of the
Circular No. 78/2014 / TT-BTC, in principle The enterprise is included in deductible expenses
when determining taxable income for bonuses directly paid to employees if there are
sufficient invoices and documents and this bonus is specified. enjoy and benefit level in one
of the following documents: Labor contract; Collective labor agreement; Financial regulations
of the Company, Corporation, and Group; Bonus regulations are stipulated by the Chairman
of the Board of Directors, General Director, and Director according to the financial regulations
of the Company, Corporation.

35. D
Salary accrued but not yet paid by finalisation deadline

36. C
According to Article 3, Circular 78/2014/TT-BTC
37. A
According to Point a, Clause 2, Article 13, Circular 103/2014/TT-BTC, CIT rates (%)
applied to interest rate is 5%
Tax base = 5,000/(1 – 5%) = 5,263
CIT (withholding tax) = 5,263 x 5% = VND263 million

38. D
The program is registered then BMS does not requested to recognise revenue, and the
COS is deducted in full

39. D
Assessable income = 220,000 – 38,000 = 182,000
CIT = 182,000 x 20%

40. D
Directors' emoluments are a valid trading expense even where the directors are also
the shareholders. No adjustment is therefore required.
41. D
Repair costs – deductible expense, therefore no adjustment is therefore required.
Irrecoverable VAT is disallowable for CIT purpose

42. C
VND16,456 million
The stock write-down is specific and is allowable against trade profits. The interest on
overdue corporation tax is loss from a non trading relationship, not an allowable trading
expense.

43. B
VND900 million
The amount charged on the accruals basis is allowable as it is for a trading purpose. As
the accounting period is 6 months in length, the accrued interest is VND900 million
(VND20,000 million x 9% x 6/12).
The interest paid on late corporation tax is non deductible.

44. C
The loss on disposal is allowed as a trading expense.
Redundancy costs are not deductible expense. Add back is therefore required.

45. A
Only unrealised foreign exchange gain/loss of of account payble/loan is recogined for
tax purposes

46. B
A qualifying donation to charity is deducible expense therefore Decrease – as circular
96/2015/TT-BTC
Recovery of previously written off trade debts is recognised as other incom, therefore
Increase
47. B

48. C
According to Section 2.31, Article 4, Circular 95/2016 /TT-BTC,
When starting production and business activities, the enterprise has not generated
revenue but has incurred regular expenses to maintain its production and business activities
(not expenses for construction investment to if these expenses meet the prescribed
conditions, they will be included in deductible expenses when determining taxable income.
If the enterprise has loan intererest during the investment period, this expense will be
included in the investment value. In case in the period of capitalization of construction
investment, the enterprise incurs both loan interest expenses and deposit interests income,
they offset between the loan interest expenses and the deposit interest income, the
remaining difference, record a decrease in the investment value.

49. B
At Point b.2, Clause 1, Article 17 of Circular 78/2014 / TT-BTC of the Ministry of Finance
If an enterprise operates in many different industries, expenses must be separately
accounted for. In case the expenses of each activity cannot be separately accounted, the
general expenses shall be allocated according to the ratio of revenue from real estate activity
to the total revenue of the enterprise.

50. C
Fixed assets are buildings that are determined and monitored separately from the
value of land using rights. The time of depreciation for building and architectural objects shall
comply with the time frame specified in Circular No. 45/2013 / TT-BTC dated April 25, 2013 of
the Ministry of Finance.
Part C: Corporate Income Tax Section B
Part C: Constructed Response Question: Answer
1. Lam Son Ltd
(a) Deductible depreciation expense in fiscal year 2020 (year ended 30 November 2020)

Depreciation
VND million
Library and kindergarten (5,760/10*11/12) 528 1.5
Swimming pool (6,400/8*9/12) 600 1
Equipment and interior of the (2,000/4*9/12) 375 1
sports centre
(both are fully deductible)
Clean water pools and tanks (1,600/10*70%*7.5/12) 70 1.5
(only 70% allowed)
Finance leased equipment (1,200*5 years – 1000 500 2
interest)/5*6/12
7
Tutorial note: According to Article 6.2.2 of Circular 78/2014 as revised by Circular
96/2015, all items are deductible except the clean water used by the residents living nearby.

(b) Assets received as settlement of a debt

Depreciation VND
Explanation
million
Yacht No depreciation expense is deductible as the 0 1
yacht is not used for the purposes of Lam
Son Ltd’s business (according to Article
6.2.2(e) of Circular 78/2014 as revised by
Circular 96/2015).
Car A depreciation expense is deductible but the 133.33 2
capital cost is capped at VND1,600 million
(1,600/8*8/12)
3
10
 2. HDG JSC
Corporate income tax (CIT) for the year ended 31 December 2020

Item VND Adjustment VND

no. million million
1a Job A (finalised in 2020)
Total profits for the job (5,000 1,875 1
revenue*60/160)
Less: profits taxable in 2019 tax return (750) 1
(2,000*60/160)
Remaining profits to be taxed in 2020 1,125
Profits recognised in I/S of 2020 1,350 1
(3,600*60/160)
Adjustment: reduce taxable profits (225) 0.5
(1,125 – 1,350)
1b Job B (in progress in 2020)
Profits taxable in 2020 (3,600*60/160) 1,350 1
Profits recognised in I/S of 2020 525 1
(1,400*60/160)
Adjustment: increase taxable profits 825 0.5
(1,350 – 525)
1c Job C (not started in 2020 but taxable in
2020)
Profits taxable in 2020 (3,000*60/160) 1,125 1
Profits recognised in I/S of 2020 0 0.5
Adjustment: increase taxable profits 1,125 0.5
(1,125 – 0)
2 Non-business related expenses
Add back: Non-welfare expenses (1,800 – 1,000 1
800)
Add back: welfare expenses not 160 1
supported by documents (800*20%)
Welfare expenses in cash (as not 0 1.5
exceeding VND20 million) and remaining
welfare expenses
3 Recovery of bad debts
Taxable income in 2020 (the recovery is not 0 1
taxable in 2020 because the write-off was
non-deductible in 2019)
Income recognised in 2020 I/S 1,200 1
Adjustment: reduce taxable profits in (1,200) 0.5
2020 (0 – 1,200)
Total adjustments 1,685
Profit per financial statements 120,000 0.5
Total taxable income 121,685
Tax at 20% 24,337 0.5
15
 3 FINANT Ltd
(a) Corporate income tax (CIT) for the year ended 31 December 2019
Tax rate Income from Income from Other income
original expansion
investment
7.5% 20% 20%
VND million VND million VND million
Historic value of fixed 200,000 100,000 1
assets (300 – 100)
Assets allocation 67% 33% 0.5
Operating taxable 68,000 0.5
income (148,000 –
80,000)
Allocation of taxable 45,560 22,440 1
income between (68*67) (68*33%)
original investment
and expansion
Other income 80,000 0.5
Tax liabilities 3,417 4,488 16,000 1.5
(45,560*7.5%) (22,440*20%) (80,000*20%)
5

(b) CIT for the year ended 31 December 2020

VND
million
Accounting profits 240,000
Add back: accrued wages and allowances not paid before 18,000 1
the CIT finalization deadline (the 17% provision does not
apply)
Add back: expenses not supported by documents (6,600 – 4,300 1
2,300)
Add back: depreciation for eight months in 2020 when 38,400 1.5
machinery was not in use (288,000/5 years*8/12) –
cessation for maintenance over 12 months
Add back: uniforms in cash in excess of VND5 million per 180 1.5
person (780 – 120*5)
Deduct: profit share from BCC (exempt in the same (40,000) 0.5
manner as dividends)
Total taxable income
CIT at 20%

(c) Deductibility of expenses

According to Article 6 of Circular 78/2014, as amended by Circulars
96/2015 and 130/2016, a company is allowed to deduct expenses which
satisfy the following conditions:
– being actually incurred in relation to the business operations of the 0.5
company;
– being supported by proper documents (e.g. invoices) according to 0.5
prevailing regulations; and
– for invoices over VND20 million (inclusive of value added tax 1
(VAT)), payment is made via a bank and evidence of this is available
The deductibility position of the IT support services expenses charged
to FINANT Ltd by the headquarter company would be as follows:
– The charge for expenses incurred at the specific service request of 1
FINANT Ltd would likely be deductible, if the three conditions (as set
out above) are satisfied, as these are actually services incurred in
relation to the business operations of FINANT Ltd
– The lump sum charge would likely be non-deductible because it 1
would appear to be an allocation of the headquarter company
management costs which may be deemed as not incurred in relation to
the business operations of FINANT Ltd, and there would be no
supporting documents regarding the validity of such charges (e.g. the
allocation based on the judgement of the headquarter company would
not be a valid justification for deductibility).

Tutorial note: Other reasonable assessments of the deductibility would also be

acceptable. 4 WEBOOK JSC
(a) Deductibility of expenses
According to Article 6, point 2.4 of Circular 78/2014, as amended by
Circulars 96/2015 and 130/2016, the following principles apply to the
deductibility of the cost of purchases from business individuals with
revenue below VND100 million per year for tax purposes:
– The buyer is required to prepare the list of purchases according to Form 1 01/TNDN
(signed by an authorised person).
– The expenses are not required to be supported with documents in the 1
case of non-cash payments (in other words, for payment-via-a-bank,
evidence is NOT required).
– If the tax authorities view that the price in the list is higher than the 1 market
price, then the tax authorities can re-calculate the deductible expenses based on such
market price.
3

(b) Corporate income tax (CIT) adjustments for the year ended 31 December 2020
Item (deductible)
Add back: payment to angel
investor (non-deductible)
1. Payments to freelance 5. Donations
lecturers No adjustment: donations to
Add back: cash payments to schools (deductible) Adjustment
individual lecturers with revenue in VND
excess of VND100 million (65%*VND700 million
million)
2. Free of charge courses for 455 1
employees Add back: market price of
free-of charge courses offered to
employees
Deduct: work-related course costs 220 1
(80%*VND220 million)
3. Investor negotiation and (176) 1
share issue costs Add back:
negotiation and share issue costs 90 1
(nondeductible)
4. Allowance payments to
shareholders 0 0.5
No adjustment: payment to
founding shareholders
150 1 0 0.5

Add back: donation to private fund (non-deductible) 80 1

7 10
Tutorial notes:
1. Free-of-charge goods/services to employees are taxable at market price.
2. Training expenses to improve employees’ skills for work are deductible (Article 6, point
2.30 of Circular 78/2014 as amended by Circular 96/2015).
3. Allowances to non-participating shareholders, such as an angel investor not involved in
the day-to-day management of the company, are not deductible.
 5 INTREX Co
(a) Principles for determining selling price and historical costs
(1) Foreign currency is the functional currency
The selling price is the total proceeds in the foreign currency. 1
The historical costs can be determined in the foreign currency, based on the 1
original capital contribution or contractual purchase price.
(2) VND is the functional currency
The selling price is the amount in foreign currency converted into VND using 1
the commercial bank’s buying exchange rate at the time of transfer.
For the original capital contribution, the historical cost is determined based 1.5
on the value in the accounting books as certified by the parties or specified
in the audited financial statements.
For the purchased capital, the historical cost is determined based on the1
purchase price.
In each case, the amount should be converted into VND using the exchange 0.5
rate at the time of contribution or purchase.
6

(b) Corporate income tax (CIT) liability on the transfer of the INTREX-TCL Ltd capital
contribution
VND
million
Selling price
Sales proceeds (USD8 million*23,100 (buying exchange 184,800 1.5
rate))
Historical costs
Original in USD converted into VND at VND 18,000 (USD15 (81,000) 1.5
million*30%*18,000)
Transfer expenses
Taxable capital gain
Tax at 20%

(2) In October 2020, INTREX Co sold 60% of the total shares of EVG JSC (equivalent to
80% of its total shareholding) to BIT Co, a foreign investor, for VND180 billion. EVG JSC was
established in 2018 as a joint stock company with a share capital of VND150 billion, of which
INTREX Co contributed 45% at par value. In January 2020, INTREX Co purchased an
additional 30% of the shares in EVG JSC, for VND90 billion. BIT Co settled VND50 billion of
the purchase price in October 2020, and the remaining VND100 billion in March 2021,
together with late payment interest of VND6 billion.

(c) CIT liability on the transfer of EVG JSC shares

VND
million
Selling price
Sales proceeds 180,000 0.5
Late payment interest 1
0,000
Historical costs (first-in-first-out (FIFO) basis)
Original contribution (VND150,000 million*45%) (67,500) 1
Remaining 15% from additional purchases (VND90,000 (45,000) 1.5
million*15%/30%)
Transfer expenses 0.5
Taxable capital gain
Tax at 20% 13,470 0.5

15

Tutorial notes:
1. The sales proceeds are the whole of the selling price under the contract,
regardless of the payment schedule. However, interest for late payment should not be
included in the taxable sales proceeds for capital gains tax purposes (Article 14.2 of Circular
78/2014).
2. Under the FIFO mechanism, the 60% of the shares sold consist of: the 45%
original contribution and 15% from the additional purchase in January 2020.
 6 Livest Co
(a) Loss carry forward principles
According to Article 9 of Circular 78/2014 as amended by Circular
96/2015:
– The enterprise is required to carry forward the tax losses FULLY and
1 CONSECUTIVELY to offset against taxable income in subsequent years.
– The loss can be carried forward up to five years from the year 1
following the loss-making year.
2
(b) Tax incentives for 2018–2019
According to the corporate income tax (CIT) regulations from 2014 to
date:
– The tax holiday (exemption, reduction) period shall commence from
1.5 the first year of taxable income.
Where the company makes a loss in the first three years, the tax holiday
commences from the fourth year of revenue generation
– For Livest Co, the tax exemption period started from 2017 (fourth 1
year of revenue generation). 2018 would be the second year of
exemption.
– 2019 is the first year of 50% reduction. 0.5

(c) Tax loss carry forward to 2021

Years Revised tax Latest 2018 2019 2020 Remaining losses year to
2021
Income 16,000 28,000 45,000
2014 (70,000 – 2019 (16,000) (28,000) 1.5
12,000) =
(58,000)
2015 (40,000 – 2020 (28,000) 1
12,000) =
(28,000)
2016 (30,000 – 2021 (17,000) (3,000) 1.5
10,000) =
(20,000)
2017 (10,000 – 2,000) 2022 (8,000) 1
= (8,000)
Total loss carry (11,000)
forward to 2021
5
10
 7. Insuranio Co
Item VND VND Adjustment
million million VND
million
Profit before tax as per draft financial statements 80,000
1 Depreciation
1 Machine value 96,000
Original depreciation per year (96/8 years) 12,000 0.5
Total depreciation from April 2018 – September 2020 (30,000) 1
(12*2.5 years)
Residual value before change 66,000 0.5
New depreciation per year (66/4 years)
Additional allowable depreciation per year due to 0.5
change in useful life
Deduct: [4,500/12 months*3 months from October– (1,125) 1
December 2020]
2 Rent
Add back: 2 months deposit (not an expense) 200 1
(100*2 months)
Rent payment (no adjustment as correct) 0 0.5
Individual tax on rent (no adjustment as being clearly 0 1
provided in contract) (1)
200
3 Provisions
Add back: provision in 2019 not fully utilised within 2,000 1.5
first six months of 2020
Provision in 2020
Salary funds of 2019 (8,500/17%) 50,000 1
Salary funds of 2020 (50,000*1.5) 75,000 1
Deduct: allowable provision in 2020 (75,000*17%) (12,750) 1
4 Pension
Total monthly salary funds for 2020 (75,000/12) 6,250 0.5
Number of employees (6,250/6.25 million per 1,000 1
employee) persons
Maximum deductible pension expense (12,000) 1
(1,000 persons*1 mil/month*12 months)
Total amount actually paid 16,000
 Add back: non-deductible pension 4,000 1
Total taxable income 72,325 0.5
Tax (20%) 14,465 0.5

Tutorial notes:
(1) Individual tax on rent: if the contract provides that the company will bear
individual taxes, the individual taxes would be deductible expenses (Article 6.2.5 of Circular
78/2014 as amended by 96/2015).
(2) According to the same Circular, Article 6.2.5, if the company does not utilise the
provision within six months from the year end, the company is required to add back the
difference in non-deductible expenses of the next year.
 8. Fances Co
(a) Treatment of investment income
According to Article 7 point 21, and Article 8 point 6 of Circular 78/2014 as
amended by Circular 96/2015:
1. Investment income received from local business operations BEFORE
1 corporate income tax (CIT) is treated as other income (and is subject to
tax at the normal tax rate).
2. Investment income received from local business operations AFTER
CIT 1 has been withheld is exempt from CIT.
3. Income AFTER CIT from business operations which are entitled to
1 incentives is also exempt from CIT in the hands of investors if the
operators have already declared and, where relevant, paid tax.
3
(b) Tax exempt income
Unit: VND million
Project Profits AFTER tax Other income Total net Fancest Fances
from main operations after tax income Co’s Co’s tax
(a) (b) after tax shares exempt
(c) = a + (d) income
b (e) = c*d

Binh An 1,600,000 – 100,000 - 1,560,000 70% 1,092,000 2.5

(1,600,000*50%*15%) (100,000*20%)
= 1,480,000 = 80,000
Hoa Sen 900,000 55,000 – 944,000 60% 566,400 1.5
(55,000*20%)
= 44,000
Dai 970,000 – 70,000 – 832,000 40% 332,800 1.5
Duong (970,000*20%) (70,000*20%)
= 776,000 = 56,000
Listed 200,000 200,000 0.5
companies
Total 2,191,200
6

(c) Tax liability on non-exempt investment income

 (80,000 million – 65,000 million)*20% = VND3,000 million

9. SANIC Co
Item Adjustment
VND
million
Profits before tax 26,800
Add 2020 depreciation for machine unused for over 12 1,800 W1
months – recorded in 2020 accounting profits (W1)
Deduct Gain on disposal recorded in 2018 accounting profits (350) W1
(W1)
Deduct Loss on disposal for tax purposes (1,900) W1
Depreciation of employees’ facility
– Kindergarten (allowed under Circular 96) 0 0.5
– Sports centre (allowed under Circular 96) 0 0.5
– Clinic 0 0.5
– Library 0 0.5
Add Damages covered by insurer (60%*1,800) 1,080 2
Add Purchases without invoices (2,500 – 1,800 supported 700 1
by Form 01/TNDN)
Add School fees for executives’ children recognised as 1,800 2
expenses (fully non-deductible as they are
Vietnamese individuals, not expatriates)
Add Feasibility study costs for abandoned project which is 500 0.5
not generating revenue
Add Summer trip – the part sponsored by the trade union 1,000 0.5
Add Summer trip – compensation from trade union (1,000) 0.5
recognised as income
Deduct Profit before tax after adjustments
Corporate income tax (CIT) liability (30,430*20%) 0.5

Workings
(W1) Machine disposal
Accounting Tax Note
VND VND
million million
Cost 7,200 7,200
Depreciation 7,200/48 months = 1
150/month
January 2018 – March 2018 (450) (450) First fiscal year
April 2018 – December 2018 (1,350) (1,350) Before repair 0.5
January 2019 – March 2019 (450) 0 Non-deductible in FY17 0.5
April 2019 – March 2020 (1,800) 0 Non-deductible in FY18 1
– to be adjusted in FY18
CIT return
Net book value (NBV) at 31 3,150 5,400 0.5
March 2020
Sales proceeds 3,500 3,500 (NBV 3,150 + profit 1
350)
Accounting gain 350 To be excluded from FY18 0.5
CIT return
Tax loss (1,900) To be adjusted in FY18 1
CIT return
15

Tutorial notes:
(1) According to Article 6, point 2.2(e), depreciation of fixed assets during repair with an
unused period of over 12 months is non-deductible. It would be acceptable to recognise a
net adjustment to reduce the accounting profit regarding disposal of the machine by
VND450 million (1,900 + 350 – 1,800). Note that further adjustment would also be
required to the 2019 CIT return for the accounting depreciation for the unused period in
FY17 (from 1 January to 31 March 2019) which was recognised in the accounting profit
but is non-deductible.
(2) Damages covered by the insurer are non-deductible (also note that the compensation
from the insurer should be adjusted in the next fiscal year as non-taxable).
(3) The school fees recovered from the executives in May 2020 (not reflected in the
accounting profit for the year ended 31 March 2020) are non-taxable but are taxable in
the next year.
(4) For the summer trip, it would be acceptable to show a net adjustment of zero (i.e.
combining and netting off both the addition of the expenses and deduction of the
compensation).

