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MIDTERM EXAMINATION 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
– TAXATION (Updated Pham Van Dong St 463
141218)
Total questions: 20 MCQs
Time: 1 hour

SUPPLEMENTARY INSTRUCTIONS
1. Calculations and workings need only be made to the nearest VND, unless instructed otherwise.
2. All apportionments should be made to the nearest month.
3. All workings should be shown in Section

TAX RATES AND ALLOWANCES

The following tax rates and allowances are to be used in answering the questions

Value added tax (VAT)

Standard rate 10%
Reduced rate 5%

Corporate income tax (CIT)

Standard rate for enterprises 20%

Rates of exchange

The following rates of exchange are to be used in answering all questions in this paper (unless
otherwise stated):

USD 1 = VND 22,800

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1. For the tax year 2015, 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham
Company A deducted a wage Van Dong
provision St VND 10 billion. The Company
fund of 463just spent VND 4
has
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. NEI Co, a foreign contractor, entered into a contract with PVN, a Vietnamese company, to supply
services in relation to oil exploration. NEI Co wants to apply the deduction method for the declaration
of value added tax (VAT) in Vietnam. In November 2014 when the tax code application was still in
progress, NEI Co incurred input VAT of USD15,000 for its operations in Vietnam. Also during that time,
PVN made a progress payment to NEI Co of USD200,000 (net of VAT at 10%) for the services. In
December 2014 when the tax code was available, NEI Co incurred a further USD28,000 input VAT for
its operations in Vietnam.
What is the amount of NEI Co’s deductible input value added tax (VAT) in 2014?
A. USD63,000
B. USD28,000
C.USD35,000
D. USD15,000

3. 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

4. SWR Co, a Vietnamese company, has three separate sales outlets. In December 2014, each of the
outlets issued an invoice for the sale of one ton of construction materials to three separate customers
as follows. The sale of construction materials is subject to value added tax (VAT) at the rate of 10%.
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- Invoice 1: selling 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham
price VND20 million, VAT VND2 Van Dong St
million 463

- Invoice 2: selling price VND22 million, no VAT as the selling price is inclusive
- Invoice 3: selling price VND20 million, no VAT because the construction materials were given to the
customer for free as part of a promotion which has been registered with the authorities
What is the output value added tax (VAT) which SWR Co should have declared in December 2014, if
no amendments were made to the invoices?
A. VND4 million
B. VND2 million
C. VND4·2 million
D. VND6·2 million

5. 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 year end only
A. 1 and 3
B. 1 and 4
C. 2 and 3
D. 2 and 4

6. 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 finalisation 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
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D. Based on VND3 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham
billion, payable from 31 January Van Dong St
2015 463
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8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham Van Dong St 463
7. Enterprise B receives contributed capital from enterprise A (Vietnamese company). 2016 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 enterprise income tax amount and has fully
paid enterprise income tax.
How much is A’s shared income and it is taxable or exempt?
A. 78 million and taxable
B. 90 million and exempt
C. 78 million and exempt
D. 90 million and taxable

8. TDP Co, a Vietnamese company applying the value added tax (VAT) deduction method, provided
services to a foreign customer for VND200 million and charged VAT at 5% on the invoice. In a tax
review by a consultant, it was identified that the VAT rate used on the invoice should have been 10%,
however, TDP Co can no longer claim back the undercharged VAT from the foreign customer.
What is the amount of additional output VAT which TDP Co will need to pay to the tax authorities
(rounded to the nearest VND million)?
A. VND9 million
B. VND10 million
C. VND11 million
D. VND20 million

9. 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

10. 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
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D. VND528 million 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham Van Dong St 463
11. On 30 June 2018, STG Co, a Vietnamese company, identified the value added tax (VAT) declaration it
made for April 2018 was under-declared by VND1,000 million. It should be noted that 21 May 2018
was a Monday, and there had been no tax audit at STG Co in 2018.
What is the late payment interest (in VND) which STG Co is required to settle on 30 June 2018,
assuming the under-declared value added tax (VAT) was settled on that date?
A. VND12,300,000
B. VND15,000,000
C. VND20,000,000
D. VND12,000,000

12. 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
(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

13. In 2017, DFC Co, a Vietnamese company, sold goods to SBY Co, another Vietnamese company, for a
total contract value of VND4,840 million, inclusive of 10% value added tax (VAT). According to the
contract, SBY Co is required to make payment within one month of the invoice date or pay interest of
1% of the contract value per month, for each month of delay. SBY Co paid the invoice four months
after DFC Co issued it on 31 May 2017.
What is the amount of total output value added tax (VAT) (in VND millions, rounded to one decimal)
DFC Co is required to declare in 2017 as a result of the above transactions?
A. VND440·0 million
B. VND459·4 million
C. VND454·5 million
D. VND484·0 million
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14. In February 2018, JTF 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham Van Dong St 463liability company,
Co, a Japanese investor, sold its capital contribution in TGT Co, a Vietnamese limited
to a foreign buyer for USD10 million, when the USD buy–sell exchange rate from the commercial bank
was VND23,000–VND23,200. The original capital contribution in TGT Co was USD10 million which is
reflected in the audited financial statements at an exchange rate of USD1 = VND20,000. The transfer
expenses incurred were immaterial. TGT Co’s functional currency is VND.
What is the corporate income tax (CIT) liability incurred by JTF Co on the sale of its capital
contribution in TGT Co in the year 2018?
A. VND6,000 million
B. VND0 million
C. VND6,400 million
D. VND230 million

15. 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

16. 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. (i) and (iv) and (v)
B. (i) and (iv)
C. (i) and (ii) and (iv)
D. (iv) only

17. RFD Co is a Vietnamese company headquartered in Hanoi. In December 2017, the company had net
output value added tax (VAT) of VND2,000 million from its business operations in Hanoi. The company
 SAPP Academy Tel 0466 709 888
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also had input VAT 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham Van Dong St 463
from two investment projects, both of which were in the construction period and had not generated
any revenue. Project A is located in Hanoi and incurred input VAT of VND1,500 million. Project B is
located in Vinh Phuc province and incurred input VAT of VND400 million.
What is the correct treatment for the input value added tax (VAT) incurred by RFD Co in respect of
the two investment projects (assuming the relevant documents for a VAT refund are in place)?

Input VAT of Project A Input VAT of Project B

A. Claim refund for VND1,500 million
B. Claim refund for VND1,500 million
C. Offset VND1,500 million with net output
VAT of VND2,000 million from operations
of headquarter
D. Offset VND1,500 million with net output
VAT of VND2,000 million from operations
of headquarter
Claim refund for VND400 million
Offset VND400 million with net output VAT of
VND2,000 million from operations of headquarter
Claim refund for VND400 million
Offset VND400 million with the VND500 million,
being the remaining amount of net output VAT
after offsetting input VAT of project A

18. 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

19. 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;
A. 1 and 2
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B. 2 and 3 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham Van Dong St 463
C. 1 and 3
D. 2 and 4

20. 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
 SAPP Academy Tel 0466 709 888
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MIDTERM 8th Floor, Sinh Plaza Tower, No. 261 Hotline: 0969 729
Pham Van Dong St 463
EXAMINATION - FINANCIAL REPORTING
ANSWER SHEET

Full Name: Mark:

Class Code: Examination Date:
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