Ex1:

ITNR Co is a foreign invested company in Vietnam manufacturing components of

equipment for its parent company and overseas affiliates. In 2020 and 2021, the
company maintained a large amount of long-term loans from its parent company.
 
Below is an extract of ITNR Co’s audited income statements for the fiscal years (FY)
ended 31 December 2020 and 2021:
 
  (Unit: VND million)
   FY2020  FY2021
Operating profit (see note)   104,000   137,000
Net interest expenses (70,000) (40,000)
Profit before tax        34,00      97,000
0
     
Note: Depreciation and amortisation (deducted in arriving at (26,000) (28,000)
operating profit)    

(a) Explain how ITNR Co should treat the interest expenses for corporate income
tax purposes, according to Decree 132/2020, relating to transfer pricing
regulations.

(b) Calculate the deductible and non-deductible interest expenses of ITNR Co for
corporate income tax purposes in the fiscal years ended 31 December 2020 and
2021.

Ex2:
Ms Tran, a 40-year-old Vietnamese citizen with two dependants, is the Chief
Executive Officer of GNR JSC, a Vietnamese company whose shares are listed on the
Vietnamese stock exchange. In 2021, she received the following gross remuneration:
 
- Monthly salary: VND350 million
- Fixed bonus: Two months’ salary, received in 2021
- Performance bonus: 50,000 shares of GNR JSC were awarded to Ms Tran in
  January 2021 for her excellent performance in 2020
 
The market price of GNR JSC’s shares was VND68,000 per share when she received
the award (the nominal value per share was VND10,000).
 
Before receiving the awarded shares, Ms Tran held 350,000 shares of GNR JSC at a
weighted average purchase price of VND12,000 per share. In July 2021, the company
issued a dividend in the form of shares, in the ratio of 1:4 (one new share issued for
every four shares held). In December 2021, the company paid a cash dividend of
VND2,500 per share. On 31 December 2021, Ms Tran sold all of her shareholding in
GNR JSC at the price of VND80,000 per share.
 
In a ruling issued to GNR JSC, the local tax authority confirmed that, for employment
income purposes, the taxable value of the awarded shares shall be based on the
market price of the shares at the time of receipt.
 
Ms Tran is responsible for her insurance contributions.

(a) Calculate the personal income tax (PIT) liability (in VND millions, rounded to 0
decimals only in the PIT calculation) of Ms Tran from her employment income
received in 2021.

(b) Calculate the personal income tax liability (rounded to the nearest VND million)
of Ms Tran from her investment income in the year 2021.

Ex3:
STC Co (STC) is a Vietnamese company operating in various fields of business. In
2021, STC undertook the following transactions with foreign companies:
 
Loan
On 2 January 2021, STC borrowed USD20 million from FB, a foreign bank, at an
interest rate of 3% per annum for six months, repayable at the maturity date.
However, at maturity, STC could not repay the loan and had to extend the
repayment period. According to the loan agreement, late payment interest of 5% per
annum would be applied on the total amount outstanding. STC fully settled the loan,
interest and late payment interest on 31 October 2021.
 
Compensation
The late payment also caused unexpected damage to FB’s business in the foreign
country. After various discussions, STC accepted the total value of compensation for
damages of USD100,000.
 
The damages were assessed by PRA Co (PRA), a professional assessor based in FB’s
country, and the assessment services were performed entirely outside of Vietnam.
PRA was appointed by STC who settled the professional service fee of USD10,000 to
PRA Co on 31 December 2021.
 
Insurance and settlement of compensation
STC purchased insurance from a foreign insurer which covers third party liabilities,
and it was agreed by all parties that the insurer would cover 70% of the
compensation. The insurer assured STC that they would be wholly responsible for
such compensation and would work directly for settlement with FB under a separate
agreement without STC’s involvement. STC settled the remaining 30% of the
compensation to FB on 31 December 2021. No late payment interest is applicable on
the compensation.
 
All the payments are net of foreign contractor tax in Vietnam, where relevant.

(a) Briefly explain the foreign contractor tax treatment in relation to the
compensation for damages payable to FB, including the settlement paid by STC Co
to FB. 
 