10. HYDRON Co
 (a) Revaluation gain/loss from capital contribution in kind
According to Article 7 point 14 of Circular 78/2014 as amended by Circular 96/2015: –
Revaluation gains/losses arising from a capital contribution in the form of assets are 1
calculated as the difference between the revalued amount and carrying amount as at the
time of the contribution, and are taxable/deductible on the transferor in the year of
contribution.
– For revaluation gains/losses arising from a capital contribution in the form of a land- 1.5
use-right which the recipient cannot depreciate or amortise, the transferor/contributor is
allowed to defer and recognise the taxable gain over a period of up to ten years from the
year of contribution.
– Where the contributor sells the capital contribution (containing a contributed land- 1.5
use-right), the contributor is required to realise, declare and pay tax on the full
revaluation gains (if any) as a transfer of real estate in the year of sale.
4
(b) Taxable gains
Unit: VND million
(Unamortised) taxable Taxable gain in year
gains
For year ended 30 September
2019.
Revaluation gain (other
income)
– Office building 3,000 3,000 1
(15,000 – 12,000)
– Land use right 110,000 5,500 2
(120,000 – 10,000) (110,000/10 years *
6/12 months)
For year ended 30 September
2020
Revaluation gain (other
income)
– Land use right 104,500 11,000 1
(110,000 – 5,500) (110,000/ 10 years)
Real estate transfer income 93,500 2
(104,500 – 11,000)
6
 10
11. BLC Co
Item Adjustment
(VND
million)
Profit before tax 38,600
Add Tools and instruments 3,297 2
(4,730 – (4,730/(1 + 10% VAT) * 8/24 months))
Add Life insurance expenses in excess of cap (W1) 1,280 W1
Add Accrued bonus 0 1
Add Uniform in cash in excess of cap VND5 million per 800 1.5
person
1,400 – (120 persons * VND5 million each)
Add Welfare expenses in excess of one month’s salary 1,180 2
cap
(2,380 – VND15,600 million salary funds/13 months)

Deduct Severance allowance paid (1,200) 1.5

Total adjusted taxable income 43,957
Of which:
– Allocation of incentivised, i.e. exempt income (i.e. 27,473 1
revenue from products produced in Ha Giang)
based on revenue
(43,957 * (50,000/(50,000 + 30,000))
– Allocation of non-incentivised income (revenue 16,484 0.5
from other provinces) (43,957 – 27,473)

Corporate income tax (CIT) liability (16,484 3,297 0.5

* 20% + 27,473 * 0%)

Working
(W1) Life insurance in excess of cap
VND
million If
x equals the number of persons at management level, accordingly the
number of employees at staff level is x * 5
 (x * 80 million) + (x * 5 * 80 million/2) = VND5,600 million 1 x * (80 +
200) = 5,600 1
x = 5,600/280 = 20 persons at management level 0.5 Staff level = 20 * 5 = 100
persons
(so total number of staff is 100 + 20 = 120 persons) 0.5
Excessive insurance fee for management level 20 persons * (VND80 880 1 million
– (3 * 12 months)
Excessive insurance fee for staff level 100 persons * (VND40 million 400 1 –
(3 * 12 months)
Total 1,280
15
Tutorial notes:
(1) The one-month salary cap for welfare purposes is calculated based on one
month’s salary actually paid.
Due to the accrued Tet payment, the total salary fund paid is 12/13 of the total salary
expenses [i.e. (VND15,600 million x 12/13)/12 = 1,200 monthly salary paid].
(2) The accrued bonus matches with 2018 revenue and is paid before the CIT
finalisation deadline and is therefore deductible.
(3) The severance allowance paid is an additional deductible expense because
provision expenses were adjusted as non-deductible in prior years.
(4) The allocation of revenue can be based on volume of production in each
province because the products are identical and are sold at the same price.

12. FORESH Co
(a) Tax treatment of capital gain arising on transfer of capital contribution
According to Article 14 point 2 of Circular 78/2014 as amended by Circular 96/2015:
– The income from the transfer of a capital contribution in a Vietnamese 1
limited liability company is subject to corporate income tax (CIT) in
Vietnam at the time of transfer.
– Capital gains tax shall be determined by: taxable income * 20% 1
(taxable income = selling price – historical costs – transfer expenses).
– The selling price shall be the actual transfer price received according 1.5
to the transfer agreement. Where the tax authorities determine that the
contractual transfer price is not in line with the market value, the tax
authorities shall have the right to impose a taxable transfer price based
on the value of the enterprise.
– Historical costs shall be the original capital contribution or the 0.5
purchase price of the capital contribution.
– Where both the buyer and seller are foreign companies, the company 1
whose capital contribution is transferred is responsible for making the
capital gains tax declaration on behalf of the seller
5

(b) CIT liability, assuming tax authorities accept transfer price

Amount
(VND
million)
Selling price (USD25 million * 80% * 23,500) 470,000 1
Historical costs (500,000 * 80%) 1
Taxable gain 0.5
CIT liability (70,000 * 20%) 14,000 0.5

(c) CIT liability, assuming tax authorities impose transfer price

Amount
(VND
million)
Selling price (equity value 1,250,000 * 80%) 1,000,000 1
Historical costs (from (b) above) 400,000
Taxable gain 600.000 0.5
CIT liability (600,000 * 20%) 120,000 0.5
2
10
Tutorial note: The basis for determining the selling price for the taxable gain, based on
the available information, is the value of equity (share capital plus retained earnings).
 13. TECHIP Co
VND
million
Draft profit before tax 138,000
Adjustments:
(1) Add Accrued gross profit margin from 30% of 2,250 2
contract provided to BTC Co not yet invoiced,
paid or recognised (21,000/70% * 30% * 25%)
(2) Add Lease payment for 27 months paid in advance 3,375 2
(4,500/36 months * 27 months)
(3) Add International school fee paid for daughter of 720 1 general director
(3) Deduct Other income to be collected from the general (220) 1 director
(720 – 500)
(4) Add Non-deductible damage covered by insurer (W1) 2,500 W1
(5) Add Non-deductible amortisation of licence (W2) 2,000 W2
(6) Realised net loss on cash 0 0.5
(6) Add Unrealised loss on cash 800 0.5
(6) Unrealised loss on trade payables 0 0.5
(6) Deduct Unrealised gain on trade receivables 0.5
Total adjusted taxable income
Corporate income tax (CIT) liability (148,125 * 20%) 29,625 0.5

Workings
(W1) Damaged equipment
VND
million
The equipment should have been recorded as follows in the draft
income statement:
– Selling price 45,000 1
– Cost of goods sold (50,000) 1
– Repair expenses (1,000) 0.5
Loss from sale (6,000)
Deductible expenses: repair 1,000
Deductible expenses: uninsured cost of flood damage ((45,000 – 2,500
50,000) * 50%)
 Non-deductible loss (covered by insurer) to be added back (2,500) 1
(W2) Licence
VND
million
Current terms of the licence (15,000/3,000) = 5 years 0.5
Total amortisable period (5 years + 10 years) = 15 years 0.5
Annual tax amortisation (15,000 million/15 years) 1,000 0.5
Amortisation expense in draft income statement (3,000) 0.5
Non-deductible amortisation expense to be added back
5
Tutorial notes:
(1) Lease payment in advance: only nine months from April to December 2020 can
be claimed as deductible expenses for fiscal year 2020. The remaining 27 months’ rent
should be added back.
(2) International school fee of the general director of VND500 million covered by
the company: this expense is not deductible because his daughter is a Vietnamese citizen.
The excess of VND220 million is also non-deductible because it is a payment made on behalf
of the general director. Accordingly, the other income of VND220 million receivable from the
general director is not taxable.
 14. Fundly Co
Fundly Co and VarSub Co
(a) Deductibility of interest expenses
The interest on a loan made in order to invest in another company
where 2 the capital is contributed in full according to the contribution
schedule or for business operations is deductible in the year it arises.
The interest on a loan made in order to invest in another company
where 1 the capital is not fully contributed according to the
contribution schedule is non-deductible, in proportion to the corresponding
shortage in contributions.
3

(b) Deductible and non-deductible interest expenses for the year ended 31 December 2020
Amount Amount VND
VND million
million
Fundly Co:
– Capital contribution required in 2020 (VND600 300,000 0.5
billion/2 years)
– Shortfall in capital contribution 0 0.5
– Deductible interest expenses (100 billion * 9% * 6,750 1
9/12)
TarSub Co:
– Capital contributions required in 2020 by 350,000 0.5
InvestHold Co (500,000 * 70%)
– Shortfall in contributions (350,000 – (150,000 + 100,000 0.5
100,000))
– Capital contributions required in 2020 by the other 150,000 0.5
investor (500,000 – 350,000)
– Shortfall in contributions 150,000 0.5
– Total shortfall (from April to December – 9 months) 250,000

– Total shortfall/Total loans (250,000/300,000) 83% 0.5

(Note)
– Interest expenses (200,000 * 10% + 100,000 * 22,875 1.5
10.5%) * 9/12)
 – Non-deductible interest expense (22,875 * 70%) 16,013 0.5
– Deductible interest expense (22,875 * 30%) 6,863 0.5

10
Note: According to point 2.18 of Circular 78/2014 as amended by Circular 96/2020,
where an enterprise has more than one set of borrowings, when a shortfall of capital
contribution exists, the non-deductible interest expense shall be determined by the formula:
shortfall interest/total loan amount * total interest expenses.
 15. Spenda Co
Corporate income tax (CIT) for the year ended 31 December 2020
Item Description Adjustment Tutorial notes (not required
VND as part of the answer)
million
Accounting loss before tax (2,800)
1 Destroyed items 0 Destroyed goods due to 1
expiry are deductible
against proper supporting
documents
2 Internal consumption of stock
– For further processing 0 Internal consumption 0.5
– For business meetings 0 Internal consumption 0.5
– For vacation and personal 50 use Treated as sales – revenue 1 must
be recognised
3 Accommodation costs
– For travel purposes 460 Personal consumption 1
– For work purposes 0 Deductible (according to 1
point 2.6 of Article 4, Circular
96/2020 revising
Article 6 of Circular
78/2019)
4 Incentive bonuses
– Actual payment 0 No impact on accounting 0.5
profits and taxable income
– Additional accounting 0 No adjustment as this is a 1
expense (VND300,000 deductible expense for this
million) year
– Disallowed provision in (450) Addition to deductible 1.5
2019 expenses in 2020 (it is not an
accounting expense for
2020, but is deductible on actual
payment in 2020)
5 Vouchers
 – Gift vouchers issued in 2019 0 No adjustment as recognised 1
in both accounting revenue
and taxable revenue for 2020

– Gift vouchers issued in 2020 0 No adjustment as no 1

accounting revenue or
taxable revenue for 2020 (only
recognised in 2016)
– Unredeemed vouchers in 0 No adjustment as it has been 1
June 2020 of (10,000 – 9,500) recognised as other income for
both accounting purposes and
tax purposes for 2020

6 Leases
– Lease A 0 No adjustment, fully 1
deductible including the tax paid
for the landlord as RTM Co
agreed in the lease agreement
to bear the PIT (point 2.5 of
Article 4
Circular 96/2020 revising
Article 6 of Circular
78/2019)
– Lease B 0 No adjustment 0.5
– Lease C
– Rent 800 Rent is non-deductible 1
because it is over VND20 million
and paid in cash
– Tax (80 * ¾) 60 The tax payment for the 1
landlord is non-deductible
because it is not provided for
in the lease agreement
Tax loss carry forward (1880) 0.5
Part D: Foreign Contractor Tax Section A
Part D: Multiple Choice Question: Answer
1. A
USD142,500 [150,000 – (150,000*5%)]
The training fee (both online courses and courses organized in Vietnam) would be
subject to foreign contractor tax (FCT) as services, corporate income tax (CIT) rate 5%, as can
be interpreted from Example 8 of Circular 103/2014.

2. D
USD58,200 (USD3,000,000 – (3,000,000*3% VAT)*2% CIT)
Tutorial note: Supplies from Vietnam are not deducted from taxable revenue. Taxable
revenue for corporate income tax (CIT) is revenue after deducting the value added tax (VAT)
portion

3. C
USD 0
According to Example 4 of Circular 103/2014, the handling services at Taiwan ports are
exempt from foreign contractor tax (FCT) in Vietnam as these were consumed outside
Vietnam.

4. D
1, 3 and 4 only
According to Article 1, Example 1, Article 7.3 of Circular 103/2014.

5. D
USD0
According to Circular 103/2014 (Article 2.2), supplies of goods by a foreign contractor
without attached services (even when a guarantee is attached) where the risks are
transferred before or at the border gate of Vietnam are exempt from foreign contractor tax
(FCT).
6. D
Option 4:
CIT: USD32,500 (650,000 * 5%)
VAT: USD34,211 (650,000/95% * 5%)
According to Circular 103/2014, purchases of goods in Vietnam are not deducted from
the taxable price for foreign contractor tax (FCT) purposes.

7. D
USD30,303 (USD600 * 5,000/(100% – 1%) * 1%)
According to Article 1.3 of Circular 103/2014, a foreign company which determines the
selling price or bears advertising costs for products sold to a Vietnamese company would be
subject to foreign contractor tax (FCT) in Vietnam (as trading activities, subject to 1% CIT).

8. C
26 million = 39 million – 13 million subcontracted to Vietnamese subcontractors.

9. B
According to Article 1, Circular 103/2014/TT-BTC

10. B
The rate for services would apply.
According to Clause 2, Article 12, Circular 103/2014/TT-BTC
VAT rates applied to trade

No. Trade VAT rate

1 Services, rental of machinery and equipment, insurance; 5

construction, installation exclusive of raw materials,
machinery and equipment.

2 Production, transportation, services attached to goods; 3

construction, installation inclusive of raw materials,
machinery and equipment.

3 Other trades 2
 CIT rates (%) applied to trading

No. Trade VAT rate

1 Lease of machinery and equipment, insurance, lease of 5

oilrig.

- Restaurant, hotel, casino management services 10

- Derivative financial services 2

11. C
The supply of goods for further processing through a bonded warehouse is not subject
to foreign contractor tax (FCT), but the supply of goods for distribution to Vietnam from the
bonded warehouse is subject to FCT – as interpreted from point 5, Article 2 of Circular
103/2014.

12. A
Eli Co is subject to FCT
In this case, Eli Co is subject to FCT because it trades goods in Vietnam and earns
income in Vietnam.

13. D
Machi Co is not subject to FCT
From 01 Oct 2014, if Machi Co delivers goods to the Vietnam’s border gate (without
being involved in customs clearance) and only provides warranty services, but not other
services, it shall not be subject to FCT.

14. C
Besthand Co is not subject to FCT
Material handling services at Hong Kong port are provided and consumed outside
Vietnam, thus not taxable in Vietnam.

15. D
 (ii) is subject to FCT, (i) is not
Advertising service outside Vietnam on internet should be still subject to FCT.

16. D
USD5,263 ((USD200,000/2 instalment/(1 – 5%)*5%)
Note: The instalment paid in March 2021 would not be subject to foreign contractor
tax (FCT) in 2020

17. B
USD238,000 (250,000 – 5,000 – 7,000)
According to Example 20 of Circular 103/2014, the full revenue would be taxable, after
deducting airport charges and refunds, collected on behalf of the airport.

18. D
USD15,263 [(250,000 + 40,000)/(1 – 5%) * 5%]

19. C
USD 80,000
Revenue subject to CIT of Shiple Co is calculated as follows:
Revenue subject to CIT = USD 100,000 – USD 20,000 = USD 80,000

20. A
(ii) is subject to FCT, (i) is not
Only brokerage service for sale of good/services outside Vietnam is not subject to FCT.

21. D
(ii) is subject to FCT, (i) is not
Online training is subject to FCT even though it is performed outside Vietnam.

22. C
Note: USD 40 million is subject to VAT
 Value of the imported M&E (USD 110 million) is not subject to VAT of FCT because they
were already subject to VAT at the import.

23. C
USD110 million and USD 20 million are subject to CIT at separate CIT rates
Value of the imported M&E and services are subject to CIT at separate tax rates.

24. A
USD 484,211
The revenue subject to VAT earned by Sydicate is calculated as follows:

Revenue subject to VAT = = 484,211 (USD)

25. C
USD17 million
In this case, the revenue subject to VAT earned by foreign contractor is calculated as
follows:
Revenue subject to VAT = USD 20 million – USD 3 million = USD 17 million
Do not subtract the value of raw materials, goods and services such as car rental, hotel
rooms, stationery, etc. from the revenue subject to VAT of Foreign Contractor.

26. D
Outbound revenue is subject to VAT, inbound revenue is not.
+ Revenue from inbound (from abroad to Vietnam) postal services is not subject to VAT
(whether service charges are paid by the consignor or consignee);
+ The whole revenue earned by Express from outbound postal services is subject to
VAT (whether service charges are paid by the consignor or consignee).

27. C
Total contract value of USD 15 million is subject to VAT at 3%
Note: CIT rate is 2% in case contract does not separate the value

28. A
29. A USD 463,158

Revenue subject to CIT = = 463,158 (USD)

30. D
USD 190,000
Revenue subject to CIT earned by Singapore Airline in the 1st quarter of 2020 is
calculated as follows:
Revenue subject to CIT = 200,000 – (6,000 + 4,000) = 190,000 (USD)

Part D: Foreign Contractor Tax Section B

Part D: Constructed Response Question: Answer
1. YZ-Trading Co
(a) Foreign contractor tax (FCT) implications of the agreements with OCB Co and
OCBN Co
According to Article 2 of Circular 103/2014:

Agreement with OCB Co • The guarantee, with the requirement to ship

back faulty products 1 overseas for replacement, would not be subject to FCT
in Vietnam.
• However, as OCB Co has the right to determine the selling price 1 of the
products in Vietnam, OCB Co will be subject to FCT in Vietnam.
• The most likely applicable FCT rates would be 1% corporate 1 income tax
(CIT) as a trading activity, but it would be exempt from value added tax
(VAT).
Agreement with OCBN Co
• As OCBN Co only bears the risks until the goods reach YZ- 1
Trading Co’s bonded warehouse at the border gate, OCBN Co
would not be subject to FCT in Vietnam on this activity.
• Nonetheless, OCBN Co would still be subject to FCT for bearing 1 the
advertising costs of the watches in Vietnam.
• There is no clear guidance on the tax treatment under the FCT 1 Circular,
however, it is arguable that the advertising costs are incurred for the sales
 of watches by OCBN Co in Vietnam (through its ‘agent’ – YZ-Trading Co),
thus the likely applicable rate would again be 1% CIT, but exempt from VAT.
6

(b) FCT implications for ADV Co and TNL Co in respect of the services supplied
Also according to Article 2 of Circular 103/2014:

Advertising by ADV Co Advertising overseas is not be subject to FCT,

except for advertising via 1 the internet for consumption in Vietnam.
Accordingly, since the advertising is via the internet, and the advertising 1
costs charged to YZ-Trading Co are for the display in the Vietnamese language,
the advertising costs charged would be subject to FCT.
Tutorial note: The tax bearer would either be ADV Co (indirectly) or
YZ-International Co (directly), and YZ-Trading Co is required to withhold
the necessary FCT.
Training by TNL Co Training activities conducted overseas are not
subject to FCT, except for 1 online training.
Accordingly, the training courses held overseas would not be subject to 1
FCT, but the training courses conducted in Vietnam would be subject to FCT.
4
10
 2. CNB Co
(a) Deductibility of purchases and subcontracted services for foreign contractor tax
(FCT) purposes
According to Articles 12 and 13 of Circular 103/2014:
Where a foreign contractor purchases materials, spare
parts, 1 machinery and equipment from local suppliers in
Vietnam for the implementation of the contract, the value of the
purchases would not be deducted from taxable revenue for FCT
purposes. Where a foreign contractor signs a contract to
subcontract a 1 part of the works to a local subcontractor in
Vietnam, the value subcontracted would be excluded (deducted)
from taxable revenue for FCT purposes
2

(b) FCT payable if the contract price items are broken down
Tax value (contract price) USD Corporate
million income tax (CIT)
to be withheld

Machinery and 45.45 1.5

equipment (50 – 5 guarantee)/(1 – 1%)
Tutorial note: Local purchases
not deducted.
CIT 0.45 (45.45*1%) 0.5

Construction and 20.41 1

installation (25 – 5)/(1 – 2%)
CIT 0.41 (20·41*2%) 0.5

Tax on services26.32 2
(remaining items) (5 + 9 + 5 + 2 + 4)/(1 – 5%)
Tutorial note: Guarantee is
taxed here.
CIT 1.32 0.5

Total CIT 6
(c) FCT payable if lump sum price
Taxable value (contract price) CIT portion to USD
million be withheld
Total value of contract 91.84 1.5
(95 – 5 sub-contracted)/(1 –2%)
Total FCT 1.84 0.5
(91·84*2%)
10
 3. TSP Co
(a) Transaction 1: Leasing contract with LUX Co
Corporate income tax (CIT) portion of foreign contractor tax (FCT):
USD
Rental income 800,000 0.5
Less: deductible expenses (according to Article 13, point
1(b.4) of Circular 103/2014)
• Negotiating contract (0) 1
• Insurance (USD20,000/12*9 months) (15,000) 1
• Transportation costs (25,000) 0.5
• Expert costs (USD15,000*6 months) (90,000) 1
Net taxable income 670,000
Gross up (670,000/(1 – 5%)) 0.5
CIT (705,263*5%) 0.5

(b)
(i) Transaction 2: Shipping contract with D-Line
For shipping lines, taxable revenue shall be the total freight costs (and 1
surcharges) received from customers from a Vietnam port to the
destination port (including inland transportation in Vietnam).
The taxable revenue can be reduced by any freight costs already subject 1
to CIT in Vietnam in the hands of either a foreign transporter or a local
transporter for shipping the goods from a port in Vietnam to a
connecting port (hub)
2

(ii) FCT to be deducted on order from MCT Co

USD
Freight income (including surcharge) (100,000 + 10,000) 110,000 1
Less: shipping costs to Singapore (20,000) 0.5
Taxable income 90,000
VAT (international transportation is subject to 0% VAT) (0) 1
CIT (90,000*2%) 1,800 0.5
 10
Tutorial note: The question was based on Example 21 of Circular 103/2014.

