Section A – Multiple choice questions

1. CCD 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
VND50 million in total.

Which of the following conditions must be met for CCD 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, 2, 3 and 4
B 1 and 4 only
C 2 and 3 only
D 2, 3 and 4 only

2. Ms Huong Nguyen, who gave birth on 1 February 2018, is CEO of HWK Co, a company in
Vietnam. She returned to work on 1 May 2018, despite the company policy and the regulations
allowing her a six-month maternity leave.

When she returned, the company paid her normal salary of VND300 million per month and in
addition, during the three months ended 31 July 2018, she received an overtime allowance of
VND150 million per month (which is within the range of allowed overtime under prevailing labour
regulations). However, Ms Huong 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 Huong Nguyen did not claim any maternity leave benefits
from social insurance from May 2018 onwards.

What is the adjustment amount for non-deductible expenses which HWK Co should make
in its corporate income tax (CIT) return for the year ended 31 December 2018 in respect of
the payments to Ms Huong Nguyen?

A VND1,350 million
B VND450 million
C VND0 million
D VND900 million

3. In March 2018, DPN Co, a Vietnamese company, disposed of a machine for VND2,200 million.
The machine was purchased in January 2017 for VND3,600 million with an estimated useful life
of three years. DPN 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 2018?

A VND100 million
B VND2,200 million
C VND0 million
D VND800 million

4. In February 2018, JTF Co, a Japanese investor, sold its capital contribution in TGT Co, a
Vietnamese limited liability company, to a foreign buyer for USD10 million, when the USD buy–

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 sell exchange rate from the commercial bank was VND23,000–VND23,200. The original capital
contribution in TGT Co was USD10 million which is reflected in the audited financial statements at
an exchange rate of USD1 = VND20,000. The transfer expenses incurred were immaterial. TGT
Co’s functional currency is VND.

What is the corporate income tax (CIT) liability incurred by JTF Co on the sale of its capital
contribution in TGT Co in the year 2018?

A VND6,000 million
B VND0 million
C VND6,400 million
D VND230 million

5. NIV Co, a Vietnamese company, rented an office for its operations from 1 April 2017 and paid a
deposit of VND792 million, equivalent to two monthly rental fees, inclusive of 10% value added
tax (VAT). Rent is payable two months in advance.

What is the amount of deductible rental expense which NIV Co can claim for corporate income
tax (CIT) purposes in the year ended 31 October 2017?

A VND5,040 million
B VND2,520 million
C VND3,240 million
D VND2,772 million

6. In 2017, CSP Co, a Vietnamese company, sold 80% of its 100% shareholding in ADC Co,
another Vietnamese company, to a foreign buyer for VND120,000 million. ADC Co was
established in 2008 with capital of VND60,000 million (fully paid up). CSP Co purchased all of the
shares of ADC Co in 2012 from the original founder for an amount of VND100,000 million, as
reflected in the share purchase agreement. The transfer expenses incurred were immaterial.

What is the corporate income tax (CIT) payable by CSP Co on the sale of shares in ADC Co
in the year 2017?

A VND8,000 million
B VND3,200 million
C VND9,600 million
D VND14,400 million

7. SHDL Co is a Vietnamese company. In 2017, the company contributed capital to SBS Co, a
newly established company in Vietnam, in the form of an indefinite-term land use right (LUR) for a
piece of land in Ho Chi Minh City.

The book value of the LUR recorded in SHDL Co’s accounts before the contribution was
VND100,000 million. The agreed capital contribution value was VND180,000 million. SHDL 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 SBS Co which SHDL Co should declare on its corporate income tax (CIT)
return for the year ended 31 December 2017?

A VND80,000 million
B VND180,000 million
C VND8,000 million
D VND16,000 million

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 8. CLT Co is a Vietnamese company employing 1,200 employees in 2017. The company has a
policy to provide uniforms to employees in both cash and in kind. In 2017, the total uniform
expenses paid by CLT Co was VND12,800 million, of which VND8,000 million was paid in cash to
employees. 40% of the expenses in kind are not supported by proper documents.

