Ex1:

This scenario relates to three requirements.

 
PIC Co (PIC) is a Vietnamese company which carries out diversified business
activities. The company has also made various investments by purchasing shares in
listed and non-listed companies. 
 
In 2019 and 2020, PIC invested heavily in TCO Co (TCO), a company listed on the
Ho Chi Minh City Stock Exchange, by making the following purchases:
 

Date Number of shares Purchase price per share

1 July 2019 3 million VND20,000

1 November 1 million VND25,000

2019

3 February 2020 5 million VND28,000

 
On 31 December 2019, TCO issued bonus shares in the ratio of 4:1.
 
On 1 June 2020, PIC needed cash for some new investments. It decided to sell 3.5
million of its TCO shares when the market price was VND32,000 per share. On 30
June 2020, when the market price of TCO’s shares was VND31,500 per share, the
management of PIC entered into a contract with SHK Co, a company in Singapore,
to exchange 2 million of its TCO shares for special imported equipment which has a
market value of USD2.70 million (this amount was specified in the exchange
contract). The transfer expenses from these transactions are negligible.
 
The local tax office recently agreed that PIC can use the weighted average purchase
price to determine the purchase costs of the shares sold.
(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.
 
Note: You should explain how each component of the taxable gain is determined
and provide TWO examples of the types of transfer expenses which may occur.

(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.
(4 marks)
 
(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.
(2 marks)

Ex2:
This scenario relates to two requirements.
 
Gen is a 48-year-old Japanese citizen working for Kaizanalytics Co (KC), a company
headquartered in Japan. In 2020, he earned gross employment income of
USD480,000 from KC.
 
KC entered into a contract to provide data analytics services to PTC Co (PTC), a
Vietnamese company. KC also has a subsidiary in Vietnam, KVN Co (KVN).
 
Gen was assigned by KC to provide services specifically to PTC and was also
assigned to help KVN with its business analysis and strategy development
requirements. During the period from 1 January 2020 to 30 June 2020, and from 1
September 2020 to 31 December 2020, he spent a total of 80 days in Japan carrying
out work relating to KVN.
 
According to the service agreement with PTC, Gen was present in Vietnam from 1
July 2020 to 31 August 2020 (62 days in total) to support PTC. KVN arranged for
him to stay in a hotel and paid him an allowance of VND8 million per day to cover
hotel costs and other miscellaneous expenses which he incurred. Throughout this
time, he was working in Vietnam on the work assigned by KC.
 
Gen is liable for any Vietnamese personal income tax on his income. Neither KC nor
Gen plan for him to return to Vietnam after 31 August 2020.
 
You should assume there were 246 working days in 2020, according to Japanese
regulations.
(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.
(b) Calculate Gen’s taxable employment income earned in Vietnam and his
personal income tax liability payable in Vietnam for the calendar year 2020.

Ex3:

This scenario relates to two requirements.

 
IMP Co (IMP) is a Vietnamese company which trades in technology products and
provides solution development services to clients.
 
IMP is considering entering into contracts with four foreign companies, all of which
require the Vietnamese party (IMP) to bear, declare and pay any foreign contractor
tax (FCT). The contracts under consideration are as follows:
 
Contract 1 with JID Co (JID), a Singapore company
- IMP will import drones from JID for sale in Vietnam.

- The terms of the contract will be DDP (delivery duty paid) to Hai Phong.
- IMP is required to support JID in advertising the products in Vietnam. The
  advertising costs incurred shall be offset against the payments for drones due
from IMP to JID.

- All defective drones will be sent back to JID and replaced within a 15-month
  period from import date. JID will not provide any other services in Vietnam.
 
Contract 2 with POPOP, a Korean company
- IMP will be the non-exclusive distributor of POPOP’s gaming equipment in
  Vietnam. The equipment will be imported to Vietnam by an importer employed by
POPOP.

- The selling price is determined by POPOP from time to time. If IMP wants to
  change the selling price, it must ask for approval from POPOP. IMP is required to
  remit collections from sales to POPOP within ten days and report the sales and
inventory monthly to POPOP.

- The risks regarding the equipment, from the time it is delivered to IMP’s
  warehouses until it is sold, shall be borne by POPOP.
 
Contract 3 with BND Co (BND), a Bermuda company
- BND will send its goods to a bonded warehouse at the Hai Phong port of Vietnam.

- IMP will arrange storage of the goods and pay for the warehouse costs on behalf
  of BND. IMP will then seek reimbursement of these costs from BND.

- If BND can sell the goods to a customer in Vietnam, IMP shall follow BND Co’s
  orders to deliver the goods from the bonded warehouse to the customer who will
  conduct import procedures. Payment is made directly from the customer to BND.

- If BND can sell the goods to a foreign company outside Vietnam, BND will arrange
  for the goods to be delivered to the customer itself.
 
Contract 4 with MyTech.Co, a UK company, effective from 1 April 2020
- MyTech.Co will provide customisation rights to its cloud-based business
  intelligence services to IMP.

