Section A – Multiple choice questions

1. 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

2. 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

3. 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

4. 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?

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

5. 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.

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 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

6. 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

7. 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

8. 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

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

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

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 (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

10. 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

11. 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

12. 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 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

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 13. 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

14. 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

15. 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

16. 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

Please determine its turnover for CIT purpose:

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

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

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 Please determine its turnover for CIT purposes

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

18. 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

19. 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

20. 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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 21. 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

22. 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
23. 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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 24. 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

25. 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

26. 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

27. 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.

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 A. 2.4 mil USD
B. 0.6 mil USD
C. 3 mil USD
D. 4 mil USD

28. 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

29. 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

30. 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

31. 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;

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

32. 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

33. 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

34. 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)

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(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.

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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)

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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)

Note: You should make all calculations to the nearest VND million.

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