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F6_Vietnam Tax

Foreign Contractor Tax_Answers for Multiple Choice Questions


1. Question 1:
-

Scenario 1: Company X, who is located overseas, signs a contract to buy cloth from Vietnamese
Company A and requests Company A to deliver the goods to Vietnamese Company B (in the form
of on-spot import/export by laws).
What tax status of X?
A.
B.
C.
D.

X is not subject to FCT


Payment from B to X is subject to FCT
Payment from X to A is subject to FCT
B is subject to FCT

B. Payment from B to X is subject to FCT


Company X sells cloth to Company B, delivers goods inside Vietnam (via Company A) and earns
income from its selling cloth to Company B.
-

Scenario 2: Company Y, who is located overseas, signs a contract to process cloth with
Vietnamese Company C and requests Company C to deliver the goods to Vietnamese Company D
for further processing (in the form of on-spot import/export by law). Company D buys goods from
Company Y for selling them in Vietnam.
What tax status of Y?
A.
B.
C.
D.

Y is subject to FCT for transaction with C


Transaction between C and D is subject to FCT
Y is subject to FCT for transaction with D
Y is not subject to FCT because this is process contract

C. Y is subject to FCT for transaction with D


Company Y sells and delivers goods in Vietnam to Company D and earns income from Company D.
-

Scenario 3: Company Z, who is located overseas, signs a contract to process or buy cloth with
Vietnamese Company E (Company Z provides raw materials for Company E) and requests
Company E to deliver the goods to Vietnamese Company G for further processing (in the form of
on-spot process import/export by law).
After processing, Company G returns the goods to Company Z; and Company Z must pay
Company G for the processing under the contract.
What tax status of Z?
A.
B.
C.
D.

Z is subject to FCT for transaction with E


Z is subject to FCT for transaction with G
Transaction between E and G is subject to FCT
Z is not subject to FCT

D. Z is not subject to FCT


In this case, Company Z shall not be subject to FCT because Z does not earn any income in
Vietnam.

F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
2.

Question 2:
Company A, who is located overseas, delivers goods to a Vietnamese Company B (or authorizes
Company B to perform some services, such as delivery, distribution, marketing, advertising) while
Company A is still the owner of goods delivered to Company B (or still take responsibility for the
cost, quality of goods/services delivered to Company B; or A impose selling prices for
goods/services).
What tax status of A?
A.
B.
C.
D.

A is not subject to FCT


B is subject to FCT
A is subject to FCT
No one is subject to FCT

C.

A is subject to FCT

In this case, Company A is subject to FCT because it trades goods in Vietnam and earns income
in Vietnam.
3.

Question 3:
Company C, who is located in Vietnam, signs a contract to import excavators and bulldozers
with Company D who is located overseas. Goods are delivered at a Vietnams border gate.
Company D bears all responsibility and costs related to the goods until they arrive at the
Vietnams border gate; Company C bear responsibility and costs related to the receipt and
transport of goods from the Vietnams border gate.
The contracts prescribes that the goods come with a one-year warranty by Company D. Other
than that, Company D does not provide any services related to such goods in Vietnam.
What tax status of C?
A.
D is not subject to FCT
B.
D is subject to FCT because of one-year warranty service
C.
D is subject to FCT because goods are delivered at a Vietnams border gate
D.
D is subject to FCT because D bears all responsibility and costs related to the goods
until they arrive at the Vietnams border gate
A.

D is not subject to FCT

From 01 Oct 2014, if Company D delivers goods to the Vietnams border gate (without being
involved in customs clearance) and only provides warranty services, but not other services, it
shall not be subject to FCT.

4.

Question 4:
Company H of Hong Kong provides material handling services at a port in Hong Kong for
Company A in Vietnam. Company A pays Company H for material handling services at the
Hong Kong port.
What tax status of H?
A.
B.

H is subject to FCT because it provides service to A


A is subject to FCT because it pays H
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F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
C.
D.

Bothe H and A are not subject to FCT


H is not subject to FCT

D.

H is not subject to FCT

Material handling services at Hong Kong port are provided and consumed outside Vietnam,
thus not taxable in Vietnam.
5.

Question 5:
A foreign organization provides to the Vietnamese Company A with the following services in the
countries where Company A issues its GDRs (Global Depository Receipt) and international
bonds: professional services, bond management and issuance services, legal consultation,
depository services, road show services (trade name promotion activity).
Are these services subject to Vietnamese FCT?
A.
B.
C.
D.

