Practice: VAT questions

Section 1 – MCQs

1. Question 1

2. Question 2

3. Question 3
4. Question 4

5. Question 5

6. Question 6

7. Question 7
Section II - Writing

Question 1:
Question 2
Question 3:

SCG Co owns a chain of retail stores and supermarkets in Vietnam. The company’s transactions in
December 2017 included the following:

Transaction 1: SCG Co set up a new supermarket in Binh Duong. The total construction costs invoiced by
the contractor on 1 December 2017 were VND660 billion (inclusive of value added tax (VAT) at 10%).
The completed project was handed over to SCG Co on 1 January 2018 and SCG Co intends to
depreciate the property at the rate of VND50 billion each year from 2018 onwards.

Transaction 2: On 10 December 2017, SCG Co purchased a four-seater car with a quoted price of
VND1,870 million (inclusive of VAT at 10%) for its general director. The seller granted SCG Co a 6%
discount off the quoted price of the car.

Transaction 3: On 20 December 2017, SCG Co received a cash incentive of VND1 billion from SG Milk to
display their products in an exclusive place in SCG Co’s supermarkets and stores in January and
February 2018.

Transaction 4: During December 2017, SCG Co gave a free helmet to the first 500 customers who
purchased goods with an invoice value of more than VND1 million. This promotional programme was
registered with the Department of Industry and Trade as a promotion. The helmets were purchased by
SCG Co for VND220,000 each (inclusive of VAT at 10%) on 1 December 2017. All of the helmets were
given to customers during the promotion.

Transaction 5: SCG Co produces bottled water for sale in its supermarket chain with the selling price of
VND4,400 per bottle (inclusive of VAT at 10%). During December 2017, SCG Co issued 2,000 bottles of
the water for internal use of which 50% were used in meetings with suppliers/customers/partners, 30% for
processing foods and other drinks for sale in the supermarket, and 20% were used on the annual
vacation trip for SCG Co’s employees.

All the transactions were settled via a bank, unless otherwise stated.

Required:
(a) For each of the transactions (1 to 5) calculate the output and/or creditable input value added
tax (VAT) for SCG Co in the month of December 2017. (7 marks)

(b) For Transaction 5, advise SCG Co on the invoice issuance requirements for each category of
water issued for internal use. (3 marks)
(10 marks)
Question 4:

(a) SLR Co sold an item of specialised equipment. The equipment was delivered to the buyer on 31
March 2018, but according to the contract, the title of the equipment would only be transferred to the
buyer upon completion of inspection by the buyer. The inspection was completed on 2 April 2018 and
full payment was made to SLR Co on 6 April 2018.

Required:
State, giving reasons, when for the purposes of value added tax (VAT) SLR Co is required to issue
an invoice for the sale of the equipment. (2 marks)

(b) SHL Co, a Vietnamese company, operates several petrol stations in Ho Chi Minh City. The petrol
stations are also convenience stores where food, drinks and various other items are sold.

Required:

For the purposes of value added tax (VAT):

(i) State when it is compulsory for SHL Co to issue an invoice to a customer whose purchases
have a value of less than VND200,000. (1 mark)

(ii) Explain the requirements for the issuance of invoices by SHL Co in the case of a customer
whose purchases have value of more than VND200,000 and who does not require an invoice,
for the sale of:
(1) petroleum; and
(2) other items sold by the convenience stores. (3 marks)

(c) HGV Co (HGV) provides internet ADSL services. HGV entered into a contract with Customer A in
June 2018, under which HGV is required to set up a leased line for Customer A, and then provide
internet services for a monthly fixed fee of VND6 million. Under the contract, the service period for fee
calculation is: from the first day to the last day of the month (or pro rata).

HGV collected the set up fee for the leased line of VND5 million from Customer A in advance on 15
June 2018 and then completed the leased line set up on 20 June 2018. Customer A officially
commenced using the line from 21 June 2018.

Required:

(i) State the general value added tax (VAT) regulatory requirements regarding the point in time
when a service provider is required to issue an invoice, and the point in time when HGV Co is
required to issue the invoice for the set up fee to Customer A. (2 marks)

(ii) Calculate the total output VAT which HGV Co should charge in the VAT invoice(s) issued to
Customer A in June 2018 under the above contract. (2 marks)

(10 marks)
Question 5:
Question 6
Question 7