TAXATION (VNM) – MOCK TEST

SECTION A
1. B
When the contract does not separate the value, total contract value of USD 20 million is
subject to VAT at 3%
2. D
Taxable amount: (gross up) ($150,000 * 23,500 exchange rate – 10 millions) / (1 – 5%)
PIT = 3,700 millions * 5% = VND185 million.
3. 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.
4. B
VND0 million
According to Article 3.1(m) and (n) of Circular 111/2013 as revised by Circular 92/2015
and 25/2018, the qualified compensation for resettlement and scholarship are non-
taxable.
5. D
According to Section 2 and 3, Circular No. 103/2014/TT-BTC, there are only 3 methods
of calculating contractor tax: the actual method (answer A), the direct (deemed) method
(answer B) and the hybrid method (answer C).
6. 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 fist
month of the next quarter

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 – Yearly tax payment, except CIT finalisation (business registration): The last day of the
first month of the next year
7. D
The correct answer is option 4: Resident in both tax years
An expat is a resident if he/she spends 183 days or more in Vietnam in the tax year. The
first tax year is 12 consecutive months from his/her first arrival, and the second tax year
is the subsequent calendar year.
First tax year: 15 April 2020 to 14 April 2021: (126 + 57) = 183 days => resident
Second tax year: 1 January to 15 November 2021: (57 + 180) = 237 days => resident
8. A
CIT liable in Vietnam = (VND850 million + VND250 million) x 20% = VND220 million
which is lower than amount paid overseas
According to Article 1, Circular no. 96/2015/TT-BTC, in case of a Vietnamese enterprise
who makes investment in a foreign country that has signed a Double Taxation Agreement
and transfers income to Vietnam after paying CIT overseas, regulations of such
Agreement shall apply. If the foreign country has not signed a Double Taxation
Agreement with Vietnam and the rate of CIT incurred in the foreign country is lower, the
difference in corporate income tax shall be collected in accordance with the CIT Law of
Vietnam.
9. C
Option 3
According to Article 4, point 9 of Decree 132/2020, the standard arm’s length range is
from 35th to 75th percentile
10. 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 2 April 2021), to the date just before the date of the decision (2
July 2021, i.e. 92 days (29 days in April + 31 days in May + 30 days in June + 2 days in
July = 92 days).
11. A

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 According to Point a, Clause 2, Article 13, Circular 103/2014/TT-BTC, CIT rates (%)
applied to interest rate is 5%
CIT Taxable value = 5,000/(1 – 5%) = 5,263
CIT (withholding tax) = 5,263 x 5% = VND263 million

12. A
Special consumption tax for 1 bottle of wine: VND300,000 x 30% = VND90,000.
VATable price for 1 bottle of wine: VND300,000 + VND90,000 = VND390,000.
13. A
According to Point 2.6d, Article 4, Circular No. 96/2015/TT-BTC, wages and salaries of
the owner of a private company, a single-member limited liability company (owned by an
individual); wages of the founders, members of the Board of members or the Executive
Board who do not directly participate in business administration.
14. C
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
(which is USD 600,000 *2% = 12,000), or pay the normal corporate income tax (CIT)
rate (20%) on revenue minus expenses (which is lower in this case: = (USD 600,000-
USD 550,000) x 20% = USD 10,000)
15. D
The correct answer is VND9,400 million ($20 million * 23,500 * 2%)
Under the hybrid method, the foreign contractor is still subject to corporate income tax
(CIT) at a deemed % of revenue.
Purchases from Vietnamese suppliers cannot be deducted from CIT-taxable revenue

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 SECTION B
1. VNV Co
(a) Corporate income tax (CIT) – Assessable income and tax rates for the years
2018, 2019, 2020 and 2021
Software Hardware
VND million VND million
2018
Taxable income 8,000 7,000 2
Loss from 2017 (must offset against the incentive (8,000) (1,000)
activity first)
Assessable income 0 6,000 1
Tax rate Exempt 20%
2019
Taxable income (10,000) 2,500
Offset loss between software and hardware 2,500 (2,500) 1
Assessable income/(loss) (7,500) 0
Tax rate 5% (50% off) 20% 1
2020
Taxable income 15,500 2,000
Loss carried forward from 2019 (7,500) 0 1
Assessable income 8,000 2,000
Tax rate 5% (50% off) 20% 1
2021
Taxable income (loss) (11,000) 3,000
Offset between software and hardware 3,000 (3,000) 1
Assessable income/(loss) (8,000) 0
Tax rate 5% (50% off) 20% 1