How much of CLT Co’s uniform expenses are non-deductible for corporate income tax
(CIT) purposes in 2017?

A VND8,880 million
B VND3,920 million
C VND9,920 million
D VND1,920 million

9. For the tax year 2015, Company A deducted a wage provision fund of VND 10 billion. The
Company has just spent VND 4 billion by March 2016 and additional VND 7 billion by end of June
2016 for the wage provision fund of 2015. Company A applies the tax period according to
calendar year.

How much adjustment for the wage expenses (in relating to the above provision) in 2016?

A. Decrease VND 7 billion

B. Decrease VND 4 billion
C. Decrease VND 3 billion
D. No adjustment

10. At the end of 2014, company, BND Co, paid bonuses to its board of directors of VND3,000
million. Each of the five directors is paid an equal amount of bonus. Two out of the five directors
are not involved in the daily management of the company’s business.

What is the amount of tax deductible expenses which BND Co will be able to claim for the
year 2014?
A VND3,000 million
B VND1,200 million
C VND1,800 million
D VND0 million

11. In 2014, company DMS Co purchased materials from suppliers who are households doing
business. DMS 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 DMS Co to use the list of goods purchased method to claim for the purchases as a tax
deductible expense?

A VND300 million
B VND200 million
C VND100 million
D VND50 million

12. TLN Co is a Vietnamese limited liability company. Hanada Co, a Japanese company, is
considering transferring its capital contribution in TLN Co to Nahada Co, an Indian company.

Which party will be responsible for making the tax declaration for the above transaction?

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 A Hanada Co only
B Nahada Co only
C Nahada Co and TLN Co
D TLN Co only

13. In 2012, company CTC Co contributed capital of VND500 million to Company Z. In 2014, CTC Co
transferred 60% of the capital it held in Company Z to a foreign company for VND450 million. At
that time the retained earnings of Company Z were VND5 million. CTC Co incurred transfer
expenses of VND10 million.

What is the taxable income/(loss) of CTC Co from the transfer?

A VND50 million (loss)

B VND140 million
C VND145 million
D VND147 million

14. On 1 January 2014, company CRS Co purchased a 16-seat car for VND2,640 million (including
value added tax (VAT)) with proper invoices. The car will be depreciated for six years.

What is the amount of the adjustment for non-deductible expenses which CRS Co should
make for the car in its tax return for the year 2014?

A VND0 million
B VND208 million
C VND320 million
D VND528 million

15. HNKV Co is a one member limited liability company, which is wholly own by HKV, a company
incorporated in Bermuda. In 2014, HKV decided to convert HNKV Co into a joint stock company
by selling the shares of HNKV Co to two local Vietnamese entities. The sale of the shares and the
conversion of the company was completed in August 2014.

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) HNKV Co is required to file a capital gains tax declaration
(2) The buyers are required to file a capital gains tax declaration
(3) HNKV Co is required to file a CIT finalisation return at the time of conversion and at the year
end
(4) HNKV Co is required to file a CIT finalisation return at the yearend only
A 1 and 3
B 1 and 4
C 2 and 3
D 2 and 4

16. PROVI Co is a company established in Vietnam. PROVI Co paid provisional quarterly corporate
income tax (CIT) of VND8 billion relating to the year ended 31 December 2014. The final tax
liabilities of PROVI Co per its CIT finalization return for 2014 was VND11 billion. The company
settled the additional tax obligations as per its CIT finalisation return for 2014 on 31 March 2015.

What is the amount on which the late tax payment penalty payable by PROVI Co will be
based and from which date would it be charged?

A Based on VND0.8 billion, payable from 31 January 2015

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 B Based on VND2.2 billion, payable from 31 January 2015
C Based on VND2.2 billion, payable from 1 April 2015
D Based on VND3 billion, payable from 31 January 2015

17. 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 1 and 4
C 2 and 3
D 2 and 4

18. RETRA 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 2018. The
estimated total revenue and profits from this project are VND2,000 billion and VND300 billion,
respectively. RETRA Co has been collecting money in advance from customers and in 2014 the
total proceeds received were VND200 billion, on which provisional tax of 1% was duly paid on
receipt.