4. Agoda Co
(a) Foreign contractor tax (FCT) on the service agreement
VND VND
million million
Domestic room charges collection 91,200
Referral fee from domestic collection 13,680 1
(91,200*15%)
Overseas room charges collection before 131,600 1
deducting referral fees
(4·76*23.5)/(1 – 15%)
Referral fee from overseas collection 19,740 0.5
(131,600*15%)
Total referral/service fees to Agoda 33,420 0.5
Gross up for CIT (33,420/(1 – 5%)) 35,179 1
CIT portion of FCT (35,179*5%) 1,759 0.5
Gross up for VAT (35,179/(1 – 5%)) 37,031 1
VAT portion of FCT (37,031*5%) 1,852 0.6
Total FCT 3,611
6

(b) Double tax agreement (DTA) exemption

Agoda would be exempt from the corporate income tax (CIT) portion of the 2
foreign contractor tax (FCT) in Vietnam if the business activities of Agoda are
categorised as ‘business profits’ and Agoda did not carry on business in
Vietnam through a permanent establishment (P/E).
Within 15 days from the deadline for the FCT declaration, the Vietnamese 2
party in the contract (i.e. SQR Co in this case) is required to submit a
notification dossier about the DTA exemption to the tax authorities
(including, for example, a notification form, copy of service agreement,
certified copy of residency certificate of Agoda in Hong Kong, etc).
 5. ALF Co
(a) Foreign contractor tax (FCT)
In accordance with Circular 103/2014 Article 2.4, foreign companies earning 1
income from Vietnam via providing online advertisement services to
Vietnamese customers are subject to FCT in Vietnam. Similar treatment
would be applicable to cloud services (Note: Candidates are not required to
provide reference to the exact Article in the Circular).
The Vietnamese party (i.e. BVN Co) who enters into contract(s) and
makes 1 payment to the foreign provider (i.e. ALF Co) is required to
withhold, declare and pay FCT to the tax authorities on behalf of the foreign
contractor, ALF Co.
The FCT declaration and payment can be made within ten days of each 1
payment or on a monthly basis, depending on appropriate registration by the
Vietnamese party (i.e. BVN Co) with local tax authorities.
3
Note: Credit was also granted for other relevant points.

(b) Foreign contractor tax (FCT) on the payment to ALF Co

USD VND
million
Net amount remitted by ALF Co (80% of total 24,000,000
collections)
Total collections (USD24million/80%) 30,000,000 0.5
VND equivalent (USD30 million*23·5) 705,000 0.5
Gross up for corporate income tax (CIT) (705,000/(1 742,105 0.5
– 5%))
CIT portion of FCT (742,105*5%) 37,105 0.5
Gross up for value added tax (VAT) (742,105/(1 – 5%) 781,163 0.5

VAT portion of FCT (781,163*5%)) 39,058 0.5

Total FCT 76,163
3

(c) Foreign contractor tax (FCT) on the payment to ALF Co

 The Vietnamese party is required to declare and pay FCT when making 2
payment to the foreign party. In this case, even though no payment was
physically made, the payment would be deemed to happen with the offset.
Accordingly, BVN Co is required to declare and pay FCT on the fee in 2019
(and not wait until finalisation in 2020).
VND
million
VND equivalent (USD250,000*23.5) 5,875 0.5
Gross up for CIT (5,875/(1 – 5%)) 6,184 0.5
CIT portion of FCT (6,184*5%) 309 0.5
VAT portion of FCT (exempt due to software services) 0.5
Total FCT (309 + 0)
 6. SGB Bank
SGB and TCB
(a) Foreign contractor tax (FCT) on interest swap
An interest swap is subject to FCT as a financial derivative in Vietnam. 1
FCT will be determined based on the ‘net’ amount to be settled to the
overseas party within each calendar year. Taxable revenue from an interest
swap is the difference between the interest receivable and the interest
payable which the foreign contractor receives within a calendar year.
(i) Where SGB receives a ‘net’ settlement (i.e. the amount which VNB must 2
pay SGB is higher than the amount which SGB must pay VNB) within the
calendar year, the taxable revenue shall be subject to corporate income tax
(CIT) at the rate of 2%.
(ii) Where SGB is required to make a net settlement to VNB within the 1
year, no FCT is payable.
4

(b) FCT liability

Taxable CIT Value added
amount tax (VAT) USD
USD USD
For 2018:
Net settlement by VNB to SGB (5 – 9 0 1.5
= –4)
For FCT 0 Exempt
For 2019
Net settlement by VNB to SGB (5 – 1,020,408 2
4)/(1 – 2%)
FCT (1.02 * 2%) 20,400 Exempt 1
For 2018:
Net settlement: no settlement in N/A N/A 1.5
2018, as final settlement was on
1 September 2019 (beginning of
period).
Accordingly no FCT arose in 2020.
 7. VCC Co
(a) Option 1: Itemised price
Corporate income tax CIT Value added VAT
(CIT) – taxable value In USD tax (VAT) – In USD
taxable
value
Machinery and 40 million 0.5
equipment (40 million/(100% – 1%))

Tax at 1% CIT 404,040 0 0.5

and VAT exempt

Construction 8,163,265 8,415,737 1

and installation (8 million/(100% – 2%)) (8,163,265/
(100% – 3%))
Tax at 2% CIT 163,265 252,472 0.5
and 3% VAT
Services 2,105,263 2,216,066 0.5
(2 million/(100% – 5%)) (2,105,263/
(100% – 5%))
Tax at 5% CIT 105,263 110,803 0.5
and 5% VAT
Software 5,555,555 0.5
(5 million/(100% –
10%))
Tax at 10% CIT 555,555 0 0.5
and VAT exempt

Training
(overseas)
Exempt from tax (Trừ train online) 0 0 0.5

Total foreign 1,228,123 363,275

contractor tax
(FCT)
 5

(b) Option 2: Lump sum price

CIT – taxable CIT VAT – VAT
value In USD taxable value In USD
Lum sum 57,142,857 58,910,162 2
price
(40 + 8 + 2 + (56 (57,142,857/
5 + 1) million/(100% – (100 – 3%))
= 56 million 2%))
Tax at 2% 1,142,857 1,767,304 1
CIT and 3%
VAT
3
Tutorial note: Training overseas is taxable under the lump sum option.

(c) Conclusion and advice

– Option 1, to itemise the price, has total foreign contractor tax (FCT)
of 1 USD1,591,398 (1,228,123 + 363,275), which is USD1,318,763 lower than
the total FCT of USD2,910,161 (1,142,857 + 1,767,304) of option 2, the lump
sum price.
– However, as VCC Co can claim full credit for the VAT portion of FCT,
it 1 should only take CIT into account when considering the price. Therefore
option 2, the lump sum price, would be more tax efficient for VCC Co.
2
10

8. C-S Co
(a) Foreign contractor tax (FCT) payable if all supplies are sub-contracted to
Vietnamese entities
Corporate income tax Value added tax (VAT) USD
(CIT) million
USD million
Taxable value 3.05 3.21 2
(2 + 0·5 + 0·4)/(1 – 5%) 3.05/(1 – 5%)
(1.5 marks) (0.5 marks)
Tax 0.15 0.16 1
(3.05 * 5%) (3.21 * 5%)
(0.5 marks) (0.5 marks)
3
Tutorial notes:
1. Only services activities are subject to FCT where the supplies are sub-contracted to
Vietnamese entities.
2. Training overseas is exempt from FCT.

(b) FCT payable if all activities are performed by the foreign contractor
(i) Lump sum price
Corporate income tax Value added tax (VAT) USD
(CIT) million
USD million
Taxable value 16.63 17.14 2
(10 + 2 + 2.9 + 0.5 + 0.4 16.63/(1 – 3%)
+ 0.5)/(1 – 2%)
(1.5 marks) (0.5 marks)
Tax 0.33 0.51 1
(16.63 * 2%) (17.14 * 3%)
(0.5 marks) (0.5 marks)
3
Tutorial note: Training overseas is not exempt from FCT in the case of a fixed price
contract.

(ii) Itemised price

Corporate income tax Value added tax (VAT)
(CIT) USD million
USD million

Machinery and
equipment
Taxable value 10.10 0.5
10/(1 – 1%)
Tax (i) 0.10 0 1
(10·10 * 1%) (Exempt)
(0.5 marks) (0.5 marks)
Construction and
installation
Taxable value 2.04 2.10 1
2/(1 – 2%) 2.04/(1 – 3%)
(0.5 marks) (0.5 marks)
Tax (ii) 0.04 0.06 1
(2.04 * 2%) (2.10 * 3%)
(0.5 marks) (0.5 marks)
Tax on services (as in 0.15 0.16 0.5
(a)) (iii)
Total FCT ((i) + 0.29 0.22 4
(ii) + (iii))
10

9. TBC Co
(a) The volume of treasury bills held on the maturity date
Total bought (250,0000 + 100,000 + 100,000) 450,000 0.5
Total sold (120,000 + 50,000) (170,000) 0.5
Volume held on the maturity date 280,000 1

(b) The weighted average buying price of the treasury bills held on the maturity date Using
the FIFO method, the 280,000 treasury bills held by TBC Co would consist of:
Price Weighted
VND price
VND million
(250,000 bought on 2 January – 80,000 85,000 6,800 2
120,000 sold on 15 March – 50,000 sold
on 15 May)
100,000 bought on 1 February 100,000 80,000 8,000 1
100,000 bought on 15 April 100,000 82,000 8,200 1
Total 200,000 16,200
 Weighted average buying price 81,000 1
(16,200/200,000)
5

(c) Taxable revenue and corporate income tax (CIT) payable under the foreign contractor
tax (FCT) regime
VND
million
From the sales of treasury bills
Taxable revenue
Sales on 15 March (120,000 * 81,000) 9,720 0.5
Sales on 15 May (50,000 * 81,500) 4,075 0.5
13,795
Tax at 0.1% 14 0.5
From the redemption of Treasury bills
Taxable revenue (100,000 face value – 81,000 (from (b)) * 280,000 5,320 1.5
(from (a))
Tax at 5% 266 1
4
10
Tutorial note: The question is based on Example 25 in Circular 103/2014.
10. Han Fun Ltd
(a)
JapanCo Limited
Design CIT-taxable turnover =
3,000,000
= USD 3,157,895
(1 – 0·05)

CIT payable = 3,157,895 x 5% = USD 157,895

Calculation of VAT: VAT-taxable turnover =
3,157,895
= USD 3,324,100
(1 – 50% x 10%)

Amount of VAT payable:

3,324,100 x 50% x 10% = USD 166,205
Total CIT and VAT = USD 324,100
 10
Equipment CIT-taxable turnover =
,000,000
= USD 10,101,010
(1 – 0·01)

CIT payable = 10,101,010 x 1% = USD 101,010

Calculation of VAT:
VAT – not subject to VAT
Total CIT and VAT = USD 101,010

Installation CIT-taxable turnover =

3,000,000
– = USD 3,061,224
(1 – 0·02)

CIT payable = 3,061,224 x 2% = USD 61,224

Calculation of VAT: VAT-taxable turnover =
3,061,224
= USD 3,222,341
(1 – 50% x 10%)

Amount of VAT payable:

3,222,341 x 50% x 10% = USD 161,117
Total CIT and VAT = USD 222,341

Construction
CIT-taxable = Nil as they have deducted from it the local materials and local
sub-contractors. Total CIT and VAT = USD 647,451
FrenchCo Limited

Design CIT-taxable turnover =

2,000,000
= USD 2,105,263
(1 – 0·05)

CIT payable = 2,105,263 x 5% = USD 105,263

Calculation of VAT:
2,105,263
VAT-taxable turnover = = USD 2,216,066
(1 – 50% x 10%)

Amount of VAT payable:

2,216,066 x 50% x 10% = USD 110,803
Total CIT and VAT = USD 216,066
 Equipment and installation
CIT-taxable turnover = 13 ,000,000
= USD 13,265,306
(1 – 0·02)

CIT payable = 13,265,306 x 2% = USD 265,306

Calculation of VAT:
13,265,306
VAT-taxable turnover = = USD 13,675,573
(1 – 30% x 10%)

Amount of VAT payable:

13,675,573 x 30% x 10% = USD 410,267
Total CIT and VAT = USD 675,573
Construction of building including materials costs
5,000,000
CIT-taxable turnover = = USD 5,102,041
(1 – 0·02)

CIT payable = 5,102,041 x 2% = USD 102,041

Calculation of VAT:
5,102,041
VAT-taxable turnove = = USD 5,259,836
(1 – 30% x 10%]

Amount of VAT payable:

5,259,836 x 30% x 10% = USD 157,795
Total CIT and VAT = USD 259,836
Total CIT and VAT = USD 1,151,475
KoreanCo Limited
Turnkey project
CIT-taxable turnover = 20 ,000,000
= USD 20,202,020
(1 – 0·01)

CIT payable = 20,202,020 x 1% = USD 202,020

Calculation of VAT:
20,202,020
VAT-taxable turnover = = USD 20,406,081
(1 – 10% x 10%)

Amount of VAT payable:

20,406,081 x 10% x 10% = USD 204,061
Total CIT and VAT = USD 406,081
Summary
JapanCo USD 647,451
FrenchCo USD 1,151,475
 KoreanCo USD 406,081

(b)
Select KoreanCo as it has the lowest cost.
While JapanCo was able to deduct the local materials and sub-contractors it still
incurred higher FCT on the installation and design. FrenchCo clearly was not tax efficient and
KoreanCo while incurring FCT on the full amount, was only taxed at VAT 1% and CIT 1%. (The
examiner accepted reasonable responses which were based on the calculations performed
by each candidate)

(c)
Hanh should not consider registering for the VAS because of:
1 Increased costs
2 Increased complexity 3 Increased record keeping 4
Increased administration.
(The examiner accepted reasonable responses)
Part E: Value Added Tax Section A
Part E: Multiple Choice Question: Answer
1. A
VND440 million [4,840 /1.1*10%]
According to Example 13 of Circular 219/2013, the interest for deferred payment would
not be subject to value added tax (VAT)

2. D
According to Article 7 and Article 11, Decree 126/2020/ND-CP, the input value added
tax (VAT) from investment projects where the project is located in the same province or
different provinces of the headquarter must be offset with the net output VAT of the
headquarter (before claiming any refund). The company can only claim a refund for the input
VAT if the residual input VAT after all the offset is more than or equal to VND300 million.

3. C
According to Article 44 of Law no. 38/2019/QH14, the deadline for:
– Monthly tax payment – value added tax (VAT): 20th of the next month,
– Quarterly tax payment – provisional corporate income tax (CIT): the last day of the next
quarter
– Yearly tax payment, except CIT finalisation (business registration): 30th of the next year

4. B
VND0 million output VAT and VND170 million (1,870/1.1*10%) creditable input VAT
According to Article 14.1 of Circular 219/2013, uninsured input VAT from damages due to fire
would be creditable in full. According to Article 5, example 14, Circular 219/2013
compensation in cash would not be subject to VAT declaration (VAT output = 0).

5. D
VND18,000,000 (40 days*(VND1,500 million*0.03%))
According to the Law on Tax administration (2019), late payment interest would be
0.03% per day. As the deadline for payment of April 2020 VAT is 20 May 2020, which was a
Sunday, the deadline is extended to 21 May 2020. The late payment days would be counted
from 22 May to 30 June 2020, i.e. 40 days.

6. C

7. A
VND2,250 million
VND2,250 million creditable input VAT (3,000 million * 75%)
According to Article 14.5 of Circular 219/2013, the input VAT for goods (including
purchased and self-produced) used for promotion activities for sales subject to VAT shall be
fully creditable (however, the input VAT on promotional goods used for exempt sales is
noncreditable and allocation is required where the company cannot separately account for
the input VAT – Article 14.2 of same Circular).

8. B
VAT filing and payment is due using the credit (deduction) method.
According to Article 11.1.d of Circular 156/2013, where the dependent unit accounts
separately, the company is required to register and declare VAT under the deduction method
to the local tax authorities of the unit.

9. B
VND158 million creditable input VAT (2,178 million * 80%/1.1 * 10%)
According to Clause 3, Article 14, Circular 219/2013, the taxable amount for creditable
input VAT for the purchase of a car with fewer than nine seats is capped at VND1,600 million.
In this case, the quoted price net of VAT exceeds VND1,600 million (2,178/1.1). However, the
actual price net of VAT after discount was VND1,584 million (2,178 * 80%/1.1), therefore
input VAT is fully creditable.

10. A
No adjustment required because the car has more than nine seats and so is depreciable
in full.
11. A
[315 million/(1 + 10%) * 10%] – (300 million * 5% paid) = 13.6 million [according to
Example 56 in Article 12 of Circular 219/2013/TT-BTC].

12. B
Only the input VAT incurred when a tax code has been obtained is deductible – point
3.b, Article 12 of Circular 103/2014.

13. C
VND5.7 million (3 million + 27 * 10% + 0)
The taxable revenue when VAT is not separated, as for Invoice 2, must be the whole of
the selling price.

14. D
Overseas branches of local firm

15. A
Transfer project of investment in manufacturing or trade of goods/services subject to
VAT to other companies or cooperatives

16. C
VAT-exclusive remunerations or commissions on brokering assessment, brokering
compensation examination, claiming compensation from a third person (including the costs)
earned by the insurer are taxable prices

17. D
The duration of claiming VAT input last until the closure of the business

18. D
Procedure for refund before investigation is used for refund of ODA project
19. B
200 million dong x 0.03% x 698 days = 41.88

20. D
A Dong is allowed to claim VAT input and no penalties

21. D

22. B
P has to issue invoice and pay VAT on the actual amount of product issued, Q pay 2% on
total sales

23. A
Forward processing

24. D
Hydrogen Pte Ltd has been wound up by court order, Zebra Pte Ltd still can not claim
bad debt relief on the VAT output.

25. A
VND 220 million
Cost VAT
VND million VND million
Parking charges – SLW 123 1,200 120
Trade association subscription 1,200 100
Golf club subscription for directors 2,000 0

26. B
VND0
 The mere receipt of payment will not be regarded as consideration received if it is held
as security pending the adoption of the sale. As such, no VAT should be levied on the security
deposit as it is refundable. Export sales are zero rated.

27. B
31 March 2023
According to Decree 174/2016/NĐ-CP, For value added tax (VAT), business records
must be kept for ten years, from the end of the prescribed accounting period, in this case 31
March 2023.