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 9

(b) Tax loss allocation after the split

AHV BHV
VND million VND million
Total loss at the end of 2021 (before the split) 0.5
VND8,000 million
Capital split ratio 65% 35%
Allocated loss to each company (5,200) (2,800) 0.5
1
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 to a share- 1
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
This award is also employment-based (additional bonus), thus the award would be 1
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 not be 1
taxable upon receipt, but delayed until Mr Nghi sells the shares.
5

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 (b) Personal income tax (PIT) liability for the year 2021 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 – 3%)
(1.5 marks) (1.5 marks)
Tax 718 1,111 1
= (35,918 * 2%) = (37,029 * 3%)
(0.5 marks) (0.5 marks)

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 Total FCT = 1,829 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 – 5%)
(1 mark) (1 mark)
Tax 432 454 1
= (8,632 * 5%) = (9,086 * 5%)
(0.5 marks) (0.5 marks)
Total FCT = 1,159 6
10

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 4. VINAMEX JSC
Value added tax (VAT) inputs
Transaction Creditable Non-creditable
VAT VND VAT VND
million million
(1) Input VAT for the canteen and dormitory is creditable 680 1
in full.
(2) Input VAT for the medical station is not creditable 400 1.5
since it is not located in an industrial park, and serves the
family of employees and people in the nearby area (non-
business purposes).
(3) Input VAT for promotional items is creditable in full. 80 1
(4) Input VAT for payment on behalf of another entity is 0 0 1.5
neither creditable nor non-creditable input VAT for
VINAMEX. VINAMEX will need to gather all the
documents advanced for the establishment of the
subsidiary and hand these over to the subsidiary when it is
set up.
(5) Input VAT for the internal movement is not creditable 520 2
because the assets have not been used for VINAMEX’s
(= 5,720/
business operations but immediately transferred to CRDT-
X, and the subsidiary’s activities are not subject to VAT. 1·1 * 10%)

Tutorial note: VINAMEX should have charged VAT on the

subsidiary.
(6) Input VAT for production of goods for non-refundable 80 1.5
aids to Vietnam by international organisations is
(880/1·1 *
creditable in full.
10%)

(7) Input VAT for purchasing cars with less than nine 160 20 1.5
seats is only creditable up to the amount of VND160
(1,980/1·1 –
million.
1,600) * 10%

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 10

5. TL JSC
Taxable income for corporate income tax (CIT) for the year ended 31 December
2021
Item VND million
1 Staff bonuses
– Accrual for bonuses in 2021 16,800 1
– Actual bonuses settlement re 2021 (16,500) 1
– Bonuses re 2020 recorded in 2021 expenses 500 2
2 Gross up for tax paid on profit sharing in Taiwan ((USD5 24,066 2
million * 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 (400) 0.5
Total adjustments 20,016
Profit per financial statements 720,000
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

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 15
Tutorial notes
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.
Strickly, students may be requested to calculate the foreign income separately from the
ordinary income
3. As the rental income was taxed in full in 2020, 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 2021
Taxable Non-
income taxable
income
VND
VND
million
million
Annual income
Annual salary (USD360,000 * 23,500) a 8,460 0.5
Performance bonus ((USD360,000/12 + 35,000) * b 1,527.5 1
23,500)
Tuition fees:
– Jennifer (USD20,000 * 23,500) c 479 1

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 – Lewis (USD15,000 * 23,500) 352.5 1
Air fares:
– (USD3,000 * 3 trips: 1 for him, 2 for his wife * d 211.5 1
23,500)
– (USD3,000 * 1 trip for him * 23,500) 70.5 0.5
Medical insurance: e 1
– For himself (USD2,000 * 12 months * 23,500) 564
– For family (USD2,000 * 2 (wife and Lewis) * 12 1,128 1
months * 23,500)
Car (20 * 12 months) f 240 1
Accumulation insurance (only taxable when paid) g 846 1
(USD3,000 * 12 months * 23,500)
11,806 2,073
9

(ii) Personal income tax (PIT) liability for the year 2021
Taxable income
VND million VND 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) 1,269 0.5
Total taxable income m=h+l 13,075
Deductions
– Self deduction (11* 12) n (132) 0.5

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998
 – 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 trigger point for 1
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 January 1
2021) nor when 25% of the options vest (i.e. on 31 December 2021) since Mr Tom does
not receive any shares in 2021. The first acquisition of option shares only occurs on 2
January 2022.
2
15

Vietsourcing Training Centre

Level 5, Kinh Do Building, 292 Tay Son, Dong Da, Hanoi Email: edu@vietsourcing.com
Phone: +8424 3856 7777 Web: nlv.edu.vn
Hotline: 09 43 42 8998