What is the taxable income from the project of RETRA Co for the purposes of its 2014
corporate income tax (CIT) finalisation return?
A VND0 billion
B VND30 billion
C VND200 billion
D VND300 billion

19. On 1 July 2012, NLAM Co leased an asset for four years and paid the whole rent of VND600
million in advance. On 1 July 2014, NLAM Co decided to shorten the lease period to three years.
The company expects that it will have to pay a penalty of VND60 million when it terminates the
lease in 2015 in order to receive a refund of one year of the original lease payment.

What is the deductible expense for NLAM Co with regard to the lease in the year ended 31
December 2014?

A. VND150 million
B. VND75 million
C. VND165 million
D. VND170 million

20. In 2016, enterprise B receives contributed capital from enterprise A. Pre-tax income
corresponding to enterprise A’s contributed capital in enterprise B is VND 100 million.

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 Enterprise B is eligible for 50% reduction of the payable corporate income tax amount and has
fully paid CIT, including enterprise A’s income according to the reduced enterprise income tax
amount.
Please advise whether A will be exempt from CIT and how much?

A. A will receive VND 90 million and will be exempt from CIT on this amount
B. A will receive VND 80 million and will be exempt from CIT on this amount
C. A will receive VND 100 million and will pay tax VND 20 mil on its CIT return
D. A will receive VND 80 million and will be exempt from CIT on this amount

21. In 2016, Enterprise B receives contributed capital from enterprise A. Pre-tax income
corresponding to enterprise A’s contributed capital in enterprise B is VND 100 million.

Enterprise B is eligible for CIT exemption in 2016, then the income enterprise A receives from
capital contribution is full VND 100 million.

Which of the following is correct?

A. A will recalculate CIT of VND 20 million for paying to Tax Department’s bank account
B. A will be exempt from corporate income tax on VND 100 million
C. A will receive VND 100 million and will pay tax VND 200 mil on its CIT return
D. A will receive VND 80 million and will be exempt from CIT on this amount

22. In 2015, enterprise B suffers a loss of VND 20 billion. In 2016, it generates an income of VND 15
billion.

What is the arrangement of tax loss carried forward?

A. The company cannot carry forward loss

B. The company can choose the year for carrying forward the loss
C. Clear the whole loss of VND 15 billion against the income in 2016, the remaining VND 5
billion will be carry-forward to 5 consecutive years after 2016
D. Clear the whole loss of VND 15 billion against the income 2016, the remaining VND 5 billion
will be carry-forward to 5 consecutive years after 2015

23. Company A established and registered its business on 10 July 2016. Its applicable fiscal year is 1
January to 31 December. What is the first tax period of Company A?

A. From 10 July 2016 to 31 December 2017

B. From 10 July 2016 to 31 December 2016
C. From 1 January 2016 to 31 December 2016
D. From 1 January 2017 to 31 December 2017

24. Company P is VAT deduction method tax payer. Its VAT invoice is as follows:

Selling price: VND200,000

VAT 10%: VND20,000
Payment amount: VND220,000

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 Please determine its turnover for CIT purpose:

A. 200,000 VND
B. 220,000 VND
C. 20,000 VND
D. 400,000 VND

25. Company A is a VAT direct method tax payer, its sales invoice states the payment amount of
VND550,000 VND without any VAT portion.

Please determine its turnover for CIT purposes

A. 0 VND
B. 500,000 VND
C. 550,000 VND
D. 450,000 VND

26. Car Dealer Company sells 2 cars on 10 month installment basis. Total installment payment is
VND250 million/car. If lump sum payment price is VND200 million/car, how much is the turnover
for CIT purposes?

A. 500 mil VND

B. 200 mil VND
C. 250 mil VND
D. 400 mil VND

27. Manufacturer Y produces product A, Y issued 10 products A to exchange for a number of goods
B, and used 20 products A to reward their employees. The selling price (excluding of VAT) of
product A at the time of exchange and reward is VND20,000 per product.