Not subject to FCT


Subject to FCT
Only professional services are subject to FCT
Only road show services are subject to FCT

A.

Not subject to FCT

Not subject to FCT because these services are performed and consumed outside Vietnam.
6.

Question 6:
A Vietnamese Company signs a contract with an organization in Singapore according to which
Organization in Singapore will (i) run advertisements for sale for products in Singapore market,
and (ii) run advertisements on internet for sale of products in Vietnamese market. Vietnamese
Company will pay Organization in Singapore for ad services.
Are ad services (i) and (ii) subject to Vietnamese FCT?
A.
B.
C.
D.

(i) and (ii) are subject to FCT


(ii) is subject to FCT, (i) is not
(i) and (ii) are not subject to FCT
(i) is subject to FCT, (ii) is not

B.

(ii) is subject to FCT, (i) is not

Advertising service outside Vietnam on internet should be still subject to FCT.


7.

Question 7:
Vietnamese company A signs a contract to hire a company in Thailand as broker (i) for sale of
As goods in Thailand or on the international market, and (ii) for transfer of As real estate in
Vietnam.
Are broking services (i) and (ii) subject to Vietnamese FCT?
A.
B.

(i) and (ii) are subject to FCT


(i) is subject to FCT, (ii) is not
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F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
C.
D.

(i) and (ii) are not subject to FCT


(ii) is subject to FCT, (i) is not

C.

(ii) is subject to FCT, (i) is not

Only brokerage service for sale of good/services outside Vietnam is not subject to FCT.
8.

Question 8:
Company A in Vietnam signs a contract with University B of Singapore (i) for provision of training
for Vietnamese employees at University B, and (ii) to provide training for Vietnamese employees
in Vietnam in the form of online training.
Are training services (i) and (ii) subject to Vietnamese FCT?
A.
B.
C.
D.

(i) and (ii) are subject to FCT


(i) is subject to FCT, (ii) is not
(ii) is subject to FCT, (i) is not
(i) and (ii) are not subject to FCT

D.

(ii) is subject to FCT, (i) is not

Online training is subject to FCT even though it is performed outside Vietnam.


9.

Question 9:
Company A in Vietnam signs a contract to buy a production line for a cement factory from
Company B overseas. The total contract value is USD 100 million, including USD 80 million of
machinery and equipment (some of them are subject to 10% VAT) and USD 20 million for
services of installation guide, supervision, warranty, and maintenance.
What is VAT liability of B?
A.
B.
C.
D.

USD 20 million is subject to VAT


USD 80 million is subject to VAT
USD 100 million is subject to VAT
Total contract value is not subject to FCT

A.

USD 20 million is subject to VAT

Value of the imported M&E (USD 80 million) is not subject to VAT of FCT because they were
already subject to VAT at the import.

10.

Question 10:
Company A in Vietnam signs a contract to buy a production line for a cement factory from
Company B overseas. The total contract value is USD 100 million (VAT-exclusive), including
USD 80 million of machinery and equipment, and USD 20 million for services of installation
guide, supervision, warranty, and maintenance.
What is CIT liability of B?
A.

Only USD 20 million is subject to CIT


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F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
B.
C.
D.

USD 80 million and USD 20 million are subject to CIT at separate CIT rates
Total USD 100 million is subject to one CIT rate
Only USD 80 million is subject to CIT

B.

USD 80 million and USD 20 million are subject to CIT at separate CIT rates

Value of the imported M&E and services are subject to CIT at separate tax rates.
11.

Question 11:
Foreign Contractor A signs a contract with a Vietnamese entity to supervise the construction of
cement factory Z. The contract value is USD 300,000 exclusive of VAT (but inclusive of
corporate income tax). Furthermore, the Vietnamese Entity provides accommodations and
workplaces for managers of Foreign Contractor A, which are valued at USD 40,000 exclusive of
VAT.
According to the contract, the Vietnamese Party is responsible for paying VAT on behalf of the
foreign contractor.
What is taxable amount subject to VAT?
A.
B.
C.
D.

USD 357,895
USD 300,000
USD 340,000
USD 40,000

A.

USD 357,895

The revenue subject to VAT earned by Foreign Contractor A is calculated as follows:


Revenue subject
=
300,000 + 40,000
=
357,894.73 (USD)
to VAT
(1-5%)
12.

