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CBE June 2021 - A
CBE June 2021 - A
CBE June 2021 - A
(a) Briefly explain the corporate income tax treatment of the sale of shares listed on
the Ho Chi Minh City Stock Exchange by a Vietnamese company.
- Where a Vietnamese firm sells shares which are listed on the stock market, the
disposing company shall be subject to normal rate of CIT (20%) on taxable gain.
- Taxable gain = selling price – purchase price – transfer expenses
- The selling price of the listed shares is the actual price at which the shares are sold
and the purchase price of the listed shares is the actual price at which the shares are
purchased (both as notified by the stock exchange).
- Transfer expenses include share registration fee, fees paid to securities company,
brokerage fees for the transfer etc.
(b) Calculate the taxable gain for corporate income tax (CIT) purposes in respect of the
sale by PIC Co (PIC) of 3.5 million TCO Co shares on 1 June 2020.
VND million
Proceed gain from selling shares (3.5 112000
million * 32000)
Less: Purchase cost of 3.5 million shares (78750)
(3.5 million * 22500)
Taxable gain 33250
(c) Calculate the potential maximum taxable gain, for CIT purposes in respect of PIC’s
exchange of shares for the special imported equipment on 30 June 2020.
On the exchange of TCO shares: the higher of market price of the shares and market value
of the equipment is applied
VND million
The deemed selling proceeds of 2 million 63000
shares (2 million * 31500)
The market value of the equipment (2.7 63450
million * 23500)
Purchase cost of 2 million shares (2 (45000)
million * 22500)
Maximum taxable gain 18450
Ex2:
(a) Briefly explain the personal income tax treatment of employment income earned in
Vietnam by a non-tax resident, including the situation where such income cannot be
clearly separated from income earned elsewhere.
- A non-tax resident is subject to PIT in Vietnam on the income sourced from Vietnam, with
a fixed rate of 20%.
- If the employment income from Vietnam cannot be separated clearly, the deemed
employment income arising in Vietnam shall be calculated as follows:
+ If the individual is presented in VN: (days of presence/365 days * global gross employment
income) + other gross income sourced from VN
(b) Calculate Gen’s taxable employment income earned in Vietnam and his personal
income tax liability payable in Vietnam for the calendar year 2020.
Days of working
Number of days present in Vietnam 16.98%
(62/365)
Number of days not present in Vietnam 32.52%
(80/246)
Total 49.5%
VND million
Global annual gross income (480000 * 11280
23500)
Gross employment income arising from 5583.6
Vietnam (11280 * 49.5%)
Other gross income sourced from Vietnam 486
(62 days * 8 million)
Total taxable income from Vietnam 6079.6
PIT payable in 2020 (6079.6 * 20%) 1215.9
Ex3:
(a) For contracts 1 to 3, analyse and explain whether the foreign companies would be
subject to foreign contractor tax (FCT) in Vietnam, the most likely FCT rate(s) that may
apply, and whether IMP Co is responsible for withholding FCT for each contract.
- Contract 1:
+ As contract delivery term is DDP (risk borne by JID in transferring goods to Vietnam) and
the advertising cost in Vietnam will be paid by JID, JID is subject to FCT in Vietnam.
+ There are no other services provided by JID, thus the activity of JID in Vietnam shall be
considered as trading, which is subject to 1% CIT and exempted from VAT. IMP will withhold
FCT.
- Contract 2:
+ IMP shall be the non-exclusive distributor of POPOP’s gaming equipment, the price will be
decided by POPOP and the risks when the goods are in Vietnam are borne by POPOP,
therefore, POPOP is the owner of those goods and doing business in Vietnam through the
contract with IMP, then POPOP is subject to FCT of Vietnam.
+ The activity of POPOP could be considered as trading, thus it is subject to 1% CIT and
exempt from VAT. IMP is required to withhold FCT for POPOP.