Please calculate Y’s turnover for CIT purposes

A. 200,000 VND
B. 600,000 VND
C. 400,000 VND
D. 500,000 VND

28. Holding Limited is operating a factory with the net book value of US$1,000,000. It is now creating
a joint venture named Subsidiary Limited with another partner and shall contribute the factory into
Subsidiary Limited as its 51% capital contribution. Holding Limited and its joint venture partner
mutually agree that the factory is valued at US$1,500,000 for capital contribution purpose. The
residual useful life of this factory is 5 years.

Please calculate the annual depreciation that Subsidiary Limited shall make.

A. 200,000 USD
B. 100,000 USD
C. 150,000 USD
D. 300,000 USD

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 29. Manufacturing (Vietnam) Ltd is a company specialized in assembling electronics for export, it
bought a Mercedes sedan for its General Director’s business travel in April 2015 at the value of
VND3 bil and is depreciating the car over 6 years, which is within the range of Circular 45.

The Company’s fiscal year is calendar year. Please calculate the non-deductible depreciation
expenses of 2015.

A. 375 mil VND

B. 250 mil VND
C. 200 mil VND
D. 175 mil VND

30. Company payroll shows that (VND’000):

Salary 1,278,000

Allowance 200,000

Total payable 1,478,000

Less personal income tax and (350,000)

Net payable to the employee 1,128,000

Out of the total salary, there was VND100,000,000 paid to some permanent employees who do
not sign any labour contract with the company.

Please calculate salary and allowance cost accepted for CIT purposes.

A. 1,128 mil VND

B. 1,378 mil VND
C. 1,478 mil VND
D. 450 mil VND
31. Which are fully deductible for CIT purpose?

(i) Life insurance premium

(ii) Golf membership and fees
(iii) Incentives for initiatives, improvement without basis (e.g. no internal regulations, no
assessment council);
(iv) Special bonus on 1 May and 2 Sept as per the company financial policy;
(v) Uniform without invoice, paid by cash directly to employee: 8,500,000 VND per year per
person.

A. all
B. (i) and (iv) and (v)
C. (i) and (iv)
D. (i) and (ii) and (iv)
E. (iv) only

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 32. In July 2015 the Company borrowed from its individual shareholders VND1,000,000,000 at the
interest rate of 1.8%/month. At that time the SBV’s prime rate was 1%/month.

Please calculate the deductible interest for the Company in 2015?

A. 90 mil VND
B. 108 mil VND
C. 60 mil VND
D. 100 mil VND

33. The company has a registered charter capital of VND100,000,000 which the shareholders
committed to contribute fully in 2015. By end of 2015 the shareholders only contribute
VND50,000,000 and in 2016 the Company borrowed VND200,000,000 at the rate of 12%/year.

Please calculate the non-deductible interest.

A. 12 mil VND
B. 6 mil VND
C. 24 mil VND
D. 18 mil VND

34. Branch B in Vietnam of the Singaporean company F has a total turnover of VND 2.5 billion in this
tax year. Company F has total turnover VND50 billion (including turnover of its other permanent
establishments). During the tax year, company F allocated a business management expenses to
B totaling VND74 million. According to the audited accounts of F, total business management
expenses of the business as a whole is VND500 million. Determine the non-deductible business
management expenses for B in respect of this tax period.

A. 74 mil VND
B. 25 mil VND
C. 49 mil VND
D. 500 mil VND

35. Company R is the developer of a residential complex, it collect advance payments from the
customers for sale of apartments when the foundation of the buildings is completed but is unable
to determine the expenses corresponding to the prepayments it receives from the customers.
Total prepayments until 2016 when the apartments are handover are as follows:

Year Prepayment Provisional CIT

2014 US$20,000,000 US$200,000

2015 US$30,000,000 US$300,000

2016 US$10,000,000 US$100,000

Total costs of the apartments amount to US$45,000,000. Please calculate the CIT payable
(additional) Company R has to pay upon hand-over.

A. 2.4 mil USD

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 B. 0.6 mil USD
C. 3 mil USD
D. 4 mil USD

36. Consideration from disposal of a fixed asset is VND120,000,000 (exclusive of VAT). Net book
value of this assets is VND60,000,000. Disposal expenses are VND12,000,000.