Question 12:
Foreign Contractor A signs a contract to build cement factory Z with a Vietnamese entity. The
total contract value is USD 10 million inclusive of VAT.
According to the main contract, Foreign Contractor A shall delegate part of the construction
(stipulated in the main contract signed with the Vietnamese entity) to Vietnamese Subcontractor B, which is valued at USD 01 million exclusive of VAT.
Furthermore, during the construction process, Foreign Contractor A buys building materials
(bricks, cement, sand, etc.), other goods and services such as stationery, car rental and hotel
rooms for experts, etc. to serve the contract execution.
What is taxable amount subject to VAT?
A.
B.
C.
D.

USD 10 million
USD 9 million
USD 11 million
USD 10 million less value of building material which A purchased

B.

USD 9 million
5

F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
In this case, the revenue subject to VAT earned by foreign contractor A is calculated as follows:
Revenue subject to VAT = USD 10 million USD 1 million = USD 9 million
Do not subtract the value of raw materials, goods and services such as car rental, hotel rooms,
stationery, etc. from the revenue subject to VAT of Foreign Contractor A.
13.

Question 13:
Company A overseas provides postal (express) services from abroad to Vietnam (inbound) and
from Vietnam to abroad (outbound).
What are VAT treatments?
A.
B.
C.
D.

Inbound revenue is subject to VAT, outbound revenue is not.


Outbound revenue is subject to VAT, inbound revenue is not.
Both inbound and outbound revenue are subject to VAT
Both inbound and outbound revenue are not subject to VAT

B.

Outbound revenue is subject to VAT, inbound revenue is not.

Revenue from inbound (from abroad to Vietnam) postal services is not subject to VAT
(whether service charges are paid by the consignor or consignee);
The whole revenue earned by Company A from outbound postal services is subject to
VAT (whether service charges are paid by the consignor or consignee).

14.

Question 14:
Vietnamese Company B provides postal services from abroad to Vietnam (inbound) and vice
versa (outbound). To provide these services, Company B pays (shared fee) to the Overseas
Company C an amount of X USD.
What are VAT treatments of money received by C?
A.
B.
C.
D.

Inbound shared money is subject to VAT, outbound shared money is not.


Both shared inbound and outbound money are subject to VAT.
Outbound shared money is subject to VAT, inbound shared money is not.
Both shared inbound and outbound money are not subject to VAT

C.

Outbound shared money is subject to VAT, inbound shared money is not.

With regard to inbound postal services (whether service charges are paid by the
consignor or consignee) the amount of X USD received by Company C is not subject to
VAT;
With regard to outbound postal services (whether service charges are paid by the
consignor or consignee), Company B shall declare, withhold, and pay VAT on the X
amount paid to Company C.

15.

Question 15:
Foreign Contractor A signs a contract to build power plant X for a Vietnamese entity. The
contract value is USD 75 million (inclusive of VAT).

Scenario 1: Value of each business activity can be separated including USD 50 million for
machinery and equipment (M&E); and USD 25 million for construction, and installation and
services as follows:
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F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
(i) Value of M&E subject to VAT: USD 30 million.
(ii) Value of M&E not subject to VAT: USD 15 million.
(iii) Value of warranty services for M&E: USD 5 million.
(iv) Value of design of technological line and other design services: USD 5 million.
(v) Value of workshops, other auxiliary systems, construction, and installation: USD 15 million.
(vi) Value of supervision services and installation guide: USD 3 million.
(vii) Value of operation training and test run services: USD 2 million.
Upon importation, VAT on USD 30 million of M&E has been paid. Value of M&E not subject to
VAT is USD 15 million.
What is VAT liability of Foreign Contractor A?
A.
B.
C.
D.

(i) is subject to VAT at 2%; (iii), (iv), (v), (vi), (vii) are subject to VAT at 5%.
(i), (iii) are subject to VAT at 2%; (iv), (v), (vi), (vii) are subject to VAT at 5%.
(iii), (iv), (v), (vi), (vii) are subject to VAT at 5%.
(v) is subject to VAT at 3%; (iii), (iv), (vi), (vii) are subject to VAT at 5%

(v) is subject to VAT at 3%; (iii), (iv), (vi), (vii) are subject to VAT at 5%

Foreign contractor shall only pay VAT on the value of services and construction/ installation in
the contract signed with the Vietnamese entity. Value of services (warranty, design, supervision,
installation guide, technical training, test run) is USD 15 million, which applies 5% VAT on
revenue from service provision; value of construction and installation is USD 15 million, which
applies 3% VAT on revenue from construction and installation (VAT is not imposed on value of
imported machinery and equipment).
-

Scenario 2: The main contract does not separate value of each business activity and only
specifies that the contract value include machinery, equipment, design services, supervision
services, installation guide, technical training, and test run services. There are not adequate
documents proving the payment of VAT on machinery and equipment during importation.
What is VAT liability of Foreign Contractor A?
A.
B.
C.
D.