- Contract 3:
+ If the goods are sold in Vietnam, BND will be subject to FCT as executing trading activity,
hence BND will pay 1% CIT and be exempt from VAT. IMP is unlikely to withhold FCT for
BND in this case, instead the customer is required to withhold tax upon payment to BND.
+ If the goods are sold outside Vietnam, BND shall not be subject to FCT.
(b) For contract 4, calculate the amount (in VND millions) of the corporate income tax
portion of foreign contractor tax liability payable by IMP Co in 2020.
CIT portion of FCT VND million
License fee (180000*23500/(1 -10%)*10) 470
Technical support service 22
(24000/12*9*23500/(1-5%)*5%)
Total CIT portion of FCT 492
Ex4:
(a) Briefly explain the conditions which must be met to claim a value added tax (VAT)
refund in respect of an investment project in progress, which is located in the same
province as the investing company’s normal business operations.
When a company has normal business operations and investment project in progress in the
same province as the company’s normal business operations, the company is required to
separately declare VAT for the investment project.
Input VAT from the investment project shall be offset with net output VAT from normal
business operations. If the remaining amount of input VAT after offset exceeds 300 million
VND, the company can claim a refund for input VAT from the investment project. On the
other hand, if the remaining of input VAT after offset is lower than 300 million VND, the
company shall carry the input VAT to the next period.
(b) Calculate the amount of refundable input value added tax (VAT) which each subsidiary
of RFD Co can claim in respect of its investment projects as at 31 July 2020.
Subsidiary Net output Input VAT Net output Exceed VND Refundable
from normal from VAT payable 300 million amount
business investment or not?
operations in projects
July 2020
A 1600 – 700 = (500) 400 Not 0
900 applicable
B 8000 – 6900 (5200) (4100) Yes (4100)
= 1100
C 7500 – 6000 (1700) (200) No 0
= 1500
D 5500 – 7300 (600) (600) Yes (600)
= (1800)
Total (4700)
Ex5:
(a) For each of FY2017 and FY2018, calculate (in VND millions) the corporate income tax
(CIT) liability of ICC Co (ICC) under Decrees 20/2017 and 68/2020 and the amount of any
resulting tax credit which can be carried forward to future fiscal years.
(b) Calculate (in VND millions) ICC’s CIT liability for FY2019 under Decree 68/2020.
FY2019 (VND million)
Net interest expense (23000) + 200 = (22800)
EBITDA 50000 + 23000 = 73000
Capped deductible interest expense 21900
(30%*EBITDA)
Actual net interest expense 22800
Deductible interest expense 21900
Non – deductible interest expense to add 900
back to PBT
Taxable profit 28100
Tax payable 5620
Ex6:
(a) Calculate (in VND millions, rounded to one decimal) the gross monthly taxable income
and the annual personal income tax (PIT) liability of Hung for 2020.
Gross monthly taxable income and annual PIT liability of Hung for 2020
VND million
Annual salary (300*12 months) 3600
Bonus for performance 800
Tuition fees (10*2+8)*12 336
Taxable housing paid by bank (10*12) 120
Car hire fee from home to office and vice versa 0
Total annual taxable income 4856
Monthly taxable income 404.7
Self-deduction (11)
Dependent deduction (4.4*4) (17.6)
Compulsory insurance (29.8*10.5%) (3.1)
Monthly assessable income 373
Monthly gross-up assessable income ((373- 558.7
9.85)/0.65)
Monthly PIT payable (558.7*0.35-9.85) 185.7
Annual PIT liability 2228.3
(b) Calculate (in VND millions, rounded to one decimal) the gross monthly taxable income
and the annual PIT liability of Trang for 2020.
VND million
Monthly salary 21
Allowance in cash 2.5
Uniform 0
Monthly taxable income 23.5
Self-deduction (11)
Compulsory insurance (23.5*10.5%) (2.5)
Monthly assessable income 10
Monthly gross-up income ((10-0.75)/0.85) 10.9
Monthly PIT liability (10.9*0.15-0.75) 0.9
Annual PIT liability 10.6