28. D
VND10,000 million (100,000 x 10%)
VAT on the sale and the trade-in items are to be accounted for , settlement discount is
not deducted before VAT calculation.

29. D
VND24,000,000
According to Article 14, Circular 219/2013/TT-BTC, as amended in Circular
119/2014/TTBTC and Circular 26/2015/TT-BTC, The stolen inventory due to mismanagement
is considered as a value added tax (VAT) abnormal loss and so the amount of input VAT of
VND24,000 is irrecoverrable, VAT value adds to lost inventory items

30. A
Input value added tax (VAT) creditable = 2.2 x 10% = 0.22
Output VAT = 3.3/(1 + 10%) x 10% = 0.3

31. A
Inventory destroyed during a rainstorm is not a value added tax (VAT) abnormal loss
and is therefore recoverable.

32. D
 Delivery of finished goods to a branch in another city for sale is a deemed sale for VAT
purposes but delivery to a branch for storage is not a deemed sale.

33. C.
According to Circular 219/2013/TT-BTC, the branch records separately and declares and
pays VAT separately for these activities, and does not record them together on production for
export. When importing goods for distribution (sale), the branch of DPN Ltd shall declare and
pay VAT on the importation and on each sale (including exportation). DPN Ltd shall use
invoices, declare and pay VAT as prescribed.
34. D
The payment for pig raising paid by Filed Co and the pigs sold to Filed Co are not
subject to
VAT
In case, Filed Co sold or processed the pigs for sale, the sold products are subject to VAT
as prescribed.

35. B
The bank does not have to pay VAT because the sold collateral is not subject to VAT

36. C
This amount of VND6 billion is revenue from capital transfer and not subject to VAT.

37. A
Vegatable.ly Co is not required to declare and pay VAT on that 13.2 million VND.

38. A
WaterWard Co must declare and calculate the out VAT on these 500 bottles, which do
not serve the manufacture or trading, shall be levied: 8,000 x 500 = VND4 million

39. C
Total deductible land value:
- 20% reduction in land levy: VND50 billion x 20% = VND10 billion;
- Land levy payable after reduction: 30 billion VND - 6 billion VND - 15 billion VND = 9 billion
VND;
- Deductible land value, including land levy payable (after reduction) and compensation for
land clearance: VND10 billion + VND25 billion = VND35 billion. The deductible land value is
divided by the business area.

40. C
The VAT-inclusive price for the VN-JP’s infrastructure rent during the lease period (20
years) is determined as follows: 27,000m2 x (800,000 – (93 ,000/𝑚2
x 20 years)) =
VND20,595.6 billion
50 𝑦𝑒𝑎𝑟𝑠

The VAT-exclusive price: 20 ,595.6

= VND18,723 billion
1+10%

The value added tax: 18,723 x 10% = VND1,872 billion.

41. B
Si Phon Co is responsible for processing forwarded processed products. When sending
the soles to Liter Co, Si Phon Co must specify the quantity, category, and specifications of the
products. The 800 million VND in revenue from processing the soles is eligible for 0% VAT.

42. D

43. C
The taxed price of a prepaid card with the face value of VND100,000 in the sales
promotion period is: 80,000 x 2,000 chiếc = 145,454,545
1+10%

44. D
Cash amount actually collected by the casino: VND245 billion – VND186 billion = VND59
billion.
The VND 59 billion-amount is the casino’s turnover inclusive of VAT and excise
tax. The taxed price shall be calculated as follows: Taxed price = 𝑉𝑁𝐷 59 𝑏𝑖𝑙𝑙𝑖𝑜𝑛 =
VND53,64 billion
 1+10%

45. A
The taxed price under this contract shall be determined as
follows: + The VAT-liable turnover is:
(USD150,000 – USD35,000) x VND23,100 = VND2,656,500,000
+ The taxed price is:
VND2,656,500,000
= VND241,500,000
1+10%

The Company may wholly declare and credit the input VAT for VAT- liable tourist
activities.

46. B
An An shall offset VND600 million from its investment project’s input VAT amount
against the payable amount for its ongoing production and business activities (VND 800
million), so in the tax period of August 2020, the company has VAT payable amount for its
new investment project is VND200 million

47. C
Binh Minh shall clear VND600 million from its investment project’s input VAT amount
against the payable amount for its ongoing production and business activities (VND250
million), so in the tax period of October 2020, the company’s input VAT amount for its new
investment project not fully credited is VND350 million and the company may be considered
for VAT refund for its investment project.

48. B
Declare VAT on revenue from post-paid telecommunication services of the entire
company with the tax agency directly managing the head office.
Pay VAT at the locality where the head office is located and where the dependent
accounting branch is located.
The amount of VAT payable at the place where the dependent cost-accounting branch
is located is determined at the rate of 2% (for post-paid telecommunication services subject
to VAT at the rate of 10%) on revenue (exclusive of VAT) postpaid telecommunication services
in the locality where the branch accounts are dependent.

49. C
When delivering feed for its animal-rearing activities, AP Co shall make invoices and
declare and pay VAT for the delivered quantity of feed and does not declare and credit input
VAT with regard to added-value invoices indicating the quantity of feed delivered for
animal-rearing activities.

50. D
VAT-inclusive turnover from the services provided in Vietnam shall be determined as
𝑉𝑁𝐷4,5 𝑏𝑖𝑙𝑙𝑖𝑜𝑛
follows: VND15 billion x = VND5,625 billion
𝑉𝑁𝐷7,5 𝑏𝑖𝑙𝑙𝑖𝑜𝑛 + 𝑉𝑁𝐷4,5 𝑏𝑖𝑙𝑙𝑖𝑜𝑛

VAT-inclusive turnover: 5,625/1.1 = VND5,114 billion

Part E: Value Added Tax Section B

Part E: Constructed Response Question: Answer
1. HOANG HA Co
(a)
– Zero-rated supplies are not subject to output tax and any inputs are creditable. Export
sales are zero-rated.
– Exempt supplies are not subject to output tax and any inputs are not creditable.
Interest is exempt.

(b) Deductible input value added tax (VAT)

Item Amount Creditable Non- Explanations

no. exclusive input VAT creditable
of VAT input VAT
1 - 2,400 0 There is no limitation for 1.5
HOANG HA Co to add
this input VAT in its VAT
return, e.g. in December
2020. Tutorial note: The
tax audit is for 2019,
meaning that the
revision in 2020 is still
acceptable.

2a 1,500 150 0 The 30-seater bus is not 1

subject to the VND1,600
million cap for vehicles.
2b 2,500 160 90 Input VAT in excess of 1.5
(50-160) VND160 million for a
four-seater car is
nondeductible.
3 2,950 295 0 Input VAT for a 1
registered promotion
is deductible in full.
4 18,000 1260 540 Input VAT for the 2
(18,000*70%) (18,000*30%) insured portion where the
insurer compensates
the input VAT is
not creditable. For the
remaining (uninsured
portion), the input VAT is
deductible in full.
7
10
 2. VSBS Co
(a) Campaign 1
(i) If the campaign is registered with the relevant authorities
For the ten products sold, the company should issue invoices at the normal price 0.5
and charge value added tax (VAT) as normal
For the products offered free, the company should issue invoices with a selling 1
price of zero, and charge zero VAT.
(ii) If the campaign is not registered
For the ten products sold, the company should issue invoices at the normal price 0.5
and charge VAT as normal.
For the product offered for free, the company is also required to issue an 1
invoice for the normal selling price and charge VAT as if it were a normal sale
In both cases, the company will be allowed to claim creditable input VAT for the 1
products if the above requirements are followed.
4

(b) Other campaigns registered with the relevant authorities

Campaign 2
The company can sell products at the reduced price during the period registered 1
with authorities. After the period, the company is required to sell the products at
the normal price. Output VAT will be calculated on the reduced price for the
invoices issued to clients.
Input VAT for the products sold at the reduced price is creditable 1

Campaign 3
The company is not required to charge and declare output VAT for the 1
vouchers at the time they are given to the customers
The company must issue invoices and charge output VAT when the customers 1
redeem the vouchers for products. Input VAT is creditable for the products
obtained from redeeming the vouchers.
4

(c) Campaign 4
Campaign 4
Upon issuing products for demo display, the company is not required to issue 1
an invoice and not required to charge VAT.
When selling the products at 40% discount to both employees and customers, 1
the company can issue invoices at the discounted price provided that the
discounted price is a reasonable price for the used products. This is
because the same discounted price is applied to both the external customers and
the employees.
2
10
 3. REALTIME Co
(a) EMRT Co invoicing requirements
According to Decree 123/2020/ND-CP
Case 1: The supplier is still required to issue an invoice for purchases
1.5 over VND200,000 even if the customer does not require it. In such
circumstances the invoice should clearly state ‘Invoice not required by buyer’
or ‘Buyer did not provide information’ According to Clause 1, Article 4, Decree
123/2020/ND-CP When selling goods and services, including those used for
trade promotion, advertising, samples, goods and services used for donation,
exchange, or paid as salaries (except for goods internally circulated or
internally used to proceed production), the seller must issue invoices
Case 2: For purchases of less than VND200,000 where the customer does 2
not require an invoice, the supplier is required to prepare a list of
goods/services sold without invoices issued. At the end of the day, the
supplier is required to issue an invoice showing the total amount of the
sales according to the list, and keep a copy of the invoice According to
Point a, Clause 6, Article 10, Decree 123/2020/ND-CP
1.5
Case 3: A revised invoice is not required provided the customer’s
tax code is correct. However, the parties are required to issue a minute
for correction.

If the Tax code, amount, tax rate, tax amount or goods on the
invoice is wrong, the seller and the buyer shall prepare a document
specifying the errors. The seller shall replace the erroneous electronic
invoice with a new one. The replacing invoice shall bear the text “Thay
thế cho hóa đơn ký hiệu mẫu số, ký hiệu hóa đơn…số hóa đơn...,
ngày... tháng... năm” (“This replaces invoice No. … dated … "). The
seller shall add the digital or electronic signature on the replacing
invoice, then send it to the buyer. If the erroneous electronic invoice
data has been transmitted to the tax authority, the seller shall send a
notice (Form No. 04 in the Appendix of Decree No. 119/2018/ND-CP)
and the new electronic invoice data to the tax authority in accordance
with Article 16 of Circular 68/2019/TT-BTC

(b) Payments made on behalf of the newly established branch

Where an organisation pays certain expenses on behalf of an entity to be 2
established under specific authorisation by the representative of the
tobe-established entity (and invoices are issued to the organisation which pays on
behalf), the input VAT is creditable by the entity to be established (not the payer)
(according to Article 14.12(b) of Circular 219/2013).
Where the bank account from which payment is made has not been 2
registered with the tax authorities at the time of payment, input VAT cannot be
deductible.
Accordingly, the remaining deductible input VAT for the branch is VND 1 110
million (130 – 20).
5
10
 4. NSN Co & BBH Co
(a) Taxable revenue and value added tax (VAT)
VND
million
Fees received by CSN Co (6,000 + 2,000) 8,000 1
Tutorial note: This amount is inclusive of VAT and special sales
tax (SST). The taxable revenue for VAT should be exclusive of
VAT and inclusive of SST, thus this amount should be ‘netted
down’ to revenue before VAT.
Taxable revenue for VAT: (8,000/(1 + 10%)) 7,273 1.5
Output VAT (7,273*10%) 727 0.5

(b) Invoicing requirement

According to Point d, Clause 3, Article 13, Decree 123/2020/ND-CP:

When BBH Co issues goods to the dependent branch, it can select one of
two methods:
– Method one: BBH Co issues a VAT invoice attached to the goods – 1.5
BBH Co would declare output VAT and the dependent branch would
declare input VAT separately
– Method two: BBH Co issues an inventory issue note cum internal 1.5
transportation, plus an internal goods movement order for the
transportation to the branch.
When the goods are sold by the branch:
– The branch issues a VAT invoice to the buyer and charges VAT as for a 1
normal sale
– If BBH Co selected method two above, when the goods are sold the 1
branch is also required to prepare a list of goods sold and send it to BBH
Co.
o Where the volume of goods sold is significant or at high frequency, 1 the
list can be prepared every five or ten days.
o Based on the list, BBH Co would issue an official VAT invoice for 1 the
sales to the branch. The dependent branch can then declare the
creditable input VAT charged by BBH Co, based on that invoice.
5. ITC Co
(a)
Explanation Output Creditable
value input
added VAT (VND
tax million)
(VAT)
(VND
million)
Purchase laptops Fully creditable as all (30 * 100 * 300 1
10%) used for generating
VAT-taxable revenue
Issue laptops for staff use No VAT charge required 0 1
for business purposes as internal consumption
for business
Issue laptops as reward Must charge VAT as 45 1
to staff payment in the nature of
(15 * 30 * 10%) a bonus
Issue laptops Must charge VAT as 105 1
for promotion company did not
(35 * 30 * 10%) register the promotion
program
Build creative centre Input VAT creditable, not 1,200 1
(13,200/1.1 * 10%) output VAT as internal
consumption for
business
150 1,500
5

(b) ELI Co
i. An e-invoice with the tax authority’s identification code (TIC) is an
1 e-invoice which is assigned an identification code by the tax
authorities before the seller sends it to the buyer
ii. The three types of e-invoice include: value added tax (VAT) e- 1
invoice, sales e-invoice and other e-invoices (including stamps, tickets,
 cards, receipts, goods dispatch and consignment notes in electronic
forms)

iii. Once the vendor applies to issue e-invoices, they are required to
1 issue e-invoices for all sales regardless of the value of the
transaction. Accordingly, ELI Co should request e-invoices for all
purchases from sellers
iv. Legal e-invoices may be converted into paper invoices, however, the 1
paper invoice would only be retained for book-keeping and
monitoring purposes, and would be invalid for transaction or
payment.
v. The key conditions which need to be met by the company for it to
1 use e-invoices without TIC include: it has or will transact with tax
authorities via electronic means; it has IT infrastructure; it uses
accounting software and e-invoicing software systems which meet the
needs of e-invoicing, allow access to e-invoices, store e-invoice data in
accordance with regulations, and ensure the transfer of electronic
data to buyers and tax authorities.

6. MINOR Co
(a) Value added tax (VAT) treatment of natural resources which are sourced
domestically
According to Article 4.23 of Circular 219/2013 as revised by Article 1.1(c)
of Circular 130/2016, and Article 1 of Circular 25/2018:
(i) The export of unprocessed natural resources or natural resources which 2 are
sourced domestically with a total value plus energy costs accounting for 51% or
more of total production costs are exempt from VAT (not zero rated).
Accordingly, input VAT for such cases is neither creditable nor refundable.
(ii) For calculating whether the ratio of 2
(value of natural resources + energy costs)
––––––––––––––––––––––––––––––––––––
 total production costs exceeds the 51% threshold, it should be
noted that total production costs only include direct costs, i.e. direct
material costs, direct labour costs and direct overheads.
All indirect expenses (e.g. selling costs and finance costs) are not include
(iii) The ratio is determined based on the finalisation report of the previous 1
year
5

(b) Refundable input VAT

Amount
(VND
million)
Value of exploited natural resources (direct material costs) 600,000 0.5
Energy costs 0.5
Value of natural resources + energy costs
Total production costs (direct materials costs 600,000 + direct 1,175,000 1.5
labour costs 300,000 + direct overheads 275,000) 1
Costs excluded (selling costs, general and administration costs, 740,000
interest expenses)
Ratio (740,000/1,175,000) 63% 0.5
Refundable input VAT – nil, because the ratio exceeds 51% 0 1
5
10

7. RBP Co
(a) Deductibility of input value added tax (VAT) for Project A and Project B
Transaction Project A Project B
(1) Input VAT from 200 billion is fully VND20 billion is 3
investment in fixed deductible (Input VAT nondeductible (Input
assets from fixed assets VAT from a project with
investment in a project only non-taxable
for both exempt and supplies is not
taxable supplies is deductible) (1 marks)
deductible in full) (2
marks)
(2) Input VAT from Only VND9,47 billion is 6 billion is nondeductible 3
operations deductible (20 input * (Input VAT from a project
taxable revenue 36/ with only non-taxable
total revenue (36 + 40)) supplies is not
Deductible input VAT deductible) (0.5 marks)
from operations of a
project with both
exempt and taxable
supplies must be
apportioned in the ratio
between taxable
revenue to total
revenue) (2·5 marks)
6

(b) Deductibility of input VAT relating to invoices

Invoice Deductible Non- Reasons
deductible
VND VND
million million
1 100 The receiving bank account must be 1
registered with the tax authorities for
input VAT to be deductible.
2 350 Late issuance of invoices is subject to 1
penalty but the invoice is valid and the
input VAT deductible.
3 250 For invoices issued manually, the blank 1
spaces must be crossed for the
invoice to be valid and input VAT
deductible.
4 10 A seller’s chop is not required for 1 invoices issued
by a supermarket.
4
10
 8. Bach Vi Co, Cam Tu Co and Hung Vuong Co
Value added tax (VAT) invoicing
(a) Bach Vi Co
The date that Bach Vi Co is required to issue an invoice for the equipment is 5 1
June 2020.
According to the current invoicing regulations, the seller of goods is required 1
to issue an invoice when the title (or right to use) is transferred to the buyer,
regardless of whether money has been collected or not.
2

(b) Cam Tu Co
(i) Where a customer’s purchases have a value of less than VND200,000, the 1
seller is only required to issue an invoice if specifically requested by the
customer.
(ii) For sales of petroleum Cam Tu Co is allowed to issue one invoice at the 1.5
end of each day for the total revenue from sales with a value in excess of
VND200,000, where the customer has not required an invoice.
For sales of other items in the convenience store, Cam Tu Co is required to 0.5
issue an invoice for each individual sale with a value in excess of
VND200,000, even if the customer does not require an invoice.
3
(c) HV Co
(i) Service providers are required to issue an invoice upon completion of the 1
service, however, where money is collected before the service is completed,
an invoice is required to be issued upon collection.
Therefore, HV Co must issue an invoice for the set up fee on receipt of the 1
cash, i.e. on 5 May 2020, since this is earlier than the completion of the
service.
2
(ii) The total output VAT chargeable by HGV Co to Customer A in May 2020 will be:
VND million
Set up fee 15 0.5
Service fee (10 million * 6 days/ 30 days) 1

VAT at 10% 0.5

10
 Reference: According to Article 9 and Clause 8, Article 10 of Decree 123/2020/ND-CP
9. Beauty Ltd
Expenses Income (VND) Output VAT Input VAT VAT
(VND) treatment
Sales 9,875,600,000 897,781,818 Taxable
Purchase of Creditable
880,000,000
goods sold 80,000,000
Salaries 578,000,000 Nil No VAT
Consultant fee 33,000,000 3,000,000 Creditable
Rent 66,000,000 6,000,000 Creditable
Repair of 200,000 Creditable
2,200,000
equipment
Sale of an old
computer in 272,727 Taxable
3,000,000
the local
market
Provisional Nil No VAT
personal income 11,000,000
tax (PIT)
Purchase of a 4,090,909 Creditable
45,000,000
new computer
Sale of old staff
uniforms Nil No VAT
10,000,000
(exported to
Japan)
Telephone and 863,636 Creditable
9,500,000
internet
Stationary 2,000,000 181,818 Creditable
Water and pantry 5,100,000 463,636 Creditable
Electricity 6,000,000 545,454 Creditable
Personal gift by Nil Non
the company’s Creditable
manager to his 11,000,000
teacher on
‘Teachers Day’
Interest on loan 12,000,000 Nil No VAT
Bank charges 355,000 32,273 Creditable
 ––––––––––– –––––––––
Total 898,054,545 95,377,726
––––––––––– –––––––––
VAT payable 802,676,819
–––––––––––
10. Vinamex Ltd
XYZ Enterprises Limited
1. Tobacco products subject to special sales tax – imported price at the border gate plus
import duty.
2. Alcohol products subject to import duty and special sales tax – imported price at the
border gate plus import duty plus the special sales tax (SST).
3. Goods subject to instalment payments – the lump sum price of the goods excluding
VAT as if by a single payment (excluding interest on instalments).
4. Goods where the invoice states the payment price including the value added tax –
sale price excluding VAT.
5. Agency and broking activities for the sale of goods and services for commission –
commission received without VAT.
6. Goods processing – processing price excluding VAT but including charges for labour,
fuel, power, auxiliary materials, and other expenses of processing incurred by the processor.
7. Residential apartments where the taxable price includes the value of land as
provided by the peoples’ committee – sales value less the value of the land provided by the
peoples’ committee.