Please calculate taxable gain/(loss) on the disposal of this fixed asset

A. 60 mil USD
B. 48 mil USD
C. 120 mil USD
D. 108 mil USD

37. Pepsi and Coca are two Vietnam wholly owned subsidiaries of the foreign company Peco. Pepsi
has tax loss in 2015 and continues its loss position in 2016 while Coca is profitable in both 2015
and 2016.

Which of the following is correct?

A. Loss of Pepsi cannot off-set with profit of Coca

B. Loss of Pepsi can off-set with profit of Coca
C. Pepsi, Coca and Peco can off-set loss and profit together
D. Loss of Pepsi can off-set with profit of Peco

38. BP has production activity which is entitled to 2-year tax exemption from 2016 and other business
lines which are subject to CIT at standard rate. In 2016 its business result is as follows:

Production: US$1,000,000
Other business lines: US$3,000,000
Determine tax payable of BP (if any)

A. USD800,000
B. USD600,000
C. USD200,000
D. USD400,000

39. Which of the following are correct?

1. In general CIT will be finalized at the year-end, but provision payments on a quarterly basis
are required;
2. The enterprises will be required to submit an annual finalization and remit any outstanding tax
arising from such finalization by the 60th day following the close of its fiscal year
3. Revision to tax returns are allowable at any time before the tax authorities notify the
enterprises of its tax audit;
4. Under-payment or over-claimed of tax refund shall be subject to penalty of 20% of the under-
declared or over-claimed amount;

A. 1 and 2

10 
 
 B. 2 and 3
C. 1 and 3
D. 2 and 4

40. During 2009, company A paid total interest of VND500,000,000 for the two loans as follows:

 5-year loan of VND2,000,000,000 from Sacombank which bears simple interest of 10% pa
 The remaining interest expenses are relating to its 4-year loan of VND1,000,000,000 from its
individual shareholders.

The State Bank of Vietnam’s prime rate remained stable at 8% pa for 2009.

Calculate the non-deductible interest expenses, if any.

A. 120 mil VND

B. 200 mil VND
C. 300 mil VND
D. 180 mil VND

41. Saigon Investment (Vietnam) Co. Ltd, a company incorporated in Vietnam, invested in a
company in Cambodia. In 2016 Saigon was paid with a dividend of VND700 mil after paying
corporate income tax in Cambodia at VND300 mil. It also has a taxable income of VND2,000 mil
from domestic business. Tax rate for the company is 20%.

Calculate the tax payable of Saigon Investment (Vietnam) Co. Ltd

A. 400 mil VND

B. 200 mil VND
C. 600 mil VND
D. 300 mil VND

42. Branch B is a company established in Vietnam by a Singaporean company S had a total turnover
of VND5 billion in this tax year. Company S had total turnover VND100 billion (including turnover
of its other permanent establishments). During the tax year, company S allocated a business
management expenses to B totaling VND100 million. According to the audited accounts of S,
total business management expenses of S as a whole is VND500 million.

Determine the level of non-deductible business management expenses for B in this tax year

A. 25 mil VND
B. 75 mil VND
C. 100 mil VND
D. 500 mil VND

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Section B – ALL SIX questions are compulsory and MUST be attempted
Please write your answers to all parts of these questions on the lined pages within the Candidate Answer
Booklet.

Question 1:

INVEX Co, a limited liability company, is fully owned by a Hong Kong-based company. INVEX Co is
located in a high-tech park in Long An, where it manufactures a memory device used in laptops and
mobile phones.
INVEX Co was established in 2008 with one factory which had a total design capacity of 1 million units
per year. The original investment certificate entitled the company to the following corporate income tax
(CIT) incentives:
– Four years tax exemption, plus nine years 50% tax reduction, commencing from the first year of
generating taxable income; and
– 15 years 10% concessional tax rate, commencing from the first year of generating taxable revenue.
INVEX Co first generated taxable revenue and taxable income in the years 2009 and 2010, respectively.
In 2014, INVEX Co completed an expansion project involving additional investment in fixed assets of
VND40 billion to set up a second (new) factory with additional design capacity of 350,000 units per year
at the same location as the existing factory. Since all the products manufactured will be gathered for sale
in a central warehouse, it is impossible for INVEX Co to clearly separate the taxable income resulting
from the existing factory and the new factory.
INVEX Co’s annual report for 2014 showed the following information:
– Total taxable income for 2014: VND21 billion, of which VND3 billion is from other income;
– Total historical costs of fixed assets actually used for production at 31 December 2014: VND100 billion.