- IMP will translate the solution and user interface into Vietnamese, promote the
  services, find users in Vietnam, collect payments and pay MyTech.Co an annual
  license fee per user. In 2020, IMP paid an amount of USD180,000 for users’
license fees to MyTech.Co.

- IMP will also pay MyTech.Co a lump sum of USD24,000 per 12-month period for
  technical support services.
(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.

(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.

Ex4:
This scenario relates to two requirements.
 
You should assume that today’s date is 31 July 2020.
 
RFD Co (RFD) is a Vietnamese parent company with four subsidiaries, A, B, C and
D, located in various provinces in Vietnam. All companies adopt the deduction
method for value added tax (VAT) declaration and declare VAT on a monthly basis.
As at 31 July 2020, all four subsidiaries had invested in at least one project in the
same province in which they conduct normal business operations. None of the
investment projects have started operations. RFD encourages all subsidiaries to
claim all possible VAT refunds from the investment projects to improve the cash
position of the subsidiaries.
 
The table below shows, for each of A, B, C and D, the total input VAT from
investment projects eligible for VAT refund consideration as at 31 July 2020. VAT for
all investment projects was separately monitored and declared. None of the
subsidiaries have any outstanding VAT refunds to claim or any outstanding VAT
payable. All amounts are in VND million:
 

Subsidiar Province Total output VAT Total input VAT Total input VAT from
y from normal from normal investment projects
business business of the company in
operations in operations in the same province,
July 2020 July 2020 as at 31 July 2020

A Quang 1,600 700 500

Nam

B Dong Nai 8,000 6,900 5,200

C Lam 7,500 6,000 1,700

Dong

D Da Nang 5,500 7,300 600

(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.

(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.

Ex5:

This scenario relates to two requirements.

 
You should assume that today’s date is 1 August 2020.
 
ICC Co (ICC) is a foreign invested company in Vietnam manufacturing airbags for
export to its parent company in Japan. ICC has been relying heavily on loans to
finance its operations and it is expected this will continue. 
 
The directors of ICC are aware of the newly issued Decree 68/2020 amending
Decree 20/2017 regarding the cap on deductible interest expenses for corporate
income tax (CIT) purposes. Provision exists to apply the new cap retrospectively to
the CIT declarations of the fiscal years (FY) 2017 – 2018. ICC has submitted CIT
returns for FY 2017 and 2018 to the tax authorities. However, the directors are now
considering whether the tax liability for each of FY2017 and FY2018 can be reduced
under Decree 68.
 
An extract of relevant information from ICC’s audited financial statements is shown
below:
 
(Unit: VND million)

FY2017 FY2018 FY2019

Operating profit (see note) 28,000 60,000 50,000

Interest income 200 800 200

Interest expenses (25,000) (19,000) (23,000)

Profit before tax 3,200 41,800 27,200

Tax 3,712 8,728 7,112

Note: Operating profit is arrived at after charging (20,000) (25,000) (23,000)

depreciation and amortisation

(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.
(12 marks)
 
(b) Calculate (in VND millions) ICC’s CIT liability for FY2019 under Decree
68/2020.
(3 marks)
 
Notes:
1. You should present your answers to requirements (a) and (b) using the pre-
formatted response space below. Your calculations should show the amount of
deductible and non-deductible interest expense in each section.
2. You should assume that no adjustment other than interest expense is required in
the CIT calculations.

Ex6:

This scenario relates to two requirements.

 
You should assume that today’s date is 31 December 2020.
 
Hung and Trang, two Vietnamese citizens, were married ten years ago. They have
three children, twin sons at eight years old and a four-year old daughter.
 
Hung is 45 years old and works for a bank in Vietnam. In 2020, Hung and his family
relocated to Ho Chi Minh due to the bank’s business requirements. His net income in
2020 included the following:
 
- Monthly salary: VND300 million

- Bonus for 2019 performance: VND800 million received in February 2020

- Children’s tuition fees (paid directly by his employer to each school): VND10
 million per month for each of his twins, and VND8 million per month for his
  daughter

- Housing support: Hung’s family rented an apartment in Ho Chi Minh City. Each
  month Hung and the bank paid VND20 million and VND10 million, respectively, to
the apartment owner for the rent

- Car hire between home and office: VND30 million per month (paid directly by his
  employer to the car hire company)
 
Trang is 38 years old and works for a not-for-profit organisation. In 2020, she
received the following net remuneration:
 
- Monthly salary: VND21 million

- Monthly petrol and living allowance in cash: VND2.5 million

- Uniform: provided in kind, capped at VND8 million per year

 
Trang’s mother, Huong, who is 68 years old, stays with them to take care of the
children. She does not have any income.
 
Both Hung and Trang are responsible for their own social, health, and insurance
contributions. They agreed that Hung would claim all possible dependant
deductions.
(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.
(10 marks)
 
(b) Calculate (in VND millions, rounded to one decimal) the gross monthly
taxable income and the annual PIT liability of Trang for 2020.
(5 marks)
 
Note: You should list all items referred to in the question, indicating by the use of
zero (0) any item which does not impact the calculation.