Note: You should ignore the potential treatment of the reimbursement by the
foreign insurer directly to FB.

(b) Calculate the amount of foreign contractor tax (to the nearest USD) which STC
Co is required to declare and pay in relation to all of its payments to FB and PRA Co
in 2021

Ex4:
You should assume that today’s date is 1 December 2021.
 
EXPT Co (EXPT) is a Vietnamese company trading in agricultural products. The
company exports products to various countries in the world, and also has a network
of commission agents in local provinces. EXPT has duly registered with the local tax
authorities to issue electronic invoices.
 
However, EXPT’s executive team are unsure of the requirements for electronic
invoices/documents in the following two cases:
 
Case 1:
EXPT authorises APT, its forwarder/export agent, to perform the exports:
- EXPT issues the goods to APT for conducting export procedures
- APT then exports the goods, with confirmation by the Customs authorities
 
Case 2:
EXPT issues the goods to CMS, its commission agent in another province:
- EXPT issues and transports the goods to CMS
- CMS then sells the goods
 
Sponsorship
In January 2021, EXPT paid CMS VND10,000 million in cash for sponsorship. It is
stated in the sponsorship agreement that 40% of the amount paid relates to
sponsorship with no conditions attached, and the remaining 60% is in exchange for
CMS’s support to display EXPT’s logo and sample products in all of its outlets, kiosks
and branches.

(a) Briefly explain the value added tax (VAT) requirements of electronic
documents/invoices for EXPT Co, APT and CMS in cases 1 and 2.
 
Note: Your answer should be based on Circular 68/2019 and you are not expected to
apply Decree 123/2020.

(b) Calculate the value added tax (VAT) implications for CMS and EXPT Co in
relation to the sponsorship.

Ex5:
You should assume that today’s date is 30 November 2021.
 
BALAP Co (BALAP) is a Vietnamese company operating in different industries, ranging
from manufacturing to services. BALAP has also invested in some projects outside
Vietnam.
 
BALAP’s draft financial statements for the fiscal year ended 30 September 2021
(fiscal year 2021) revealed a profit before tax of VND80,000 million. The company’s
finance director is reviewing the following information about transactions that may
potentially result in adjustments to its corporate income tax return. All amounts are
exclusive of value added tax (VAT) and are supported by proper documents, except
where clearly stated otherwise.
 
(1 The draft income statement includes revenue for a large project to provide
) services to an important client. As at 30 September 2021, the project was
  completed, and all the costs incurred. However, BALAP had only issued invoices
  for 60% of the total value of the project, which amounted to VND63,000 million.
  The remaining unbilled revenue of VND42,000 million was accrued in the draft
  income statement and on 31 October 2021, BALAP issued an invoice in respect
  of this amount.
(2 BALAP offered special bonuses amounting to VND8,000 million to its
) management team and high performing employees in 2021. However, the
  bonuses were unpaid as at 30 September 2021.
   
  In the year ended 30 September 2020, BALAP accrued bonuses of VND5,000
  million in the financial statements, but did not pay these during the year as the
  company was short of cash. Accordingly, BALAP had to amend the tax return for
  fiscal year 2020 to treat these bonuses as non-deductible expenses. BALAP made
  an additional expense accrual of VND3,000 million in the draft income statement
  for the fiscal year 2021.
   
  In November 2021 BALAP made a payment of VND8,000 million in bonuses
  relating to the years ended 30 September 2020 and 30 September 2021.
   
  The local tax authority agreed with BALAP that any adjustment relating to
  bonuses can be made to the tax return for the year when actual payment was
made.
(3 On the company’s 20th year anniversary, which fell in the fiscal year 2021,
) BALAP gifted jewellery to all its employees, which had a total value of VND6,000
  million. The gifts were recorded as cost of goods sold in the draft income
  statement.
(4 During the year, BALAP also expensed an amount of VND12,000 million for
) employee welfare expenses, such as medical care, family support etc. The
  expenses amounted to 7% of the total actual implemented salary fund of the
  company.
(5 On 30 September 2021 BALAP received a payment in euros, equivalent to
) VND3,500 million, from XAM Co, a French foreign contractor with which BALAP
  signed a contract for a service in 2018. The payment received by BALAP was in
  respect of foreign contractor tax. As the contract did not state which party
  should bear the foreign contractor tax (FCT), there was a dispute. In 2018, BALAP
  advanced the FCT to the tax authority, and recorded this as a receivable in its
  financial records.
   