Required:
(a) Advise INVEX Co whether the expansion project completed in 2014 will be eligible for
corporate income tax (CIT) incentives, and if so, how the taxable income from the expansion
project will be determined.
(4 marks)
(b) Calculate INVEX Co’s total corporate income tax (CIT) liability for the year ended 31 December
2014. (6 marks)

(10 marks)

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Question 2

VB Bank is a commercial bank in Vietnam, which made substantial accounting profits in the fiscal year
2014.

The following is a summary of the adjustments prepared by VB Bank’s tax accountant prior to the
preparation of the bank’s tax return for the year ended 31 December 2014. Positive or negative
adjustments mean that the item will be added back to or deducted from the accounting profit in arriving
taxable income, respectively.

13 
 
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 VB Bank’s corporate income tax
(CIT) return for the year ended 31 December 2014, 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.
(15 marks)

Question 3:

CRU Ltd (CRU) 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 2012, CRU purchased a luxury car for VND6,600 million (including 10% value added tax
(VAT)) for the chairman of its board. CRU intended to use the car for six years.
In October 2014, the car was involved in an accident and had to be repaired at a cost of VND792 million
(including VAT). The repair was completed on 25 October 2014 and the repair service company issued
an invoice for the full repair costs to CRU on that same date. According to the repair service agreement,
CRU was required to settle 90% of the repair costs in 2014 and the remaining 10% in February 2015. The
first payment was made by bank transfer and the second in cash.
On 1 November 2014, the chairman decided to contribute the car as a part of CRU’s capital contribution
to CRS Co, a 100% subsidiary of CRU. The value contributed by the car was VND2,400 million (excluding
VAT), and CRS Co intends to use the car for four years.

Required:
(a) Calculate CRU Ltd’s deductible depreciation and repair expenses for each of the years ended
31 December 2013, 2014 and 2015 as a result of the above transactions. (6 marks)

(b) Calculate CRU Ltd’s taxable income or loss from the disposal of the car in the year ended 31
December 2014. (2 marks)

(c) Calculate CRS Co’s deductible depreciation expense in respect of the car for the year ended 31
December 2014. (2 marks)

14 
 
Question 4

HVNV Co (HVNV) is a Vietnamese company owned by two shareholders, Ms An and Mr Bao, with the
shareholding ratio of 65% and 35%, respectively. HVNV specialises in software development and the
trading of computer hardware. The company’s recent taxable income/(tax losses) from operations have
been as follows:

HVNV 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 2009. Due to inappropriate planning, the
tax exemptions available in the years 2009 and 2010 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
2009.

The trading of computer hardware activity is subject to the common tax rate (i.e. 25% up to 2013, and
22% in 2014 and 2015).

In 2012, HVNV 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 2015, as a result of unresolvable disputes, the shareholders decided to split HVNV into two
separate companies according to their current shareholding ratio – AHV (to be held by Ms An) and BHV
(to be held by Mr Bao).

Required:
(a) Calculate (in VND millions) the assessable income for corporate income tax (CIT) for each of
HVNV Co’s activities in the years 2012, 2013, 2014 and 2015 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 AHV and BHV
respectively after the split.

Question 5 You should assume that today’s date is 21 March 2016.

VTL JSC (VTL) is a Vietnamese company, whose shares are listed on the Vietnamese stock exchange.
VTL specializes in the manufacture and installation of telecommunication equipment and in recent years
has conducted several successful investment projects in both Vietnam and overseas.