USD 75 million is subject to VAT at 2%


USD 75 million is subject to VAT at 5%.
USD 75 million is subject to VAT at 3%
USD 75 million is not subject to VAT

C.

USD 75 million is subject to VAT at 3%

Foreign Contractor A shall pay 3% VAT on the whole contract value, which is USD 75 million.
-

Scenario 3: Foreign contractor A signs contracts with subcontractors to delegate the


construction and installation works with supply of raw materials, and Foreign Contractor A only
provides the services (such as supervision service, installation guide etc.).
What is VAT liability of Foreign Contractor A?
A.
B.
C.
D.

Value of services is subject to VAT at 5%


Value of services is subject to VAT at 2%
Value of services is subject to VAT at 3%
Total contract value of USD 75 million is subject to VAT

A.

Value of services is subject to VAT at 5%


7

F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
Only value of services is subject to 5% VAT.
16.

Question 16:
Korean Contractor H, who does not follow Vietnamese accounting system (VAS), signs a
contract with Company B in Vietnam to provide machinery and equipment with installation and
test run services for USD 10 million. The contract does not separate the value of machinery and
equipment from the value of services.
What is VAT liability of Foreign contractor H?
A.
B.
C.
D.

Total contract value of USD 10 million is subject to VAT at 5%


Total contract value of USD 10 million is subject to VAT at 2%
Total contract value of USD 10 million is subject to VAT at 3%
Total contract value of USD 10 million is not subject to VAT

D.

Total contract value of USD 10 million is subject to VAT at 3%

3% VAT shall apply.


17.

Question 17:
In January 2015, Foreign Contractor A signs a contract with a Vietnamese entity to provide
petroleum services for USD 01 million. Before obtaining the tax registration certificate (for
payment of VAT by deduction method), Foreign Contractor A incurs an input VAT of USD 5,000
on purchased goods/services.
On 15 March 2015, the Vietnamese entity pays USD 100,000 to Foreign Contractor A (exclusive
of VAT and inclusive of corporate income tax). The Vietnamese entity pays VAT on behalf of
Foreign Contractor A, which equals (=) 100,000 x 10% = 10,000 (USD).
On 01 May 2015, Foreign Contractor A applies for a registration and is issued with a tax
registration certificate by the tax authority. In May 2015, the Vietnamese entity pays USD 200,000
to Foreign Contractor A (exclusive of VAT and inclusive of corporate income tax). Thus, output
VAT incurred by Foreign Contractor A in May is USD 20,000 (= 200,000 x 10%).
Input VAT of Foreign Contractor A incurred during the period from 01 May 2015 to 30 May 2015
is USD 2,000 (Foreign Contractor A already has a tax code during this period). Foreign
Contractor A transfers all invoices and receipts incurred in May 2015 to the Vietnamese entity in
order for the Vietnamese entity to declare and pay VAT on behalf of Foreign Contractor A.
What is payable VAT of Foreign Contractor A in May 2015?
A.
B.
C.
D.

Payable VAT is 18,000 USD


Payable VAT is 20,000 USD
Payable VAT is 13,000 USD
Payable VAT is 28,000 USD

A.

Payable VAT is 18,000 USD

VAT payable by Foreign Contractor A in the tax period May 2015 is USD 18,000 (=USD 20,000
USD 2,000).
Foreign Contractor A must not deduct USD 5,000 of input VAT incurred before May 01, 2015.

F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
18.

Question 18:
Foreign Contractor A signs a contract with a Vietnamese entity to supervise the construction of
Cement Factory Z. The contract value is USD 285,000 exclusive of VAT and CIT. Furthermore,
the Vietnamese entity provides accommodations and workplaces for managers of Foreign
Contractor A, which are valued as USD 38,000 exclusive of VAT and CIT. According to the
contract, the Vietnamese entity is responsible for paying VAT and CIT on behalf of the Foreign
Contractor.
What is taxable amount subject to CIT?
A.
B.
C.
D.