11. Hanh Nguyen Ltd

(a)
Nguyen Ltd – June VAT period
Service provided Transaction Input Output
value VND VAT VAT VND VND

Training course 172,500,000 17,250,000

Course books (5%) 17,500,000 875,000
Training course in Singapore (exported service 18,000 SGD 0
0% or invoiced in July
Monthly service fee revenue from an Finland 300,000,000 30,000,000
in Vietnam
Rent expense 90,000,000 9,000,000
Wages to staff (not subject to VAT) 200,000,000 0
 ––––– –––––
Subtotals 9,000,000 48,125,000
––––– –––––
Total VAT due (net) 39,125,000
–––––
Note: The training course conducted in Vietnam on 25 March (and assumed declared in
April) and the software developed on 10 December both relate to VAT periods other than
June 2020.

(b)
1. A contract for the sale of goods or processing of goods (in the case of the processing
of goods) or for provision of services to foreign organisations or individuals.
In the case of an authorised export, a contract authorising export and minutes of
liquidation of the contract authorising export (if the contract has expired) or a periodical debt
reconciliation statement between the principal and the authorised dealer, specifying the
quantity and types of products, and the value of goods which were exported under the
authorisation; also, the number and date of the export contract which the authorised dealer
has signed with the foreign party; the serial number, date and amount stated in the source
document for payment by the principal to the authorised dealer; and the serial number and
date of the customs declaration of the goods exported by the authorised dealer.
2. In the case of an export of goods, a customs declaration with certification by the
customs office of the actual physical export of the goods.
In addition, payment for the exported goods and services must be made via a bank or
by another method specified in the export contract acceptable to the tax authorities as
deemed to have been made via a bank; for example, by set off against a foreign loan or
through a third party authorised by the foreign party to the contract.
 12. Ronadol Ltd
Ronadol Limited
Value added tax (VAT) for November 2020
Expenses Income VND VAT rate VND Input VAT Output VAT
VND VND
Interest income 15,000,000,000 N/A - - 0·5
Other fee income 10,000,000,000 10% 0 909,090,909 1
Sale of old furniture 4,000,000,000 10% 0 363,636,364 1

Purchase of 4,500,000,000 5% 214,285,714 0 1

computer
equipment
Salaries 700,000,000 N/A - - 0·5
Mobile phone bill 30,000,000 10% 2,727,273 0 1
Electricity bill 8,900,000 10% 809,091 0 1
Rent 190,000,000 10% 17,272,727 0 1
Management fee 120,000,000 10% 10,909,091 0 1
(gross of tax)
Provisional 21,000,000 N/A - - 0·5
personal income
tax
Stationary 15,000,000 10% 1,363,636 0 1
Telephone and 22,000,000 10% 2,000,000 0 1
internet
Interest on loan 30,000,000 0% 0 0 1
Bank charges 1,100,000 10% 100,000 0 1
––––––––––– –––––––––– –––––––––––
Total revenue 29,000,000,000 244,272,727 1,272,727,273
Taxable revenue 14,000,000,000
–––––––––––
Creditiable 48.3% 117,924,764 2
percentage –––––––––––

Total 1,154,802,509 0·5

payable/(creditable) –––––––––––
15
13. PT Soft JSC
(a)
PT Soft JSC
Value added tax (VAT) output 9 3,000,000,000 0% 0
and input for the month of June 2020
Item Amount VAT Output Input
VAT no. exclusive of rate VAT VAT
1 150,000,000 10%
15,000,000 10 50,000,000 10% 0
2 2,000,000 0 Explanations

3 25,000,000 10% 2,500,000

0·5
Direct sales 1
invoice
VND20 million 1
4 250,000,000 10% threshold for cash payment
25,000,000 not applied to seller
no longer apply 1 over six
months declaration Deductible VAT 1
5 2,000,000,000 10% is capped at 10% of VND1,600 million
160,000,000 1
0·5
Input VAT of 2 foreign
contractor (300
6 700,000,000 Exempt 0 million/(1 –
7 200,000,000 10% 5%)*5%
20,000,000 Sale to an export 1 processing
8 300,000,000 enterprise is treated as an export
15,789,474 Cash payment in 1 excess of VND20
million
 10

(b)
Allocation of input VAT
Item Amount VAT Input VAT Apportionment Reason no.
rate required?
1 150,000,000 10% 15,000,000 No Fixed assets 1
used for both
exempt and
non-exempt
activities)
5 2,000,000,000 10% 160,000,000 No As above 0·5
8 300,000,000 15,789,474 Yes 0·5
VAT-taxable revenue: (25,000,000 + 200,000,000 + 3,000,000,000) = 1
3,225,000,000
Total revenue: (3,225,000,000 + 700,000,000) = 3,925,000,000 0·5
Allocation ratio: 3,225,000,000/3,925,000,000 = 82·17% 0·5
Allocated deductible VAT: (15,789,474*82·17%) = 12,974,210 0·5
Total deductible input VAT: 12,974,210 + 15,000,000 + 160,000,000 = 0·5
187,974,210
5
15

14. Company A
a)
(i)Types of invoices to be issued
Case 1: Company A must issue a VAT invoice to Company B. 1
 Case 2: Company A must issue an export invoice to Company C. 1 Case
3: Company D should issue a sales invoice to Company A (a foreign exchange
trader must use the direct method for foreign exchange trading). 1 Case 4:
Company E should issue a special invoice (international air freight 1 receipt) to
Company A. 1
Case 5: The tickets themselves will be invoices, if they have been
registered as such with the authorities.
5
(b) Situations where settlement is deemed to have been made via a
bank Settlement is deemed as being made via a bank where:
(i) the value of goods and services purchased is offset with the value of
goods/services sold to the same party (or ‘bartering’), if this is provided for 1
in the contract;
(ii)the value of goods and services supplied by the seller is offset with a debt 1 that the
seller is owing to the buyer, if this is provided for in the contract; and
(iii) the buyer authorises a third party to pay the amount due via a bank to the 1
seller, if this is provided for in the contract.
3

(c) Input value added tax (VAT) implications

(i) Input VAT on a fixed asset being a building used as the head office of a life
insurance company is not deductible for VAT purposes, but is added to the
cost of the building for corporate income tax (CIT) purposes. 1.5
(ii)Input VAT on the villa destroyed by fire is not deductible for VAT, and is not
added to deductible expenses for CIT purposes as in this case the total cost
including the VAT is covered by the insurance company compensation. (iii) 1.5
Input VAT on the villa sold to the CEO at a significant discount is deductible
in full as it is treated as a normal sales transaction by the company. There 1
are no CIT implications.
4
15
Tutorial note: the company must calculate the output VAT based on market value
(this was not asked for in the exam)
15. Minh Nhat Co
(a) The value added tax (VAT) rate of zero (0) per cent applies to exported 0.5 services.
 Exported services include services provided directly to organisations overseas.
Organisations overseas means foreign organisations which do not 1.5 have any
permanent establishment in Vietnam and are not VAT taxpayers in Vietnam.
Exported services which are entitled to the VAT rate of zero (0) per cent must
satisfy the following conditions:
– A contract for the provision of services with an organisation is available. 1
– Payment receipts for exported services made via a bank and other source of
supporting documents must be available. 1
4
(b) The conditions for the credit of input VAT in the case of a purchase of office
equipment is as follows:
– having a lawful VAT invoice for the office equipment purchased; and 1 – having a
receipt for payment via a bank for office equipment purchased, as the payment is for
more than VND20 million pursuant to the invoice. 1
In May 2020, Minh Nhat only made payment of VND275 million via a bank (the
remaining amount of VND55 million was paid in cash). Therefore, only 1 the
amount of VND25 million is acceptable as deductible input VAT.
Lan Anh must reduce the amount of deductible VAT by VND5 million in
Minh Nhat’s VAT return for May 2020. 1
4
(c) When a VAT purchase invoice issued by a supplier has been lost when being
delivered by post the purchaser (Minh Nhat) is required to submit a notice to
the local tax authorities on the loss of the invoice. 1 The notice must include
the following documents:
– Report on loss of invoice (in stipulated form); 0.5
– Minutes on loss of invoice signed by the legal representative of the 0.5 purchaser
and the person in-charge of invoices of the company;
– A copy of the invoice (sheet no.1 kept by the seller) certified as a true copy 0.5 and
signed by the seller.
The above documents should also kept by Minh Nhat to serve as a basis for 0.5
declaration of input VAT and deductible expenses.
3
15
 VIETSOURCING TRAINING CENTRE

MOCK EXAM
MOCK TEST 1: SECTION A
SECTION A
1.
Sung Soo Co , a korean contractor, who does not follow Vietnamese accounting system
(VAS), signs a contract with Lorry Co in Vietnam to provide compressor machine and
spareparts equipment with installation and test run services for USD 20 million. The contract
does not separate the value of compressor machine and spareparts equipment from the
value of services.
What is VAT liability of Sung Soo Co?
A. Total contract value of USD 10 million is subject to VAT at 5% B.
Total contract value of USD 10 million is subject to VAT at 3%
 C. Total contract value of USD 10 million is subject to VAT at 2%
D. Total contract value of USD 10 million is not subject to VAT

2.
In January 2020, Mr Liam Oscar, a 50-year-old American citizen, started his
employment in Vietnam for MachineField Co, a Vietnamese company. In June 2020, his wife
Elizabeth, also a 45-year-old American citizen, suffered stroke in America. She could not take
care her self and had to move to Vietnam to live with Liam from July 2020 to the end of the
2020 year. She had no income in 2020. MachineField Co provided Liam with cash support of
VND80 million towards medical care expenses for Elizabeth in Vietnam during 2020.
What is the total personal deduction/relief (in VND millions and ignoring social,
health and unemployment insurance) Mr Liam Oscar can claim in the year 2020 relating to
his personal income tax (PIT)?
A. VND282 million
B. VND184.8million
C. VND132 million
D. VND108 million

3.
Haulwer Co is a Thailand company. In 2016, the company purchased shares in PNJ JSC,
an unlisted Vietnamese joint stock company, for VND20,000 million (equivalent to USD1
million at that time). In 2020 when PNJ JSC’s shares were listed on the Vietnamese stock
exchange, Haulwen Co sold the entire shareholding for USD1,5 million when exchange rate is
23,500.
What is the amount of tax (in VND million) which should be deducted before the
proceeds from the sale of the shares can be remitted overseas to Tangwang Co?
A. VND3.53 million
B. VND0 million
C. VND17,63 million
D. VND35.25million

4.
In 2020, UCH Co, a Vietnamese company, received compensation in cash of VND2,200
million from an insurance company for damage to goods caused by a fire. According to the
insurance policy, the compensation does NOT cover any value added tax (VAT) on the
purchase of the goods. The insured goods were purchased by UCH Co for VND1,980 million
(inclusive of VAT 10%).
What is the amount of output value added tax (VAT) and creditable input VAT (in VND
millions) UCH Co is required to declare in 2020 as a result of the above transactions?
Output VAT Creditable input VAT
A. VND220 million VND198 million
B. VND0 million VND0 million
C. VND0 million VND180 million
D. VND220 million VND0 million

5.
Dynein Co, a Singapore company, holds a 23% shareholding in Yarns Co, a Vietnamese
company until 1 April 2016. From 1 May 2020 Dynein Co had invested more in to Yarns Co
and holding 30% shares. Dynein Co sold goods to Yarns Co in 2020.
What is the relationship between Dynein Co and Yarns Co for the purposes of
reporting related parties’ transactions in accordance with the regulations in Vietnam?
Before 1 May 2020 From 1 May 2020
A. Related parties Related parties
B. Not related parties Related parties
C. Related parties Not related parties
D. Not related parties Not related parties

6.
In January 2020, Rotors Co, a foreign contractor, signs a contract with a Anh Ngoc Co to
provide gas services for USD 01 million. Before obtaining the tax registration certificate (for
payment of VAT by deduction method), Rotors Co incurs an input VAT of USD 5,000 on
purchased goods/services.
On 15 March 2020, the Anh Ngoc Co pays USD 120,000 to Rotors Co (exclusive of VAT
and inclusive of corporate income tax). The Anh Ngoc Co pays VAT on behalf of Rotors Co,
which equals (=) 120,000 x 10% = 12,000 (USD).
On 01 April 2020, Rotors Co applies for a registration and is issued with a tax
registration certificate by the tax authority. In June 2020, the Anh Ngoc Co pays USD 220,000
to Rotors Co (exclusive of VAT and inclusive of corporate income tax). Thus, output VAT
incurred by Rotors Co in June is USD 22,000 (= 220,000 x 10%).
 Input VAT of Rotors Co incurred during the period from 01 June 2020 to 30 June 2020 is
USD 4,000 (Foreign Contractor A already has a tax code during this period). Rotors Co
transfers all invoices and receipts incurred in June 2020 to Bao Ngoc Co in order for Bao Ngoc
Co to declare and pay VAT on behalf of Rotors Co
What is payable VAT of Rotors Co in June 2020?
A. Payable VAT is 18,000
USD B. Payable VAT is 20,000 USD
C. Payable VAT is 13,000 USD
D. Payable VAT is 28,000 USD

7.
In 2020, Ms Minh Tu, a Vietnamese citizen, purchased 200,000 shares in VSC Bank
when the price per share was VND50,000 (five times par value). The shares were listed on the
official stock exchange and in 2020, VSC Bank announced a 10% dividend per share, of which
40% would be paid in cash and 60% in the form of bonus shares. The market price of the
shares at the time of announcement was VND80,000 per share. Ms Minh Tu had no intention
of selling these shares in 2020.
What is Ms Minh Tu’s Vietnamese personal income tax (PIT) liability (in VND million)
in the year 2020 in relation to the dividend?
A. VND4 million
B. VND8 million
C. VND32million
D. VND0 million

8.
Lorry Co, a company in Vietnam, reimbursed employees’ expenses for overseas
business trips originally paid by the employees using their personal credit cards. The
expenses amounted to VND40 million in total.
Which of the following conditions must be met for Lorry Co to treat such reimbursed
expenses as deductible for corporate income tax (CIT) purposes?
(1) The credit card is guaranteed by the company
(2) The expenses are supported by proper documents/invoices
(3) The trip is authorised by a decision issued by the company’s directors
(4) The company policy allows employees to advance expenses for business trips by personal
credit cards
 A. 1 and 4 only
B. 2 and 3 only
C. 2, 3 and 4 only
D. 1, 2, 3 and 4

9.
On 30 June 2020, Bolts Co, a Vietnamese company, identified the value added tax (VAT)
declaration it made for April 2020 was under-declared by VND1,300 million. It assumes that
21 May 2020 was a Monday, and there had been no tax audit at Bolts Co in 2020.
What is the late payment interest (in VND) which Bolts Co is required to settle on 30
June 2020, assuming the under-declared value added tax (VAT) was settled on that date?
A.
VND26,000,000 B.
VND15,990,000 C.
VND20,000,000
D. VND15,600,000

10.
According to the related-party transactions regulations, when select the independant
comparables, the minimum number of independent comparables shall be selected after
completion of the comparability analysis and adjustment of material differences as follows:
(i) 01 comparable which is selected if related-party transactions or taxpayers
performing relatedparty transactions and independent comparables has no difference
(ii) 03 comparables which are selected in the event that there are certain
differences existing in independent comparables and there are not sufficient information or
data provided as the basis for eliminating all of the material differences
(iii) 05 comparables which are selected only when there is any information or data
used as the basis for eliminating most of the material differences existing in independent
comparables.
(iv) 03 comparables which are selected only when there is any information or data
used as the basis for eliminating most of the material differences existing in independent
comparables. A. (i), (ii) and (iii)
B. (i), (ii) and (iv)
C. (i), (ii), (iii) and (iv)
 D. (i), (iii) and (iv)

11.
Awls Co signs a contract with Hoang Gia Co to supervise the construction of Cement
Factory Z. The contract value is USD 205,000 exclusive of VAT and CIT. Furthermore, Hoang
Gia Co provides accommodations and workplaces for managers of Awls Co, which are valued
as USD 18,000 exclusive of VAT and CIT. According to the contract, the Hoang Gia Co is
responsible for paying VAT and CIT on behalf of the Foreign Contractor.
What is taxable amount subject to CIT?
A. USD
247,778 B. USD
234,737
C. USD 215,789
D. USD 18,947

12.
Ms Hang Nguyen is 34 years old, a Vietnamese tax resident and has one dependant.
For the whole of the year 2020, she worked as an executive assistant for Mill.ly Co, a local
company in Vietnam, for a monthly salary of VND116 million (gross of personal income tax
(PIT)). Ms Hang Nguyen is responsible for her own social, health and unemployment
insurance, assuming the cap for all insurances is 20 times of minimum monthly salary.
What is Ms Hang Nguyen’s monthly personal income tax liability (in VND millions,
rounded to two decimals only in the final PIT calculations) in the year 2020?
A. VND26.48 million
B. VND24.26 million
C. VND32.8 million D. VND27.3 million

13.
In 2016, SHB JSC, a joint-stock company registered in Vietnam, invested in shares of
VNB JSC, a company listed on the Vietnamese stock market, when the share price was
VND15,000 per share. In August 2020, SHB JSC received dividends from VNB JSC in the form
of six million bonus shares when the market price of one share in VNB JSC was VND25,000. In
December 2020, SHB JSC sold five million bonus shares of VNB JSC for VND29,000 per share.
SHB JSC is subject to the standard rate of corporate tax.
 What is the total corporate income tax (CIT) liability payable by SHB JSC in the fiscal
year 2020 on the receipt of the dividend in August 2020 and the sale of the shares in
December 2020?
A. VND4,000 million
B. VND14,000 million
C. VND29,000 million
D. VND0 million

14.
PNLT Co, a foreign contractor from Denmark, entered into a contract for construction
of a factory in Vietnam and applied the deemed method for declaring foreign contractor tax
(FCT). The works were completed in 2019, however, there were some disputes between PNLT
Co, its suppliers and the project owner. When the disputes were settled in 2020, PNLT Co
received contractual compensation of USD 600,000 from its suppliers, but had to pay
contractual compensation of USD 450,000 to the project owner. Compensation is treated as
‘other business activities’ for corporate income tax (CIT) purposes.
What is the amount of corporate income tax (CIT) as a portion of the foreign
contractor tax (FCT) liability incurred by PNLT Co in Vietnam in 2020, if the company’s policy
is to minimise tax under current regulations?
A. USD0
B. USD 12,000
C. USD36,000
D. USD3,600
15.
Which of the following statements are correct?
(i) The Vietnamese language shall be the official language used in all tax-related
documents to be submitted to the tax authorities
(ii) Documents in a foreign language must be translated into Vietnamese. All
translations must be performed or certified by an authorised public notary
(iii) Where the documents in a foreign language are more than 20 pages (of A4 size)
long, the taxpayer is allowed to translate only the key provisions relating to the
determination of the tax obligations (plus a written explanation to the tax authorities)
A. i, ii and iii
B. i only
 C. i and iii only
D. ii and iii only
MOCK TEST 1: SECTION B
1.
VNV Co (VNV) is a Vietnamese company owned by two shareholders, Ms Linh and Mr
Nam, with the shareholding ratio of 65% and 35%, respectively. VNV specialises in software
development and the trading of computer hardware. The company’s recent taxable
income/(tax losses) from operations have been as follows:
Year ended Software Trading of Combined total
computer
31 December development
hardware

VND million
VND million VND million
2016 (cannot be separated for each activity) (9,000)
2017 8,000 7,000 15,000
2018 (10,000) 2,500 (7,500)
2019 15,500 2,000 17,500
2020 (11,000) 3,000 (8,000)
VNV is entitled to four years tax exemption plus a nine-year 50% tax reduction for its
software development activity from the first year of profits, which was in 2014. Due to
inappropriate planning, the tax exemptions available in the years 2014 and 2015 were used
inefficiently when the company made small profits but could not identify separately from
which of its activities the profits came. The software activity is also entitled to the 10% tax
rate in the 15 years from the year of first revenue, which was also 2014.
The trading of computer hardware activity is subject to the common tax rate (i.e. 22%
up to 2016, and 20% from 2017).
In 2017, VNV was instructed in a written ruling by tax authorities that apart from the
guidance under the corporate income tax (CIT) Circulars, the losses must be utilised in a
consecutive manner to fully offset all profits from all activities within five years after their
incurrence.
At the end of 2020, as a result of unresolvable disputes, the shareholders decided to
split VNV into two separate companies according to their current shareholding ratio – LHV (to
be held by Ms Linh) and NHV (to be held by Mr Nam).
Required:
 (a) Calculate (in VND millions) the assessable income for corporate income tax (CIT)
for each of VNV Co’s activities in the years 2017, 2018, 2019 and 2020 and state the tax rate
applicable in each case.
Note: You should use the loss utilisation as required under the CURRENT CIT
regulations. (9 marks)
(b) Calculate (in VND millions) the tax loss carry forward to be allocated to LHV and
NHV respectively after the split. (1 mark)
(Total: 10 marks)

2.
Mr Nghi Pham, who is 47 years old and a Vietnamese citizen, is the general director of
MCP JSC (MCP) a company listed on the Vietnamese stock market.
According to his labour contract with MCP, Mr Nghi Pham’s monthly gross income is
VND280 million (covering all benefits in cash and in kind and all taxable). He is also entitled to
incentives based on the performance of the company. At the end of 2020, MCP offered Mr
Nghi Pham a ‘cashing shares award’ scheme as an appendix to his labour contract, by which
he would receive a nominal award of 1·2 million shares of MCP (with no dividend and voting
rights). On 31 December 2020, MCP would pay him an ‘award’ equal to the difference
between the share price at the beginning of 2020 (of VND12,000 per share) and that on 30
December 2020. In 2020, MCP made a substantial profit and the share price on 30 December
2020 had increased to VND30,000 per share.
The board of directors was very happy with Mr Nghi Pham’s performance in 2020 and
they are considering offering him additional incentives as follows:
– Option 1: a special cash bonus of VND3,600 million, payable immediately on 31
December 2020; or
– Option 2: a cash bonus of VND1,800 million, plus 130,000 shares to be awarded
with full rights to receive dividends, payable immediately on 31 December 2020. The board
plans to make a dividend payment for 2020 of VND1,000 per share in May 2021.
Mr Nghia Phan has three dependants, being his children. His compulsory insurance is
calculated based on the cap of VND29.8 million per month.