VTL’s audited financial statements for 2015 show a profit before tax of VND680,000 million. The following
issues have been identified as relevant to the preparation of the company’s 2015 corporate income tax
return. All amounts are stated exclusive of any applicable value added tax (VAT), except where
specifically stated otherwise.

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1. Special bonuses are offered to the management team and some employees with exceptional
performance.

However, the bonuses for 2015 were not settled by the fiscal year end of 31 December 2015. VTL
accrued VND11,000 million in the 2015 audited financial statement for these bonuses, representing a
10% increase from the accrued bonuses for 2014 of VND10,000 million.

For 2014, the actual bonuses settled and paid in February 2015 were VND10,500 million. The
difference
(between the accrued expenses of VND10,000 million and the actual settlement amount) of VND500
million was recorded as an additional expense in the 2015 audited financial statements.
The actual bonuses for 2015 of VND12,500 million were settled and paid on 15 March 2016 (after the
audited financial statements were finalised).

2. During 2015, VTL received USD5 million being the after tax profit share from its investment project in
Singapore. The profits had been subject to the common income tax rate in Singapore of 17%.

3. In 2014, VTL rented out an office in Ho Chi Minh City, which was not required for its own use, for a
period of four years. VTL received the full rental payment for the whole four-year period, of
VND26,400 million (inclusive of 10% VAT) on the signing of the rental agreement. For accounting
purposes VTL will recognise the rental income over the four years of the rental period (2014 to 2017)
but for tax purposes it elected to treat the whole amount as taxable in 2014.

4. During 2015, VTL received and paid invoices for the medical costs of its directors amounting to
VND1,200 million. Under VTL’s insurance policy with an insurer, 50% of the medical costs will be
covered by the insurer. According to the contract with the directors, VTL will only bear up to a total of
VND400 million per year for the costs not covered by the insurer, however, in 2015 VTL decided not
to seek any reimbursement from the directors.

5. In 2015, VTL 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 2015 financial statements was VND600 million.

6. In December 2014, VTL obtained a loan from a bank specifically to finance a new investment to set
up a new company in Cambodia. In 2015, the interest incurred on this loan amounted to VND3,600
million. The capital contributions to VTL by its shareholders have been made in full.

7. In 2015, VTL incurred the following foreign exchange gains/losses, all of which had been recorded in
the 2015 audited income statement:
– a realised net gain of VND900 million;
– an unrealised loss on receivables as at 31 December 2015 of VND1,400 million;
– an unrealised gain on payables as at 31 December 2015 of VND1,200 million; and
– an unrealised gain on cash at bank as at 31 December 2015 of VND300 million.

Required:
Calculate VTL JSC’s taxable income and tax liabilities (in VND millions) for corporate income tax
(CIT) purposes
for the year ended 31 December 2015.
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.
(15 marks)

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Question 6

FXVN Ltd is a Vietnamese company established in 2014, whose functional currency is the Vietnam Dong.
From 2014 to June 2016, the company was in the construction period (construction of its factory and
purchase of machinery and equipment) with no operations and no revenues. During this period, FXVN Ltd
had the following transactions in US dollars (USD):

FXVN Ltd commenced business operations and started generating revenue from 1 July 2016. The
company expects to amortise the foreign exchange differences incurred during the construction period
over the maximum period available as allowed under the prevailing regulations in 2016.

Required:
(a) Explain the treatment of ‘realised’ foreign exchange differences arising from the formation
of fixed assets in the following periods:
(b)
– the construction period (where a company has no business operations); and
– the period from when a company starts its business operations. (5 marks)

(b) Calculate (in VND millions) the amount of the foreign exchange differences which FXVN Ltd
can capitalize during the construction period, and the deductible expense from the amortisation of
the capitalised exchange differences allowable for corporate income tax (CIT) purposes, if any, in
the fiscal year ended 31 December 2016. (5 marks)

Question 7

IVEX 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 2015–2016, IVEX 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 2015, IVEX 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 2015, IVEX Ltd invested VND50,000 million in a
new production line, which qualified as expansion investment under the corporate income tax (CIT)

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regulations. IVEX Ltd’s total historical costs of fixed assets (including the new production line) at the fiscal
year-end of 31 December 2015 was VND200,000 million.