USD 323,000
USD 285,000
USD 340,000
USD 38,000

B.

USD 340,000

Revenue subject
to CIT
19.

285,000 + 38,000
(1- 5%)

340,000 (USD)

Question 19:
Foreign Contractor A signs a contract to build Cement Factory Z with a Vietnamese entity. The
total contract value is USD 9 million exclusive of VAT. According to the main contract, Foreign
Contractor A shall delegate part of the construction (stipulated in the main contract signed with
the Vietnamese entity) to Vietnamese Sub-contractor B, which is valued at USD 01 million
exclusive of VAT.
Furthermore, during the construction process, Foreign Contractor A buys building materials
(bricks, cement, sand, etc.), other goods and services such as stationery, car rental and hotel
rooms for experts, etc. to serve the contract execution.
What is taxable amount subject to CIT?
A.
B.
C.
D.

USD 9 million
USD 8 million
USD 10 million
USD 8 million less value of building material which A purchased

C.

USD 8 million

In this case, the revenue subject to CIT earned by foreign contractor A is calculated as follows:
Revenue subject to CIT = USD 9 million USD 1 million = USD 8 million
Do not subtract the value of raw materials, goods and services such as car rental, hotel rooms,
stationery, etc. from the revenue subject to CIT of foreign contractor A.
20.

Question 20:
st

In the 1 quarter of 2013, Foreign Airline A earns the revenue of USD 100,000, including USD
85,000 from passenger air tickets, USD 10,000 from airway bills, and USD 5,000 from
miscellaneous charges orders (MCOs); USD 1,000 of airport fees is collected on behalf of the
State; expense of USD 2,000 is paid for returned tickets.
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F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
What is taxable amount subject to CIT for Quarter I of A?
A.
B.
C.
D.

USD 100,000
USD 99,000
USD 95,000
USD 97,000

D.

USD 97,000
st

Revenue subject to CIT earned by Foreign Airline A in the 1 quarter of 2013 is calculated as
follows:
Revenue subject to CIT = 100,000 (1,000 + 2,000) = 97,000 (USD)
21.

Question 21:
Company A acts as an agent of Foreign Marine Shipping Company X. According to the agent
contract, Company A, on behalf of Company X, receives goods to be transported abroad, issues
bills of lading, collects charges.
Company B of Vietnam hires Company X (via Company A) to transport goods from Vietnam to
United State of America (USA) for USD 100,000.
Company A hires ships from Vietnamese or foreign companies to carry goods from Vietnam to
Singapore for USD 20,000. From Singapore, goods shall be transported to the USA by the ships
of Company X.
What is taxable revenue subject CIT of X?
A.
B.
C.
D.

USD 100,000
USD 80,000
USD 120,000
USD 97,000

C.

USD 80,000

Revenue subject to CIT of company X is calculated as follows:


Revenue subject to CIT = USD 100,000 USD 20,000 = USD 80,000
22.

Question 22:
Company A overseas provides postal (express) services from abroad to Vietnam (inbound) and
from Vietnam to abroad (outbound).
What are CIT treatments?
A.
B.
C.
D.

Inbound revenue is subject to CIT, outbound revenue is not.


Outbound revenue is subject to CIT, inbound revenue is not.
Both inbound and outbound revenue are subject to CIT
Both inbound and outbound revenue are not subject to CIT

Outbound revenue is subject to CIT, inbound revenue is not.

Revenue from inbound postal services is not subject to CIT (whether service charges
are paid by the consignor or consignee);
10

F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
+

23.

The whole revenue earned by Company A from outbound postal services is subject to
CIT (whether service charges are paid by the consignor or consignee).

Question 23:
Vietnamese Company B provides postal services from abroad to Vietnam (inbound) and vice
versa (outbound). To provide these services, Company B pays (shared fee) to the overseas
Company C for an amount of X USD.
What are CIT treatments of money received by C?
A.
B.
C.
D.

Inbound shared money is subject to CIT, outbound shared money is not.


Both shared inbound and outbound money are subject to CIT.
Outbound shared money is subject to VAT, inbound shared money is not.
Both shared inbound and outbound money are not subject to CIT

D.

Outbound shared money is subject to CIT, inbound shared money is not.