Required:
(a) Describe the personal income tax (PIT) treatment of (1) the ‘cashing shares
award’ scheme and (2) the shares awarded under Option 2 above. (5 marks)
 (b) Calculate (in VND millions) Mr Nghi Pham’s PIT liability in Vietnam in the year
2020 under Option 1 above. (5 marks)
(Total: 10 marks)

3.
CSP Co (CSP) is an international supplier of foodstuff processing equipment
incorporated in Singapore. CSP intends to enter into a contract with MCD, a Vietnamese
corporation, for the supply of a large foodstuff production line in Vietnam.
The expected contract value of the production line will consist of the following (after
withholding tax in Vietnam):
– Machinery and equipment: USD35 million
– Design of the production line: USD4 million
– Supervision, installation and training: USD4.2 million
CSP is considering whether to make the contract a lump sum contract for USD43.2
million, or a contract with the value of each activity shown separately (as above).
CSP also wants to subcontract a part of the equipment supply amounting to USD8
million to Vietnamese subcontractors.
The whole of the above supplies are in a list of objects subject to value added tax (VAT)
at 10% under the Vietnamese VAT regulations.
According to the draft contract, MCD will bear all the withholding tax in Vietnam in
respect of the activities of CSP.

Required:
(a) Calculate the foreign contractor tax (FCT) applicable to CSP Co if the contract
value is stated as a lump sum of USD43.2 million. (4 marks)
(b) Calculate the FCT applicable to CSP Co if the contract value is shown separately
for each activity. (6 marks)
Note: You should make all calculations to the nearest USD thousands.
(Total: 10 marks)

4.
 The following questions relating to value added tax (VAT) have been raised by clients of
MVB Co, a tax consulting firm in Vietnam:
(a) NX Co (NX) exported goods to a foreign buyer in April 2020. NX authorised an
export agent in Vietnam to sign the contracts with the foreign buyer. The export agent
conducted all necessary procedures for the export, and obtained sufficient documents for
the export. The deadline for payment in accordance with the export contract and
authorisation contract was 10 May 2020. The foreign buyer remitted money to the agent via
a bank on 6 May 2020, however, the agent had not transferred the money to NX by 31 May
2020.
NX had incurred input VAT for the exported goods in February 2020 but has not yet
claimed this input VAT. NX did claim credit for the input VAT in their May 2020 VAT return but
are not sure if they were eligible for the credit.
NX want to know: what the primary requirements for an input VAT credit are in this
case, whether they are eligible for such a credit and what action (if any) they should now
take. NX declare VAT by monthly period. (6 marks)

(b) TIS Co (TIS) is a Vietnamese subsidiary of a foreign company processing and

exporting software to its parent company. TIS usually packages the software and relevant
code on a DVD and exports the DVD to its parent company. However, in April 2020, due to
urgent requests from its parent company, TIS transmitted the software to the parent
company via the internet. TIS does not have a customs declaration for this transmission.
The parent company agreed with TIS in the contract for the software that they will
offset the software development fee against an amount which the parent company has paid
to an overseas supplier on behalf of TIS.
TIS want to know: whether they can claim an input VAT credit for the expenses
incurred which relate to the software exported in April 2020 and what action (if any) they
should now take. (2 marks)
(c) Flax Co (Flax) provided research services in Vietnam to INV, a foreign company,
for INV to consider and decide whether to go ahead with a potential investment project in
Vietnam.
Flax has incurred input VAT for these services starting from March 2020, and requested
INV to provide a confirmation that it has no permanent establishment (P/E) in Vietnam.
However, at the end of April 2020, INV replied that they did not want to provide such a
confirmation to Flax and that they did not understand why they had to provide such a
confirmation.
 Flax wants to know: why INV is required to issue such a confirmation, and what the
implications are for both INV and Flax if INV continues to refuse to provide such confirmation.
(2 marks) Required:
Provide the advice as requested by each of MVB Co’s clients.
Note: The mark allocation is as shown against each client’s query.
(Total: 10 marks)

5.
You should assume that today’s date is 21 March 2021.
TL JSC (VTL) is a Vietnamese company, whose shares are listed on the Vietnamese stock
exchange. TL specializes in the manufacture and installation of telecommunication
equipment and in recent years has conducted several successful investment projects in both
Vietnam and overseas.
TL’s audited financial statements for 2020 show a profit before tax of VND720,000
million. The following issues have been identified as relevant to the preparation of the
company’s 2020 corporate income tax return. All amounts are stated exclusive of any
applicable value added tax (VAT), except where specifically stated otherwise.
(1) Special bonuses are offered to the management team and some employees with
exceptional performance.
However, the bonuses for 2020 were not settled by the fiscal year end of 31 December
2020. TL accrued VND16,800 million in the 2020 audited financial statement for these
bonuses, representing a 12% increase from the accrued bonuses for 2019 of VND15,000
million.
For 2019, the actual bonuses settled and paid in February 2010 were VND15,500
million. The difference (between the accrued expenses of VND15,000 million and the actual
settlement amount) of VND500 million was recorded as an additional expense in the 2020
audited financial statements.
The actual bonuses for 2020 of VND16,500 million were settled and paid on 15 March
2021 (after the audited financial statements were finalised).
(2) During 2020, TL received USD5 million being the after tax profit share from its
investment project in Taiwan.
The profits had been subject to the common income tax rate in Taiwan of 17%.
(3) In 2019, TL rented out an office in Ho Chi Minh City, which was not required for
its own use, for a period of five years. TL received the full rental payment for the whole
five-year period, of VND33,000 million (inclusive of 10% VAT) on the signing of the rental
agreement. For accounting purposes TL will recognise the rental income over the five years of
the rental period (2019 to 2023) but for tax purposes it elected to treat the whole amount as
taxable in 2019.
(4) During 2020, TL received and paid invoices for the medical costs of its directors
amounting to VND1,100 million. Under TL’s insurance policy with an insurer, 50% of the
medical costs will be covered by the insurer. According to the contract with the directors, TL
will only bear up to a total of VND350 million per
year for the costs not covered by the insurer, however, in 2020 TL decided not to seek
any reimbursement from the directors.
(5) In 2020, TL purchased some hi-tech equipment and shortened its useful life from
five years (as stipulated in Circular 45/2013 on depreciation) to three years. The depreciation
charge for this equipment in the 2020 financial statements was VND600 million.
(6) In December 2019, TL obtained a loan from a bank specifically to finance a new
investment to set up a new company in Cambodia. In 2020, the interest incurred on this loan
amounted to VND3,600 million.
The capital contributions to TL by its shareholders have been made in full.
(7) In 2020, TL incurred the following foreign exchange gains/losses, all of which had
been recorded in the 2020 audited income statement:
– a realised net gain of VND800 million;
– an unrealised loss on receivables as at 31 December 2020 of VND1,350 million;
– an unrealised gain on payables as at 31 December 2020 of VND1,280 million; and – an
unrealised gain on cash at bank as at 31 December 2020 of VND400 million.

Required:
Calculate TL JSC’s taxable income and tax liabilities (in VND millions) for corporate
income tax (CIT) purposes for the year ended 31 December 2020.
Note: You should list all of the items specifically referred to in notes 1 to 7, indicating
by the use of ‘0’ any item for which no adjustment is required.
Ex-change rate 23,500 VND for 1 USD
(Total: 15 marks)

6.
(a) For the purposes of part (a) of this question you should assume that today’s date is
31 December 2020.
 Mr Tom, who is 48 years old, and a US citizen, was assigned to work in his company’s
subsidiary in Vietnam, MCS Vietnam Co (MCS-V), from 1 January 2020. His wife, Julian, who is
40 years old, followed him to Vietnam as a housewife without income. The couple have two
children, Jennifer aged 19 years and Lewis aged 15 years. Lewis joined his parents in Vietnam,
but Jennifer continued her college education in the US.
Tom’s remuneration with MCS-V in 2020 consisted of the
following: – Annual salary: USD360,000 for the 12-month period.
– Performance bonus: one month’s salary plus USD35,000 performance incentives.
– Housing: MCS-V rented a house for Tom and his family for USD4,500 per month and paid
the rent directly to the landlord.
– Tuition fees: MCS-V reimbursed Tom for the university tuition fees for Jennifer in the US of
USD20,000 and the school fees for Lewis in Vietnam of USD15,000.
– Air fares: MCS-V reimbursed air fares for two round trips back to the US for Tom and his
wife. According to MCS-V’s records, the air fare cost for one round trip is USD3,000 per
person.
– Medical insurance: MCS-V purchased medical insurance for each member of Tom’s family
who were present in Vietnam at a cost of USD2,000 per month per person.
– Car: MCS-V hired a car with a driver at a cost of VND20 million per month to transport Tom
between his house and the office.
– Accumulation insurance: MCS-V purchased an accumulation insurance for Tom with a
foreign insurer at a cost of USD3,000 per month. The cumulative contributions plus 6% per
year will be paid to Tom either on the five-year anniversary of the commencement of the
policy, or one year from the termination of his employment with MCS-V, whichever comes
earlier.

Required:
(i) Calculate Mr Tom’s taxable income and non-taxable income (before any housing
benefits) for the year 2020. (9 marks)
(ii) Calculate Mr Tom’s personal income tax (PIT) liability from employment for the
year 2020. (4 marks)
Note: All calculations should be made in VND millions, rounded to zero decimal in
every calculation.
(b) You should treat this part as independent of the calculations in part (a).
 On 1 January 2020, Tom was granted options to purchase 1.2 million shares of MCS
Vietnam Co’s parent company, MCS US Inc, at USD1 per share. The options will become
vested to him at various dates over the next four years, provided that he continues to be
employed by the MCS group of companies. Options for the right to purchase 300,000 shares
at USD1 became vested on 31 December 2020, when the market price was USD1.50 per
share. Tom exercised the option to purchase these vested shares on 2 January 2021 when the
market price was USD1.52 per share.
Required:
Explain the personal income tax (PIT) treatment in Vietnam of the options granted to
and exercised by Mr Tom in the year 2020. (2 marks)
Ex-change rate VND 23,500 to USD 1
(Total: 15 marks)
MOCK TEST 1: SECTION A
1. B
Total contract value of USD 10 million is subject to VAT at 3%
3% VAT shall apply.

2. C
VND132 million [(11 million self-relief*12 months)
Ms Elizabeth Oscar is 50 years old and would not qualify for the dependant deduction.
The cash support is taxable income in this case, but not a deduction.
Tutorial note: Cash support for fatal diseases is non-taxable; however, in this case cash
support is taxable because it is not for a fatal disease.

3. D
VND35.25 million [USD1,5 million*23,500*0·1%]
As PNJ JSC is listed, Haulwen Co’s sale of shares in PNJ JSC is subject to tax under the
foreign contractor tax (FCT) mechanism, not as a transfer of a capital contribution under the
corporate income tax (CIT) regulations. The rate of 0·1% of proceeds would be applied.

4. C
VND0 million output VAT and VND180 million (1,980/1·1*10%) creditable input VAT
According to Article 14.1 of Circular 219/2013, uninsured input VAT from damages due to fire
would be creditable in full. According to Article 5, example 14, compensation in cash would
not be subject to VAT declaration (VAT output = 0).

5. B
Not related parties before 2020, related parties from 1 May 2020
According to Article 5.1(a) of Decree 132/2020 regarding Transfer Pricing, ‘one
enterprise directly or indirectly holds at least 25% of the contributed capital of the owner of
the other enterprise …’ would be related parties.

6. A
Payable VAT is 18,000 USD
 VAT payable by Rotors Co in the tax period May 2020 is USD 18,000 (=USD 22,000– USD
4,000).
Rotors Co must not deduct USD 5,000 of input VAT incurred before June 01, 2020.

7. A
VND4 million (200,000 shares*10,000 par value*10%*40% dividend rate in cash*5%
tax rate) According to Article 10 (point 3.c of Circular 111/2013 as amended by Circular
92/2015), only the dividend paid in cash is subject to PIT at the time of receipt. The dividend
payment rate would be calculated based on par value (VND10,000 per share), not market
price.

8. C
According to Article 6, point 2.9 of Circular 78/2014 as amended by Circular 96/2015.

9. D
VND15,600,000 (40 days*(VND1,300 million*0·03%))
According to Circular 130/2016, late payment interest would be 0·03% per day. As the
deadline for payment of April 2019 VAT is 20 May 2019, which was a Sunday, the deadline is
extended to 21 May 2019. The late payment days would be counted from 22 May to 30 June
2019, i.e. 40 days.

10. A
According to Clause 3, Article 7, Decree 132/2020/ND-CP, the minimum number of
independent comparables shall be selected after completion of the comparability analysis
and adjustment of material differences as follows: One comparable which is selected if
related-party transactions or taxpayers performing related-party transactions and
independent comparables has no difference; three comparables which are selected in the
event that there are certain differences existing in independent comparables and there are
not sufficient information or data provided as the basis for eliminating all of the material
differences, and five comparables which are selected only when there is any information or
data used as the basis for eliminating most of the material differences existing in
independent comparables.

11. B
 USD 234,737

Revenue subject to CIT = = 234,737,000 (USD)

12. B
VND24.26 million
[((116 – 11 – 4.4 – (29.8 * 10.5%)) * 35%) – 9.85] = 24.26

13. C
VND29,000 million ((5 million shares * 29,000 – 0) * 20%)
According to Article 8.6 of Circular 78/2014 as amended by Circular 96/2015, dividends
received by corporate shareholders from local companies shall be exempt from CIT (including
all forms of distribution such as bonus shares). Subsequent sales of bonus shares would be
subject to 20% CIT (historical costs of the bonus shares are zero)

14. B
USD 600,000 *2% = 12,000
According to Article 13.3 of Circular 103/2014, in the case of a foreign contractor
receiving compensation which is higher than the compensation payable, the contractor can
select to pay foreign contractor tax (FCT) at the appropriate percentage on the receipt, or pay
the normal corporate income tax (CIT) rate (20%) on revenue minus expenses.

15. C

MOCK TEST 1: SECTION B

1. VNV Co
(a) Corporate income tax (CIT) – Assessable income and tax rates for the years 2017,
2018, 2019 and 2020
Software Hardware
VND million VND million
2017
Taxable income 8,000 7,000 2
Loss from 2016 (must offset against the (8,000) incentive(1,000)
activity first)
Assessable income 0 6,000 1
Tax rate Exempt 20%
2018
Taxable income (10,000) 2,500
Offset loss between software and hardware (2,500) 1
Assessable income/(loss) 0
Tax rate 5% (50% off) 20% 1
2019
Taxable income 15,500 2,000
Loss carried forward from 2018 0 1
Assessable income 2,000
Tax rate 5% (50% off) 20% 1
2020
Taxable income (loss) (11,000) 3,000
Offset between software and hardware (3,000) 1
Assessable income/(loss) 0
Tax rate 5% (50% off) 20% 1
9

(b) Tax loss allocation after the split

AHV BHV
VND million VND million
Total loss at the end of 2020 (before the split) 0.5
VND8,000 million
Capital split ratio 65% 35%
Allocated loss to each company (5,200) (2,800) 0.5

10

2. Mr Nghi Pham
 (a) Tax treatment of share awards
‘Cashing shares award’ scheme 1.5
This is effectively an employment-related performance incentive
since the terms are stated in the labour contract. Therefore, it will be
treated as employment income, not investment income
The payment was made in cash, not by shares, thus the tax delay
applicable 1 to a share-based bonus (Article 26, point 11 of Circular 111/2013)
is not applicable. So, the ‘cashing’ share award would be taxed in Mr Nghi’s
hands on payment.
Actual ‘share award’ scheme 1
This award is also employment-based (additional bonus), thus the award
would be employment income.
However, any income received from the shares received after the award (e.g. 0.5
dividends) will be investment income.
The award involves the issuance of shares to Mr Nghi, thus the income
would 1 not be taxable upon receipt, but delayed until Mr Nghi sells the shares.
5

(b) Personal income tax (PIT) liability for the year 2020 under Option 1
Amount
VND
million
Salary (280 million * 12 months) 3,360 0.5
Cashing’ award (30,000 – 12,000) * 1.2 million shares 21,600 0.5
Cash bonus 3,600 0.5

Taxable income 28,560

Self-deduction and dependant (11 + 4.4 * 3) * 12 (290.4) 1 Insurance
deduction (29.8 * 10.5% * 12) (37.55) 1
Total assessable income 28,232
Monthly assessable income (28,232/12 months) 2,353 0.5
Annual tax liability (2,353 * 35% – 9.85) * 12 months 9,764.4 1
5
 10

3. CSP Co
(a) Lump sum contract
Corporate income tax (CIT) Value added tax (VAT)
USD’000 USD’000
Taxable income 35,918 37,029 3
= (43,200 – 8,000)/(1 – 2%) = 35,918/(1 – 30% * 10%)
(1.5 marks) (1.5 marks)
Tax 718 1,111 1
= (35,918 * 2%) = (37,029 * 3%)
(0.5 marks) (0.5 marks)
4

(b) Separate value contract

CIT VAT
USD’000 USD’000
Machinery
equipment
Taxable income 27,273 0 2
= (35,000 – 8,000)/(1 – 1%)
(1.5 marks) (0.5 marks)
Tax 273 0 1
= (27,273 * 1%) (exempt)
(0.5 marks) (0.5 marks)
Services
Taxable income 8,632 9,086 2
= (4,000 + 4,200)/(1 – 5%) = 8,632/(1 – 50% * 10%)
(1 mark) (1 mark)
Tax 432 454 1
= (8,632 * 5%) = (9,086 * 5%)
(0.5 marks) (0.5 marks)
 4.
(a) NX Co (NX)
The requirements for an input VAT credit on an export are: 1.5
– there should be an export contract (including an authorisation contract to
any agent); – there should be a Customs declaration form for the exported goods;
and – the payments should be made via a bank.
ANX should have the documentation to satisfy the first two conditions. 0.5 With
regard to condition three, both payments must be made via a bank within the 1 deadline
in the contract (i.e. 10 May 2020).
Since the agent failed to remit money to ANX via a bank within the deadline, ANX 1
would not be eligible for an input VAT credit in May 2020
ANX should negotiate with the agent to get payment via a bank as soon as
possible. If 1 the agent cannot pay by 20 June 2020 (the deadline for submitting the May
2020 VAT return), ANX should amend their May 2020 VAT declaration to reduce such
input VAT claimed
When the agent makes payment via a bank at a later date, ANX can claim a
deduction 1 for the input VAT, even if the tax authorities decided to conduct a tax audit
in ANX before the agent remitted the money
6
(b) TIS Co
TIS needs to satisfy the same three conditions as stated in (a) to claim an input VAT
0.5 credit on an export
However, in the case of the export of software via the internet, TIS does not need a
0.5 physical Customs declaration form for the exported goods
Instead, TIS needs to obtain confirmation from the buyer (i.e. the parent company)
that 0.5 they have duly received the software via the internet
The offset of the fee payment against a trade payable would be considered as a
deemed 0.5 payment via a bank.
Accordingly TIS would have satisfied all the conditions for the input credit
2
(c) ESS Co
 In order to qualify for the 0% VAT rate for exported services, the Vietnamese exporter
needs to:

- prepare sufficient documents (such as a contract for exported services with the 0.5
foreign buyer, payment via a bank, etc);

- obtain a confirmation from the buyer that the buyer has no permanent 0.5
establishment (P/E) in Vietnam and that the buyer is not a VAT-payer in Vietnam If ESS
cannot provide such confirmation, the services to INVS will not qualify as 0.5 exported
services. As a result, ESS would be required to issue a VAT invoice and charge VAT at
10% on the fee invoiced to INVS.
If ESS does not charge the 10% VAT to INVS, then the tax authorities may collect such
0.5 VAT from ESS
2

5. TL JSC
Taxable income for corporate income tax (CIT) for the year ended 31 December 2020
Item VND million
1 Staff bonuses
– Accrual for bonuses in 2020 16,800 1
– Actual bonuses settlement re 2020 (16,500) 1
– Bonuses re 2019 recorded in 2020 expenses 500 2
2 Gross up for tax paid on profit sharing in Taiwan ((USD5 24,066 million * 2
23,500)/83 * 17)
3 Rental income (33,000/1.1/5) (6,000) 1.5
4 Medical costs (1,100 * 50% – 350) 200 1.5
5 Quick depreciation 0 1.5
6 Loan for investment in new company 0 1
7 Foreign exchange gain/loss
– Realised net gain 0 0.5
– Unrealised loss on receivables 1,350 0.5
– Unrealised gain on payables 0 0.5
– Unrealised gain on cash 0.5
Total adjustments
Profit per financial statements
 Total taxable income 740,016
Tax at 20% 148,003 0.5
Credit for tax paid in Taiwan (24,066) 1
Total tax in Vietnam 123,937
15
Tutorial notes (not required as part of the answer):
1. The accrued bonuses are non-deductible but the actual bonus payments are deductible in
the year to which they relate.
2. The profit share from Tawan is taxable in Vietnam, but a foreign tax credit is available.
3. As the rental income was taxed in full in 2019, it will be non-taxable in the subsequent
years.
4. The medical costs are non-deductible as they are not covered in the directors’ employment
contracts.
5. No adjustment is required for the quick depreciation, because the company made a profit
and depreciation of up to two times the regulated depreciation expense is allowed. A
reduction from five years to three years does not exceed two times.
6. No adjustment is required for the loan interest, as provided in Circular 96/2015, Article 4,
point 2.18 amending the same point in Article 6 of Circular 78/2014.

6.
(a) (i) Taxable and non-taxable income for the year 2020
Taxable Non-
income taxable
income
VND VND
million million
Annual income
Annual salary (USD360,000 * a 8,460 0.5
23,500)
Performance bonus b 1,527.5 1
((USD360,000/12 + 35,000) *
23,500)
Tuition fees:
– Jennifer (USD20,000 * 23,500) c 479 1
– Lewis (USD15,000 * 23,500) 352.5 1
Air fares:
– (USD3,000 * 3 trips: 1 for him, 2 d for 211.5 1
his wife * 23,500)
– (USD3,000 * 1 trip for him * 70.5 0.5
23,500)
Medical insurance: e 1
– For himself (USD2,000 * 12 months * 564
23,500)
– For family (USD2,000 * 2 (wife and 1,128 1
Lewis) * 12 months * 23,500)
Car (20 * 12 months) f 240 1
Accumulation insurance (only g taxable 846 1
when paid)
(USD3,000 * 12 months * 23,500)
11,806 2,073
9

(ii) Personal income tax (PIT) liability for the year 2020
Taxable
income

VND VND
million million
Total taxable income before h 11,806
housing (from (a))
– 15% of gross income (11,806* i 1,770.9 0.5
15%)
– Actual housing cost (USD4,500 * k 1,269 0.5
12 * 23,500)
Taxable housing l = min(i,k) 0.5
Total taxable income m=h+l
Deductions
– Self deduction (11* 12) n (132) 0.5
 – Family deduction (4.4 * 12) (for o (52.8) (184.8) 1
Lewis only)
Annual assessable income p 12,890
Monthly assessable income q = p/12 1,074.18 0.5
Annual tax liability r = (q * 0.35 – 4,393.4 0.5
9.85) * 12
4

(b) Tax treatment of options

The current regulations are unclear regarding stock options. However, the
1 trigger point for taxable income from a bonus/incentive in the form of shares is
when the shares are sold.
Accordingly, the options would not be taxable neither at their grant (i.e.
on 1 1 January 2020) nor when 25% of the options vest (i.e. on 31 December
2020) since Mr Tom does not receive any shares in 2020. The first acquisition of
option shares only occurs on 2 January 2021.
MOCK TEST 2: SECTION A
1.
Which of the following statement is true in term of hybrid method under FCT?
A. If the contract state as net of VAT and gross of CIT the tax payer has to calculate FCT
under hybrid method
B. The amount of taxable price is not deducted by the amount sub-contracted to hybrid
method FC
C. In general, the Vietnamese party is not requested to withhold & pay CIT for FC using
hybrid method
D. Under hybrid method, the FC is allowed to VAT input deductible after signing the FC
contract

2.
Which statement is not correct in term of loss relief?
A. Company is allow to offset loss of capital transfer activity to the profit of ordinary
activities
B. Company is allow to offset loss of foreign income to the profit of ordinary activities
C. Profit of transfer of capital contribution in a company by LUR cannot offset with the
loss of ordinary activities
D. Profit of other income with the sources of ordinary activity can offset with the loss of
ordinary activities

3.
Garment Co is a Vietnamese company employing 1,500 employees in 2020. The
company has a policy to provide uniforms to employees in both cash and in kind. In 2020, the
total uniform expenses paid by Garment Co was VND15,500 million, of which VND9,000
million was paid in cash to employees. 30% of the expenses in kind are not supported by
proper documents.
How much of Garment Co’s uniform expenses are non-deductible for corporate
income tax (CIT) purposes in 2020?
A. VND9,000 million
B. VND3,450 million
C. VND10,950 million
 D. VND1,950 million

4.
In May 2020, Mr Hoan and Ms Tuyet, two Vietnamese tax residents, were the equal
co-winners of a promotion prize, a house which had a market value of VND3300 million,
inclusive of 10% VAT, from a real estate company.
What is the amount (in VND million, rounded by one decimal) of Ms Tuyet’s personal
income tax (PIT) liability on the above promotion prize?
A. VND0 million
B. VND165 million
C. VND164.5 million
D. VND330 million

5.
On 1 January 2020, company Cera Co purchased a 16-seat car for VND2,860 million
(including value added tax (VAT)) with proper invoices. The car will be depreciated for five
years. What is the amount of the adjustment for non-deductible expenses which Cera Co
should make for the car in its tax return for the year 2020?
A. VND0 million
B. VND252 million C. VND200 million
D. VND230 million

6.
Bank A has a loan of USD 10 million with a monthly interest rate of 5.2%. The effective
period of the contract is 03 years from 01 February 2017 to 01 February 2020. Payments shall
be made every 06 months at the beginning of the period.
According to the loan contract, A negotiates with Bank B overseas to execute the
Interest Rate Swap (IRS) contract, in particular:
- The effective period of the contract is 03 years from 01 February 2017 to 01
February 2020. Payments shall be made every 06 months at the beginning of the period.
- Floating interest payable to B is Libor + 0.25% and B has to pay A a fixed interest
rate of 5.2%. This means if Libor + 0.25% is higher than the fixed interest rate in the IRS
contract, B will receive a difference of interest from A which equals (=) (Libor + 0.25%) – (less)
interest payable at 5.2%. On the contrary, if Libor + 0.25% is lower than the fixed interest rate
in the IRS contract, A will receive a difference of interest from B, which equals (=) 5.2% - (less)
interest received by A calculated according to interest rate of Libor + 0.25%.

Payment Libor The rate The rate The rate received Difference
time interest payable payable by B or A after received by A or B
rate (%) to B by to A by offsetting in each period
A (%) B (USD 1,000)
Libor +
A B A B
0.25%
1/2/2017 4.80 5.05 5.20 0.15 - 15
–
31/7/2017
1/8/2017 5.00 5.25 5.20 0.05 5
-
31/1/2018
1/2/2018 4.90 5.15 5.20 0.05 - 5
-
31/7/2018
1/8/2018 4.95 5.20 5.20 0.00 - -
-
31/1/2019
1/2/2019 4.90 5.15 5.20 0.05 5
-
31/7/2019
1/8/2019 5.05 5.30 5.20 0.10 10
-
31/1/2019
What is revenue subject to CIT of B for 2017, 2018, 2019 and 2020?
A. USD 15,000; USD 10,000; USD 5,000 and Nil respectively
 B. USD 10,000; USD 5,000; USD 0 and Nil respectively
C. USD 20,000; USD 15,000; USD 10 and USD 5,000 respectively
D. USD 5,000; USD 10,000; USD 15,000 and Nil respectively

7.
Which combination of the following statements correctly describes the treatment of
foreign exchange gains/losses arising during the construction period of a new company
which has no revenue?
(1) Gains and losses must be accounted for separately
(2) Gains and losses can be offset
(3) Gains and losses must be recognised in the year of incurrence
(4) Gains and losses must be deferred and allocated over a period of up to five years from
when the project is put into use
A. 1 and 3 B. 2 and 3 C. 1 and 4
D. 2 and 4

8.
Which statement is not correct regarding responsibility to submit CIT declarations:
A. Where the taxpayer has an affiliate that keep accounting records independently,
the affiliate shall submit its tax declarations and finalization to the supervisory tax
authority. B. Where the taxpayer has an affiliate that does not keep accounting records
independently, such affiliate is not required to submit tax declarations. The taxpayer must
include the tax incurred by the affiliate in the CIT declaration.
C. The companies regularly make real estate transfer can select to submit a provisional
CIT declaration every quarter or by occasion as non-real estate company having RE
transaction
D. Pubic services organisation pay tax by quarterly on the percentage of sales and not
required to do finalization

9.
Which type of the following income is not income being salary of an individual?
A. Income from doing professional accounting services
B. Income from provision of marketing advise for a company
 C. Income from participating in fashion show
D. Income from participating in science research project

10.
Dong Phuong Co, a Vietnamese company applying the value added tax (VAT) deduction
method, provided services to a foreign customer for VND300 million and charged VAT at 5%
on the invoice. In a tax review by a consultant, it was identified that the VAT rate used on the
invoice should have been 10%, however, Dong Phuong Co can no longer claim back the
undercharged VAT from the foreign customer.
What is the amount of additional output VAT which Dong Phuong Co will need to pay
to the tax authorities?
A. VND13.6 million
B. VND15 million C. VND20 million
D. VND30 million

11.
On 01 January 2020, Treasury Bonds X with a face value of VND100,000 and a term of
06 months are issued for VND89,000 per Treasury Bill. After being issued, Treasury Bonds are
listed on HNX. Investor A makes some transactions below from 02 January to 01 July 2020
(maturity date):
Transaction date Buy/Sell Amount Price
2/1/2020 Buy 100 90,000
1/2/2020 Buy 100 92,000
1/3/2020 Sell 70 93,000
1/4/2020 Buy 40 94,000
1/5/2020 Sell 20 95,000
What is taxable revenue subject CIT with respect to bonds which Investor A receives
at maturity date?
A. VND
1,000,000 B. VND
1,140,000
C. VND 1,520,000
D. VND 900,000
 12.
The following type of income is required to withhold at sources?
A. Business income
B. Transfer of real estate
C. Transfer of security
D. Interest from deposit paid by bank in Vietnam

13.
In 2019, Kirner Co, a Vietnamese company incurred losses of VND12 billion from
incentive activities which were subject to a tax rate of 10%, made gains from the transferring
of real estate of VND5 billion and had other income of VND14 billion in the year 2020.
What is the minimum tax liability of Kirner Co in 2020?
A. VND2,420
million B. VND3,800
million
C. VND1,400 million
D. VND0 million

14.
Ms Giang Doan is a real estate trader and owns various plots of land. In 2010, she
bought the land use right for a 1,500 square metre plot of land in Hue for VND4 million per
square metre. There was non construction project on the land. In 2020, she sold the land use
right under a contract which denominated the proceeds at VND6 million per square metre.
The price of the same area of land set by The People’s Committee was VND4,5 million per
square metre in 2010, and VND12 million per square metre in 2020
What us the personal income tax (PIT) liability of Ms Giang Doan from the sale of the
land use right in the fiscal year 2020?
A. VND360
million B. VND0million
C. VND240 million
D. VND 225 million
 15.
Which of the following statements is correct in respect of taxable price for VAT purpose? A.
Taxable prices of goods and services used for sales promotion is market value
B. When transferring real estate, taxable price is the transferring price minus (-)
deductible land value under the transferring contract
C. VAT-exclusive remunerations or commissions on brokering assessment, brokering
compensation examination, claiming compensation from a third person (including the
costs) earned by the insurer are taxable prices
D. Taxable price for sub-lease machine where it is not yet domestically produced, is
allowed to deduct the amount of lease paid to overseas party
MOCK TEST 2: SECTION B
1.
HRA Ltd (HRA) is the Vietnamese parent company of a group of subsidiaries doing
business in the manufacturing sector. All of the group companies have a year end of 31
December.
On 1 January 2018, HRA purchased a luxury car for VND8,800 million (including 10%
value added tax (VAT)) for the chairman of its board. HRA intended to use the car for six
years.
In October 2020, the car was involved in an accident and had to be repaired at a cost of
VND1188 million (including VAT). The repair was completed on 25 October 2020 and the
repair service company issued an invoice for the full repair costs to HRA on that same date.
According to the repair service agreement, HRA was required to settle 90% of the repair costs
in 2020 and the remaining 10% in February 2021. The first payment was made by bank
transfer and the second in cash.
On 1 November 2020, the chairman decided to contribute the car as a part of HRA’s
capital contribution to HRB Co, a 100% subsidiary of HRA. The value contributed by the car
was VND3,600 million (excluding VAT), and HRB Co intends to use the car for five years.

Required:
(a) Calculate HRA Ltd’s deductible depreciation and repair expenses for each of the years
ended 31 December 2019, 2020 and 2021 as a result of the above transactions. (6 marks)
(b) Calculate HRA Ltd’s taxable income or loss from the disposal of the car in the year ended
31 December 2020. (2 marks)
(c) Calculate HRB Co’s deductible depreciation expense in respect of the car for the year
ended 31 December 2020. (2 marks)
Note: You should make all calculations to the nearest VND million.
(Total: 10 marks)
2.
In 2016, Mr Thuy Bui, a 50-year-old Vietnamese national, purchased 2,000,000 shares
in DBX, a company listed on the Vietnamese stock exchange, for VND15,000 per share. The
nominal price of each DBX share is VND10,000.
In 2020, Mr Tuy had the following transactions with regard to DBX’s shares:
– On 1 January 2020, he received 200,000 shares as a scrip dividend (i.e. a dividend paid in
the form of shares).
– On 1 May 2020, he sold 180,000 shares for VND28,000 per share.
– On 25 November 2020, he sold 600,000 shares for VND30,000 per share.

Required:
(a) Calculate the provisional personal income tax (PIT) which Mr Thuy Bui had to pay
during the year 2020 when he sold his DBX shares. (5 marks)
(b) Calculate Mr Thuy Bui’s final PIT liability from the sales of his DBX shares if he is
required to pay PIT under the ‘20% regime’ and has all available documents relating to his
share purchases. (5 marks)
Note: You should make all calculations to the nearest VND million.
(Total: 10 Marks)

3.
You should assume that today’s date is 1 November 2020.
PTF Co is a distributor of electronic products in Vietnam. PTF Co is also an importer of
components for assembling into specialised computers and is a solution provider for cloud
services.
PTF Co is considering entering into a number of agreements with foreign companies
before the end of 2020. PTF Co is aware of changes in the foreign contractor tax (FCT)
treatment under the new Circular 103/2014/TT-BTC and has obtained the following summary
of the key issues relating to three of these contracts and one of its ongoing contracts:

Contract 1 with PPA Co

PTF Co is about to renew an existing agreement with PPA Co for the long-term
distribution of e-Nophi, a global mobile Phone brand, in Vietnam. The draft revised
agreement provides that:
– PTF Co will be authorised to be the non-exclusive distributor of e-Nophi in Vietnam.
– The price of e-Nophi will be fixed and determined by PPA Co for each period. PTF Co
will not be allowed to change the quoted price without the prior written consent from
PPA.

Contract 2 with Mac Co

 PTF Co is negotiating an import contract for laptops for re-sale in Vietnam with Mac Co.
According to the draft agreement:
– The terms of delivery will be DDP (delivery duty paid) to Ho Chi Minh City.
– The advertising costs for the products in Vietnam will be advanced by PTF Co, but Mac
Co will reimburse these costs to PTF Co upon submission of sufficient supporting
documents.
– Mac Co will replace any defective laptop one-for-one within one year from the supply
date.

Contract 3 with ELF Co

PTF is negotiating an import contract for specialised computer components with ELF
Co. According to the draft agreement:
– The terms of delivery will be CIF (costs, insurance, freight) to Ho Chi Minh City port.
– ELF Co will be responsible for the insurance and freight costs up to delivery at Ho Chi
Minh City port, but the risk will be transferred from the uploading port in Malaysia.
– ELF Co will not provide any services in Vietnam, but will be responsible for the
warranty of the components in case of defects. The defective components will be
shipped to the subsidiary of ELF Co in Malaysia to be fixed or replaced if needed.

Contract 4 with MBI Co

PTF Co has an existing licence agreement, which was originally concluded in 2019, with
MBI Co, a leading provider of cloud services solutions. Under the terms of the agreement:
– MBI Co transfers technology to PTF Co which enables users of a new cloud service to
stream any kind of file from the cloud to their mobile device using an application.
– PTF Co localises and distributes the services in Vietnam, and pays a licence fee to MBI
Co at 3% of the net service revenue.
– In addition, PTF Co pays MBI Co a fixed fee for training PTF Co’s technical staff to fully
deploy the service. The training is conducted online with MBI Co’s trainers providing
lectures to PTF Co’s staff via the internet.
– PTF Co is responsible for any foreign contractor tax (FCT) payable in Vietnam.
In 2020, PTF Co recorded net service revenue of VND22.3 billion from the licensed
services and paid MBI Co a training fee of USD52,000, exchange rate is VND 23,500 for USD 1.

Required:
 (a) In respect of Contracts 1 and 2, state whether PPA Co and Bookmac Co will be
subject to foreign contractor tax (FCT) in Vietnam and if so, at what rates. (4 marks)
(b) In respect of Contract 3, state, giving reasons, whether ELF Co will be subject to
FCT in Vietnam. (2 marks)
(c) In respect of Contract 4, calculate the FCT liability (in VND millions) to be
incurred by PTF Co in 2020. (4 marks)
(Total: 10 marks)

4.
CSG Co owns a chain of retail stores and supermarkets in Vietnam. The company’s
transactions in December 2020 included the following:

Transaction 1: CSG Co set up a new supermarket in Binh Thuan. The total construction
costs invoiced by the contractor on 1 December 2020 were VND660 billion (inclusive of value
added tax (VAT) at 10%). The completed project was handed over to CSG Co on 1 January
2021 and CSG Co intends to depreciate the property at the rate of VND50 billion each year
from 2021 onwards.

Transaction 2: On 10 December 2020, CSG Co purchased a four-seater car with a

quoted price of VND1,870 million (inclusive of VAT at 10%) for its general director. The seller
granted CSG Co a 6% discount off the quoted price of the car.

Transaction 3: On 20 December 2020, CSG Co received a cash incentive of VND1 billion

from SG Milk to display their products in an exclusive place in CSG Co’s supermarkets and
stores in January and February 2021.