  In 2021, XAM Co responded and agreed to reimburse 80% of the FCT to BALAP
  and made this payment. BALAP offset the payment against the receivable
  amount in the draft financial statements of 2021 and wrote off the difference as
expenses.
(6 During the fiscal year 2021, BALAP recognised, in its income statement, an
) operating loss from its branch outside Vietnam equivalent to VND50,000 million.
  The loss was recorded based on the management accounts of the branch, as
  audited financial statements of the branch were not available.
 
(7 In January 2021, BALAP purchased new technology to manufacture a new
) product. As it wished to accelerate depreciation, BALAP decided to shorten its
  useful life from five years to three years for tax purposes (but not for accounting
  purposes). The depreciation charge (based on five years’ useful life) in the
  income statement for the fiscal year 2021 was VND900 million.
(8 BALAP recognised, in its draft income statement, an unrealised gain on
) receivables of VND1,800 million, and an unrealised loss on payables of VND1,300
  million, from the year-end evaluation of foreign exchange differences.
 
 
Calculate, with brief explanatory notes, the corporate income tax liability (in VND
millions) to be declared by BALAP Co for the year ended 30 September 2021.      
        
Note:
Your computation should start with the profit before tax of VND80,000 million, and
should list all items referred to in the question, showing their correct treatment and
indicating by the use of zero (0) any item which does not require adjustment.  

Ex6:
You should assume that today’s date is 31 December 2021.
 
Ms Khanh, a 40-year-old Vietnamese citizen, is a manager for DLT Co (DLT), a
Vietnam company. In 2021, she was also a part-time applications beta tester,
employed by XML Co (XML), a software company operating in Vietnam.
 
In 2021, the contractual gross income of Ms Khanh from DLT included the following:
 
- Basic salary: VND100 million per working month.
- Bonus: equivalent to two months’ salary, pro-rata for the working months.
- Overtime: 150% of her normal basic salary rate. In 2021 the total of Ms Khanh’s
  overtime hours was equivalent to her standard working hours in a month.
- Petroleum allowance: VND3 million per working month.
- Uniform allowance: VND8 million in cash per year.
 
Ms Khanh was responsible for her part of compulsory insurance contributions.
 
In March 2021, she gave birth to a son and registered him as a dependant from
March 2021. She took maternity leave for six months from March 2021. During her
maternity leave, DLT paid her 60% of her basic salary (in addition to the maternity
support she received from the social insurance authority of VND181.78 million).
 
XML paid Ms Khanh according to the number of hours she spent on their virtual
platforms testing their apps. During 2021, according to their records Ms Khanh spent
a total of 120 hours on this work. XML paid Ms Khanh a gross wage of VND2 million
per working hour. XML also gifted her e-learning courses in LearnPlus, a well-known
e-learning platform, valued at VND100 million, for free, for her to develop her beta-
testing skills.
 
When participating in the e-learning courses using her own leisure time, Ms Khanh
won a cash award equivalent to VND200 million in an international challenge created
by LearnPlus platform. She also received a discount coupon to purchase, at a cost of
only VND1 million, premium access to all courses with LearnPlus for ten years.
Premium access is normally sold for USD5,000 by LearnPlus. The coupon is not
transferable and will expire in two months following issuance should Ms Khanh not
use it.

(a) In respect of Ms Khanh for the year 2021, calculate (to the nearest VND million,
rounded to 1 decimal):
- Taxable income and non-taxable income from all income sources, and
- Total annual personal income tax liability

(b) Briefly describe the personal income tax implications for Ms Khanh of the cash
award and the discount coupon which she received from LearnPlus.