In 2015, the taxable income declared by IVEX Ltd was VND48,000 million, of which other non-operating
taxable income was VND8,000 million.

In 2016, the incentive period of the company expired and IVEX Ltd became subject to the common tax
rate. According to its draft financial statements, IVEX Ltd had accounting profits before tax of
VND160,000 million in 2016. 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 VND8,500 million were not paid before the deadline for CIT
finalisation. IVEX Ltd’s total actual salary fund in 2016 was VND55,000 million. No provision for
salary fund was made as at 31 December 2016.

2. Purchases without invoices amounted to VND9,200 million, of which VND2,800 million were
purchases of depletions from households who issued IVEX Ltd with lists of the purchases under
form 01/TNDN.

3. Machinery bought in 2013 with a historical cost of VND6,000 million and an estimated useful life
of five years ceased to be used from 1 June 2015 for maintenance. In 2015, IVEX Ltd expected
that this maintenance would take 13 months, but the maintenance was in fact completed on 31
August 2016 and the machinery was put into use again from 1 September 2016. In the draft
financial statements, this machinery was depreciated over 12 months in 2016.

4. Uniform expenses (supported with valid documents) were VND720 million paid in cash, and
VND360 million made in kind. IVEX Ltd had an average of 120 employees during the year 2016.

5. A profits share of VND40,000 million was received from a business co-operation contract (BCC)
which IVEX Ltd had entered into. These profits were after deducting CIT at the rate of 20%, which
was declared and paid by the operator.

From 2017, the foreign investor’s headquarter company is considering charging IVEX 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 IVEX 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 IVEX Ltd in the year 2015 from the original investment,
expansion investment and other activities, and the total corporate income tax (CIT) liability of
IVEX Ltd for the year ended 31 December 2015.
Note: The standard rate of CIT in 2015 was 22%. (5 marks)
(b) Calculate the taxable income and the tax liability which IVEX Ltd should declare in its CIT
return for the year ended 31 December 2016.
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 IVEX Ltd in the year 2017.
(4 marks)

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Question 8 LMK

Question 9

HTM 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 2017.

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:

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Required:

Calculate (in VND millions) the corporate income tax (CIT) liability to be declared by HTM Co for
the year ended 31 December 2017, 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.
(15 marks)

Question 10 DPN Ltd is a company established ten years ago in Vietnam, with diversified activities and
over 1,000 employees. In its fiscal year ended 30 September 2016, DPN Ltd purchased and constructed
various assets for use as follows:

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Required:

(a) Calculate (in VND millions) DPN Ltd’s deductible depreciation expense for corporate income
tax (CIT) purposes with regard to each of items 1 to 5 in the fiscal year 2016. (7 marks)

(b) Briefly explain whether DPN 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 2016. (3 marks)
(10 marks)

Question 11

CGB JSC (CGB) is a foreign invested company in Vietnam, whose main operations are to provide
strategic management consulting services to corporate clients in Vietnam and overseas.
CGB’s income statement (I/S) for the year 2016 shows that it earned profits before tax of VND96,000
million. During the preparation of the company’s 2016 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:

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Required:
Calculate CGB JSC’s taxable income and tax liability (in VND millions) for corporate income tax
(CIT) purposes for the year ended 31 December 2016, indicating the required adjustments to the
profit before tax of VND96,000 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.
(15 marks)

Question 12

IVST Co is a Vietnamese company which operates in various industries, contributes capital to various
projects and invests in the shares of listed companies.

In 2018, IVST 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:

Question 13

VBS Co is a company with diversified operations in various industries including farming. In June 2018, the
company prepared its draft corporate income tax (CIT) return for the fiscal year ended 31 March 2018.
The draft CIT return is detailed below and may contain errors:

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Question 14
WALC JSC (WALC) is a corporation in Vietnam operating in the field of financial consulting services.
WALC’s audited financial statements for year ended 31 December 2014 show the following:

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Question 15 RTM Co

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Question 16 EDM

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Question 17

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