With regard to inbound postal services (whether service charges are paid by the
consignor or consignee) the amount of X USD received by Company C is not subject to
VAT;
With regard to outbound postal services (whether service charges are paid by the
consignor or consignee), Company B shall declare, withhold, and pay CIT on the x
amount paid to Company C.

24.

Question 24:
Bank A has a loan of USD 10 million with a monthly interest rate of 5.2%. The effective period
of the contract is 03 years from 01 February 2012 to 01 February 2015. Payments shall be
made every 06 months at the beginning of the period.
According to the loan contract, A negotiates with Bank B overseas to execute the Interest Rate
Swap (IRS) contract, in particular:
-

The effective period of the contract is 03 years from 01 February 2012 to 01 February 2015.
Payments shall be made every 06 months at the beginning of the period.

Floating interest payable to B is Libor + 0.25% and B has to pay A a fixed interest rate of
5.2%. This means if Libor + 0.25% is higher than the fixed interest rate in the IRS contract,
B will receive a difference of interest from A which equals (=) (Libor + 0.25%) (less)
interest payable at 5.2%. On the contrary, if Libor + 0.25% is lower than the fixed interest
rate in the IRS contract, A will receive a difference of interest from B, which equals (=) 5.2%
- (less) interest received by A calculated according to interest rate of Libor + 0.25%.

11

F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
Payment
time

Libor
interest
rate (%)

1/2/201231/7/2012
1/8/2012 31/1/2013
1/2/201331/7/2013
1/8/2013 31/1/2014
1/2/2014 31/7/2014
1/8/201430/1/2015

The rate
payable to
B by A (%)
Libor +
0.25%

The rate
payable to
A by B

4.80

5.05

5.20

5.00

5.25

5.20

4.90

5.15

5.20

4.95

5.20

5.20

4.90

5.15

5.20

5.05

5.30

5.20

The rate
received by B or
A after
offsetting
A
B
0.15
0.05

Difference
received by A or
B in each period
(USD 1,000)
A
B
-

15

5
0.05

0.00

0.05
0.10

5
10

What is revenue subject to CIT of B for 2012, 2013, 2014 and 2015?
A.
B.
C.
D.

USD 15,000; USD 10,000; USD 5,000 and Nil respectively


USD 10,000; USD 5,000; USD 0 and Nil respectively
USD 20,000; USD 15,000; USD 10 and USD 5,000 respectively
USD 5,000; USD 10,000; USD 15,000 and Nil respectively

B.

USD 10,000; USD 5,000; USD 0 and Nil respectively

Revenue subject to CIT received by B is calculated as follows:


In 2012 (from January 01, 2012 to December 31, 2012): Total amount B receives from
A: (15,000 - 5,000) = 10,000 (USD);
In 2013 (from January 01, 2013 to December 31, 2013): Total amount B receives from
A: (5,000 - 0) = 5,000 (USD);
In 2014 (from January 01, 2014 to December 31, 2014): B has to pay A totally USD
5,000 (taxable revenue = 0)
25.

Question 25:
On 01 January 2015, Treasury Bonds X with a face value of VND 100,000 and a term of 06
months are issued for VND 89,000 per Treasury Bill. After being issued, Treasury Bonds are
listed on HNX. Investor A makes some transactions below from 02 January to 01 July 2015
(maturity date):
Transaction
date
2/1/2015
1/2/2015
1/3/2015
1/4/2015
1/5/2015

Buy/Sell
Buy
Buy
Sell
Buy
Sell

Amount

Price
100
100
70
40
20

90,000
92,000
93,000
94,000
95,000

12

F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
What is taxable revenue subject CIT with respect to bonds which Investor A receives at
maturity date?
A.
B.
C.
D.

VND 1,000,000
VND 1,140,000
VND 1,520,000
VND 900,000

C.

VND 1,140,000

Step 1: determine the amount of treasury bills held on the maturity date: (100 + 100 + 40) (70
+20) = 150
Step 2: Determine the amount, time, and corresponding buying prices of the treasury bills held on
the maturity date after subtracting the amount of sold treasury bills according to First-in-first-out
rules: 150 treasury bills are held on the maturity date, including:
+ 10 treasury bills at VND 90,000 bought on January 02, 2015
+ 100 treasury bills at VND 92,000 bought on February 02, 2015
+ 40 treasury bills at VND 94,000 bought on April 02, 2015
Step 3: Determine the weighted buying price using the formula:
Weighted mean of buying prices: [(40 x 94,000 + 100 x 92,000 + 10 x 90,000)/ 150] = 92.400
(VND)
Revenue subject to CIT from the treasury bills received by the investor on the maturity date:
(100,000 92,400) x 150 = 1,140,000 (VND).
26.