Transaction 4: During December 2020, CSG Co gave a free helmet to the first 500
customers who purchased goods with an invoice value of more than VND1 million. This
promotional programme was registered with the Department of Industry and Trade as a
promotion. The helmets were purchased by CSG Co for VND220,000 each (inclusive of VAT at
10%) on 1 December 2020. All of the helmets were given to customers during the promotion.
 Transaction 5: CSG Co produces bottled water for sale in its supermarket chain with the
selling price of VND4,400 per bottle (inclusive of VAT at 10%). During December 2020, CSG Co
issued 2,000 bottles of the water for internal use of which 50% were used in meetings with
suppliers/customers/partners, 30% for processing foods and other drinks for sale in the
supermarket, and 20% were used on the annual vacation trip for CSG Co’s employees.
All the transactions were settled via a bank, unless otherwise stated.
Required:
(a) For each of the transactions (1 to 5) calculate the output and/or creditable input
value added tax (VAT) for CSG Co in the month of December 2020. (7 marks)
(b) For Transaction 5, advise CSG Co on the invoice issuance requirements for each
category of water issued for internal use. (3 marks)
(Total: 10 marks)

5.
VP Bank is a commercial bank in Vietnam, which made substantial accounting profits in
the fiscal year 2020.
The following is a summary of the adjustments prepared by VP Bank’s tax accountant
prior to the preparation of the bank’s tax return for the year ended 31 December 2020.
Positive or negative adjustments mean that the item will be added back to or deducted from
the accounting profit in arriving taxable income, respectively.
Items Descriptions Proposed Notes
adjustments
(VND
million)
1 Accruals of 1,384,225 Actual interest income to be earned but
interest income not yet received by the bank from
receivable borrowers, since the loans have not
matured
2 Accruals of (752,347) Actual interest expense to be incurred
interest expense payable but not yet settled to lenders, since the
loans have not matured
3 Special bonuses 132,000 to Bonuses were granted to all employees
employees on a special anniversary of the bank.
These bonuses were not stipulated in any
documents/policy of the bank at the
 beginning of the year and were not
based on performance
4 Welfare 14,000 Welfare expenses, such as wedding gifts,
expenses medical care, support to the family of
(excluding vacation employees, etc, all supported by proper
trip documents. These expenses account for
below) 0.5% of the total actual implemented
salary fund of the bank
5 Vacation trips for 9,000 Overseas trips for high performance
employees employees. Although only about 30% of
these expenses were not supported by
proper documents, the tax accountant
considered itmprudent to adjust for the
whole of the expense.
6 Sponsorship of 12,000 The sponsorship was rejected as tax
the construction of deductible in a tax audit by the tax
houses for authorities for the period 2015 to 2017,
the poor despite their being supported by proper
documents. 20% of the sponsorship
was paid in cash
7 Collection of a 16,000 The debt was incurred in 2015 but became bad
debt which bad and was fully provided for in the 2017 was provided for
financial statements and tax returns. The in the previous provision was
rejected by the tax year authorities in their tax audit of 2018
because of an insufficient basis for the
provision
8 Foreign 3,500 This expense resulted from a dispute over contractor tax a
software contract in 2019, which was (FCT) borne for silent about which
party would bear the foreign FCT. Due to the dispute, VP Bank paid the
contractor tax due and recorded it as a receivable from the foreign
contractor in 2019 In 2020, the foreign contractor agreed to reimburse VP
Bank for 50% of the FCT because they could claim a credit for tax for this
amount in their home country. The non-reimbursed amount of VND2,500
million was recorded as an expense by VP Bank in its 2020 financial
statements
9 Dividends from (182,000) Dividends received from subsidiaries and
subsidiaries and associates in which VP Bank own shares associates
10 Foreign (720,000) Unrealised foreign exchange losses from exchange
losses the revaluation of receivables at the year end. In the financial
statements, the losses were treated as accounting expenses in arriving at
the accounting profits
11 Losses of (620,000) Losses incurred by VP Bank’s branch in
overseas branch Europe in the fiscal year 2019. In the financial
statements, the losses were treated as other expenses in arriving at the
accounting profits
All the amounts are stated exclusive of any applicable value added tax (VAT), except
where specifically stated otherwise.

Required:
Redraft the summary of adjustments required for the purposes of VP Bank’s corporate
income tax (CIT) return for the year ended 31 December 2020, giving appropriate
explanations for the inclusion or exclusion from taxable income of the various items.
Notes:
1. Use the same format for the table as given in the question, and list all of the individual
adjustment items specifically referred to in notes 1 to 11, indicating by the use of ‘0’
any item for which no adjustment is required.
2. Make all calculations to the nearest VND million.

(Total: 15 marks)

6.
Ms Dung Nguyen has worked as a manager for HRB since she graduated in 2013. She is
married to Hoai Tran and they have two daughters, who were born in 2015 and 2017,
respectively.
In 2020, Dung received the following income from HRB:
– Salary: VND35 million per month;
– Overtime: VND150 million (her overtime was consistently paid at 150% of her normal
wage).
 HRB bears her personal income tax (PIT) liability and contributes employer’s
compulsory insurance for Dung, but she is responsible for her own employee’s compulsory
insurance contributions.
In addition to her employment with HRB, Ms Dung has also entered into an
employment contract with IBO, a training centre, to be a long-term lecturer on their weekend
courses from 1 April 2020. IBO paid Dung a fixed wage of VND4 million per month, plus a
variable lecture fee of VND1,000,000 per each lecture hour, which was also paid on a
monthly basis. Based on IBO’s records, Ms Dung conducted 40 hours of lectures per month in
2020. All of her PIT was also covered by IBO.
In January 2020, Hoai was involved in an accident and had to undergo surgery and to
stay at home for at least 12 months, without any income. After the accident Hoai received
compensation of VND350 million, including full cost of the surgery and hospital expenses of
VND420 million under an insurance policy taken out by him and Dung in 2019. In addition,
HRB paid cash support of VND42 million to Dung for her husband’s hospitalisation. However,
as all the hospital expenses were covered by the insurance, Dung used this support to settle
her daughters’ school fees.

Required:
(a) Prepare a table listing Ms Dung Nguyen’s taxable income (net of tax) and non-taxable
income in Vietnam for the year 2020. (7 marks)
(b) Calculate Ms Dung Nguyen’s total annual personal income tax (PIT) liability for 2020
based on the taxable income calculated in (a) above. (8 marks) Notes:
1. You should attribute all the personal deductions to Dung’s employment with HRB.
2. Make all calculations in VND millions, rounded to one decimal.
(Total: 15 marks)
MOCK TEST 2: SECTION A
1. C
In general, the Vietnamese party is not requested to withhold & pay CIT for FC
using hybrid method

2. B

3. B
VND3,450 million ((9,000 – (1,500 persons * 5 million/person)) + ((15,500 –
9,000)*30%)) According to Article 6.2.6 of Circular 78/2014, as amended by Circular
96/2015, uniform expenses in cash can be deductible up to VND5 million/person/year, while
uniform expenses in kind can be deductible in full subject to proper documents.

4. C
VND164.5 million ((3300 million – 10 million)/2 persons*10%)
According to Article 15.1 (b) of Circular 111/2013, the taxable income of a promotion
prize is the total market value of the item (inclusive of VAT) in excess of VND10 million. The
deduction of VND10 million is per item, not per person.

5. A
No adjustment required because the car has more than nine seats and so is
depreciable in full.

6. B
USD 10,000; USD 5,000; USD 0 and Nil respectively
Revenue subject to CIT received by B is calculated as follows:
- In 2017 (from January 01, 2017 to December 31, 2017): Total amount B receives
from A: (15,000 - 5,000) = 10,000 (USD);
- In 2018 (from January 01, 2018 to December 31, 2018): Total amount B receives
from A: (5,000 - 0) = 5,000 (USD);
- In 2019 (from January 01, 2019 to December 31, 2019): B has to pay A totally
USD 5,000 (taxable revenue = 0)
7. D
The net foreign exchange gains/losses after offsetting are allocated over a period of up
to five years from the project being put into use – point 2.22, Article 6 of Circular 78/2014.

8. A

9. A

10. A
[315 million/(1 + 10%) * 10%] – (300 million * 5% paid) = 13.6 million [according to
Example 56 in Article 12 of Circular 219/2013/TT-BTC].

11. C
VND 1,140,000
Step 1: determine the amount of treasury bills held on the maturity date: (100 + 100 +
40) – (70 +20) = 150
Step 2: Determine the amount, time, and corresponding buying prices of the treasury
bills held on the maturity date after subtracting the amount of sold treasury bills according to
First-infirst-out rules: 150 treasury bills are held on the maturity date, including:
+ 10 treasury bills at VND 90,000 bought on January 02, 2020
+ 100 treasury bills at VND 92,000 bought on February 02, 2020
+ 40 treasury bills at VND 94,000 bought on April 02, 2020
Step 3: Determine the weighted buying price using the formula:
Weighted mean of buying prices: [(40 x 94,000 + 100 x 92,000 + 10 x 90,000)/ 150] =
92.400 (VND)
Revenue subject to CIT from the treasury bills received by the investor on the maturity
date: (100,000 – 92,400) x 150 = 1,140,000 (VND).

12. C

13. C
 VND1000 million (5 billion * 20%)
The net losses from incentives and other income of VND2 billion cannot be offset with
the gains from real estate.
14. A
VND360 million (1,500 * 12 million * 2%)
According to Article 12.1 of Circular 111/2013 as amended by Circular 92/2015, in the
case of real estate transferred by an individual, if the contract price is lower than the price
determined by The People’s Committee at the time of sale, the taxable income shall be
determined using the price determined by The People’s Committee.

15. C
VAT-exclusive remunerations or commissions on brokering assessment, brokering
compensation examination, claiming compensation from a third person (including the costs)
earned by the insurer are taxable prices
MOCK TEST 2: SECTION B
1.
(a) HRA Ltd’s deductible expenses – 2019, 2020 and 2021
Assuming the car is less than nine seats (full credit will, however, be given to other
assumptions)
Deductible Marks
expenses VND
million
2019
Depreciation expense (subject to a cap of VND1,600 267 million) 1
(VND1,600 million/6 years)
2020
Depreciation expense (VND1,600 million/6 years * 222 10/12 1
months)
Repair costs (fully deductible as invoices issued for 1080 2
100% and payment deadline yet to come) (VND1188
million/1.1
2021
Repair costs (must be deducted from deductible (108) 2
expenses as payment over VND20 million not being paid via a
bank) (VND1188 million/1.1 * 10%)
6

(b) HRA Ltd’s other income from disposal 2020

VND million VND million Marks
Contribution value 3,600
Net book value 0.5
- Initial costs per book (8,800/1·1) 8,000
- Accumulated depreciation on (3,778) (4,222) 1.5
accounting book (8,000/6 years * (2 + 10/12 months))

Net taxable income/(loss) from disposal (622)

2
 (c) HRB Co’s deductible depreciation 2020
VND million Marks
Depreciable value (subject to cap) 1,600 0.5
Deductible depreciation expenses (1,600/5 years * 2/12 53.3 1.5 months)
2

2.

Mr Thuy Bui
(a) Provisional personal income tax (PIT) from shares sale transactions

VND million

Sale on 1 May 2020

– Tax on capital investment income (for scrip dividend (VND10,000 * 90 1
180,000 shares) * 5% ·
5
– Tax on transfer of capital (VND28,000 * 180,000 shares) * 0·1% 5.04 1
Sale on 25 November 2020
– Tax on capital investment income for the remaining scrip dividend
(VND10,000 * (200,000 – 180,000 shares) * 5% 10 1
·
5
– Tax on transfer of capital (VND30,000 * 600,000 shares) * 0·1% 18 1
5
(b) Final PIT from shares sale transactions
VND
million
Selling price (180,000 * VND28,000 + (a) 23,040 1
600,000 * VND30,000)
Purchase price
– Purchase price of the shares held at the (b) VND30,000 beginning of year (2 0
million shares * million ·
VND15,000) 5
– Purchase price during the year, i.e. scrip (c) VND2,000 0
dividend (200,000 * VND10,000) million ·
5

– Total number of shares purchased (2 (d) 2·2 million million + 200,000 script 0·5
dividend) shares
– Average purchase price e = (b + c)/d VND14,545 1
– Purchase price of the shares sold (f) (11,345) 0·5
(180,000 + 600,000 shares) * VND14,545 ––––––
Tax liability g = (a – f) * 2,339 1
20% ––––––
5
 10

3.
(a) Contracts 1 and 2 foreign contractor tax (FCT) implications
Contract 1: PPA Co
Since the price of the products will be fixed and determined by PPA Co, PPA Co would
be subject to FCT in Vietnam (under point 3, Article 1, Circular
103/2014/TT-BTC). 1

There is no clear stipulation in Circular 103 about the tax rate for the activity,
however, the most likely case would be that the goods are subject to corporate
income tax (CIT) of 1% and exempt from value added tax (VAT). 1
Contract 2: Mac Co
The contract terms are DDP and the advertising costs will be borne by BookMac
Co, so Mac Co will be subject to FCT in Vietnam (points 2 and 3, Article 1 of
Circular 103/2014). 1
If no other services are provided by BookMac Co in relation to the laptops (the warranty
itself is not a service), it is likely that the supply would be subject to CIT
at 1% and exempt from VAT. 1
4

(b) Contract 3 liability to foreign contractor tax (FCT)

Contract 1: ELF Co

ELF Co is unlikely to be subject to FCT in Vietnam because: 0.5

– the contract terms are CIF and the risk to the goods are transferred in Malaysia.
There is no service conducted by ELF Co in Vietnam according to the summary; 1 and
– the warranty clause itself without any other services in Vietnam would not
0.5
expose ELF Co to FCT in Vietnam (point 2, Article 2 of Circular 103/2014).

(c) Contract 4 foreign contractor tax (FCT) liability in 2020

 Corporate income tax (CIT) Value added tax (VAT)
VND million VND million
74·3 Exempt
Licence fee (22,300 * 3%/(1 – 10%) * 10%) 2
(1·5 marks) (0·5 marks)
Training fee (not 64.5 67.7
exempt because (52 * 23.5/(1 – 5%) * 5%) (64.3/(1 – 5%)) 2 provided online) (1·5
marks) (0·5 marks)

4.
(a) Value added tax (VAT)
Transactions Output VAT Input VAT VND
million VND
million
(1) Input VAT for the construction costs is deductible in 60,000 1.5 full in the period of
receiving invoice (allocation to the
depreciation period of 12 years is not relevant)
(660,000/1·1*10%)
(2) Input VAT for the car is deductible in full because the invoiced 160 1.5
amount after the discount is lower than
VND1,600 million
Invoice price (net VAT): 1,870 * (1 – 6%)/1·1 = 1,598
VAT = 1,598 * 10% = 160
(3) The cash incentive for displaying goods in the 100 supermarkets and 1
stores is subject to VAT at 10%
(point 1, Article 5, Circular 219/2013, Example 15)
(1,000 * 10%)
(4) CSG Co can charge VAT at 10% on a taxable value of 0 10 1.5
zero for the helmets given away for free as the promotion is
registered with the authorities (point 5, Article 7 of Circular
219/2013). The input is creditable in full (0·22 million/1·1 *
10% * 500)

(5) No VAT output arises in respect of the water issued

for customer/supplier meetings and for processing food
and drinks
A full VAT charge at 10% applies to the water used for 0.16 the 1
vacation trip (2,000 * 20% * (4,400/1·1 * 10%))
Input VAT is creditable in full (2,000 * (4,400/1·1 * 10%)) 0.8 0.5

(b) Invoicing requirements for Transaction 5

For the water used for meetings, CSG Co is neither required to issue VAT invoices 1 nor to
declare this output VAT on these invoices in its return.
For the water used for the processing of foods, CSG Co is neither required to issue 1
VAT invoices nor to charge VAT (point 4, Article 7 of Circular 219/2013 and point 3 (a)
Article 5 of Circular 119/2014).
For the water used on the vacation trip by its employees, CSG Co is required to issue 1
VAT invoices as for normal sales (example 25, point 4, Article 7 of Circular 219/2013).

5.
VP Bank
Summary of adjustments for corporate income tax (CIT) for the year ended 31
December 2020
Items Descriptions Proposed Notes Marks
 adjustments
(VND
million)
1 Accruals of 0 Interest income is recorded and taxed on an 1 accruals
interest basis
income
receivable
2 Accruals of 0 Interest expenses are deductible on an accruals 1
interest basis
expense
payable
3 Special 132,000 The bonuses are not deductible because they 1
bonuses to are not stipulated in any documents (point 2.5
employees Article 6 of Circular 78.
Note: Point 2.31 as amended in Circular 151 since it
is not of welfare nature)
4 Welfare 0 Total implemented salary fund: 2.5
expenses 14,000/0·5% = 2,800,000
(excluding vacation
Cap for welfare (including vacation trip):
trip below)
2,800,000/12 months = 233,333
Total welfare expenses (vacation + other welfare):
9,000 + 14,000 = 23,000
Welfare expenses did not exceed the cap.
Thus all welfare expenses are deductible
(except those not supported by proper
documents)
5 Vacation 3,000 trips Only the 30% not supported by proper 1.5
for employees documents is not deductible (9,000 * 30% =
3,000).
6 Sponsorship 2,400 Such sponsorship is deductible in 2020 (point 1.5
of the 2.26, Article 6 of Circular 78). However, the
construction payment in cash in excess of VND20 million is not
deductible (i.e. 10,000 * 20% = 2,000)
of houses
for the poor
 7 Collection of (16,000) The debt was provided for, for accounting 2 a bad debt
purposes, thus when the debt was collected, it which was would have been
recorded as income in the provided for accounting profits.
in the However, since the original provision was previous year
rejected by the tax authorities, the income should not be taxed when the
debt was recovered. Thus the income should be deducted from the
accounting profit, not added back.
8 Foreign 3,500 The non-reimbursed expense is not deductible 2 contractor (and
should be added back). Because the tax (FCT) contract is silent about which
party will bear borne for the tax, the FCT is the responsibility of the foreign
foreign contractor.
contractor The reimbursed amount will have no tax
implications, as it is not income of VP Bank
9 Dividends (182,000) These are not taxable and thus should be 0.5 from
deducted from the accounting profits subsidiaries and associates
10 Foreign 720,000 The losses are not deductible for tax purposes 0.5 exchange
and must be added back (the treatment of losses deducting the losses as the
accountant did
would understate the taxable profits by two
times).
11 Losses of 620,000 The losses are not deductible and should be 1.5 overseas
added back since they are required to be branch accounted for separately and
not offset with
the profits of the bank (point 22, Article 7,
Circular 78/2014)
15

6.
(a) Taxable and non-taxable income for the year 2020
Taxable Non-taxable Marks
income income VND
VND million
 million
Income from HRB
Salary (35 * 12 months) 420 0.5
Overtime (150 * 100/150) | (150 * 50/150 100 50 1.5
Cash support (taxable in full) 42 1
562
Income from IBO
Fixed wage (4 * 9 months) 36 1
Lecture fee (1 * 40 hours * 9 months) 360 1.5
396
Compensation from insurer 350 1.5
Total taxable/non-taxable income 958 400
7

Tutorial notes:
1. The cash support received from HRB is taxable because it was not used for the hospital
expenses, according to point g.1.2, part 2, Article 2 of Circular 111/2013).
2. The compensation from the insurer, for both hospital and non-hospital expenses, is not
taxable according to point n.1, part 1, Article 3 of Circular 111/2013.

(b) PIT liability for the year 2020

From HRB From IBO Marks
VND VND
million million
Monthly taxable (562/12 months) 46.8 0.5
income
(396/9 months) 44 0.5
Self-deduction (VND11 million (11) 0.5
Dependant deduction
(VND4.4 million* 3 persons, including daughters (13.2) and 1
husband)
Compulsory insurance [VND29.8 million * (8% + (3.1) 1·5% + 1.5
1%)]
Monthly assessable income [46.8 – (11 + 13.2 + 19.5 44 0.5
3.1)]
Monthly gross-up [(19.5 – 1·65)/0·8] 22.3 income 0.5

[(44 – 3·25)/0·75] 54.3 0.5

Total assessable income (22.3 *12 months + 54.3 * 9 756.3 0.5
months)
Monthly assessable income [(756.3/12 months) – (11 35.7 1
+ 13.2 + 3.1)]
Annual tax liability 68.1 1
(35.7 * 25% – 3.25) * 12 months
8