Question 26:
Foreign Contractor A signs a contract to build power plant X for a Vietnamese entity. The
contract value is USD 75 million (exclusive of VAT and inclusive of CIT).

Scenario 1: Value of each business activity can be separated including USD 50 million for
machinery and equipment (M&E), and USD 25 million for construction, and installation and
services as follows:
(i) Value of M&E: USD 45 million.
(ii) Value of warranty services for M&E: USD 5 million.
(iii) Value of design of technological line and other design services: USD 5 million.
(iv) Value of workshops, other auxiliary systems, construction, and installation: USD 15 million.
(v) Value of supervision services and installation guide: USD 3 million.
(vi) Value of operation training and test run services: USD 2 million.
What is CIT liability of Foreign contractor A?
A.
B.
C.
D.

(i) subject to CIT at 2%; (ii) (iii), (iv), (v), (vi) subject to CIT at 5%.
(i), (ii) subject to CIT at 1%; (iii), (iv), (v), (vi) subject to CIT at 5%.
(iv) subject to CIT at 2%; (ii), (iii), (v), (vi) subject to CIT at 5%.
(i) subject to CIT at 1%; (iv) subject to CIT at 2%; (ii), (iii),(v),(vi) subject to CIT at 5%

D.

(i) subject to CIT at 1%; (iv) subject to CIT at 2%; (ii), (iii),(v),(vi) subject to CIT at 5%

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F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
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Scenario 2: The value of each business activity cannot be separated.


What is CIT liability of Foreign Contractor A?
A.
B.
C.
D.

USD 75 million is subject to CIT at 2%


USD 75 million is subject to CIT at 5%.
USD 75 million is subject to CIT at 3%
USD 75 million is not subject to CIT

A.

USD 75 million is subject to CIT at 2%

The 2% CIT shall apply to the whole contract value which is USD 75 million.

Scenario 3: Where Foreign Contractor A signs contracts with local subcontractors to delegate
the works inclusive of raw materials and Foreign Contractor A only provide the other services
(such as supervision service, installation guide etc.).
What is CIT liability of Foreign Contractor A?
A.
B.
C.
D.

Value of services is subject to CIT at 5%


Value of services is subject to CIT at 2%
Value of services is subject to CIT at 3%
Total contract value of USD 75 million is subject to CIT

A.

Value of services is subject to CIT at 5%

Value of services is subject to 5% CIT.


27.

Question 27:
Foreign Contractor A signs a contract with a Vietnamese entity to provide a production line for
USD 70 million.

Scenario 1: Value of machinery and equipment (M&E) and services are separated
(i) Value of machinery and equipment: USD 60 million.
(ii) Value of technological line design and other design services: USD 5 million
(iii) Value of supervision and installation guide: USD 3 million.
(iv) Value of operation training and test run services: USD 2 million.
What is CIT liability of Foreign contractor A?
A.
B.
C.
D.

(i) subject to CIT at 1%. (ii), (iii), (iv) subject to CIT at 5%.
(i), (ii) subject to CIT at 1%; (iii), (iv) subject to CIT at 5%.
(iv) subject to CIT at 2%; (ii), (iii) subject to CIT at 5%.
(i) subject to CIT at 1%; (iv) subject to CIT at 2%; (ii), (iii) subject to CIT at 5%

(i) subject to CIT at 1%. (ii), (iii), (iv) subject to CIT at 5%.

If the value of machinery and equipment can be separated from value of services, the value of
machinery and equipment shall apply CIT rate on trading; the value of design, supervision,
installation, training, and test run services shall apply CIT rate on service provision.

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F6_Vietnam Tax
Foreign Contractor Tax_Answers for Multiple Choice Questions
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Scenario 2: Value of machinery and equipment (M&E) and services are NOT separated
What is CIT liability of Foreign contractor A?

A.
B.
C.
D.

Total contract value of USD 70 million is subject to CIT at 5%


Total contract value of USD 70 million is subject to CIT at 1%
Total contract value of USD 70 million is subject to CIT at 2%
Total contract value of USD 70 million is not subject to CIT

B.

Total contract value of USD 70 million is subject to CIT at 2%

2% CIT shall apply to the whole contract value (USD 70 million).

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