EXERCISE 1 – DETERMINE TAXABLE REVENUE

Viet A JSC is a large Vietnamese company which was established in January 2016. Viet
A leases industrial-specific equipment (under operating lease agreements) and also
provides services in relation to this equipment. In addition to these main activities, the
company has investments in securities and real estate activities as well.

The below is revenue and other income extracted from its unaudited income statement for
the year ended 31 December 2017

Items Notes Amount (VND million)

Sales revenue 1 and 2 390,000
Other income 3 120,000

Notes

1. For services provision, Viet A often requests its customers pay upfront fee of 50% of
the contract value on the signing the contracts and issues VAT invoices to them. In
the year ended 31 December 2017, the VAT invoices amounting to VND12,000
million were issued but the services had not been rendered. These were included in
accounting revenue of 2017 and declared taxable revenue in 2017 for CIT purpose.

2. In September 2017, the Company leases an equipment for three years lease period
(rental of VND500 million/month). 10% settlement discount will be applicable if the
customers pay the rental in full. The Company has accounted for 4 months lease
revenue and recorded costs relating to this lease. The Company has selected to
declare tax for the whole of the lease rental received in advance in 2017.

3. Other income includes dividend from investment in the subsidiary (i.e. Viet My
company) of VND800 million. This dividend received on 30 January 2018. The
dividend was declared on 1 December 2017 and recorded by Viet A as “other
income” in the year 2017.

Required:

Compute Viet A’s taxable revenue and income for the year 2017.
EXERCISE 2 – DETERMINE TAXABLE REVENUE

Moc Co. Ltd. (Moc) is a Vietnamese incorporated company. Its principle activity is the
manufacture of furniture for both local sale and export.

Below is information of revenue and other income extracted from the income statement
of the company for the year ended 31 December 2018

Note VND VND

million million
Sales revenues: 180,000
In which: Revenues from export goods 1 80,000
Revenues from local sales 2 100,000
Deductible items: (20,000)
In which: Sale returns from local sales 3 (20,000)
Net sales 160,000
Other income 4 45,000

Notes:

1. On 25 December 2018, Moc Co completed customs clearance to export a batch of

furniture amounting to USD200K, exchange rate VND/USD22,500. The goods were
exported under FOB term at HCMC Port. On 12 January 2019, Moc Co had the Bill
of Lading for these goods. Moc Co has not recorded revenue in FS of 2018 and the
accountant has decided not to adjust the associated revenue in the draft CIT return.

2. On 31 December 2018, Moc Co issued an invoice of VND500 million for the local
sale of furniture. As the furniture (together with risk and rewards of ownership) was
only delivered to the buyer in January, the revenue and cost of goods sold were
therefore not recorded in the FS of Moc Co for the year 2018 and the accountant
decided not to adjust the revenue of VND500 million in the draft CIT return.

3. Other income includes income from selling securities in Stock market and dividend
of VND500million from other securities held for trading.

Required:

Calculate taxable revenue and income of Moc Co for the year 2018.
EXERCISE 3 – DETERMINE DEDUCTIBLE AND NON-DEDUCTIBLE
EXPENSES

Below is expenses information extracted from the income statement of Moc Co for the
year ended 31 December 2018

Note VND VND

million million
Cost of goods sold 1&2 100,000
Financial expenses 12,000
In which
Interest expense 3 (750)
Selling expenses 4 30,000
Administrative expenses 5 15,000
Other expenses 6 6,000

Notes:

1. This includes the depreciation of a machine used for manufacturing furniture of Moc
Co. The machine underwent a major repair from 1 April 2018 to 30 September 2018
and because the machine was not in use during this period, the accountant added
back a half year’s depreciation to non-deductible expenses. When it was purchased
in 2015, the machine had an original cost of VND7,000 million and an expected
useful life of seven years.

2. This item also includes overtime (OT) paid to workers. During the year 2018, OT
exceeding 200 hours/annum/employee is VND400 million.

3. On 1 June 2018, Moc Co borrowed VND5,000 billion at an interest rate of 18% per
annum from a commercial bank to contribute to the legal capital of Gia Cat
Company (a wholly owned subsidiary of Moc Co). Moc Co has recorded an interest
of VND500 million, being 6 months interest on the loan.

The interest currently recorded in FS of Moc Co relates to loan borrowed on 1

January 2018 from individual shareholder at an interest rate of 20%/annum. At that
time, the lending interest of SBV is announced at 12%/annum

4. This item includes advertising and promotion expenses incurred in 2018. 30% of
these expenses were not supported by proper documents.

5. This item includes:

(i) Salaries paid to Board of Directors comprise VND700 million paid to members
who are directly involved in the management of the company’s operation, and
VND200 million to members who were not involved in that management.
 (ii) An accrual bonus has been made for lunar new year of 5,500 million. The bonus
was not agreed in the Collective labour agreement or any other relevant
document. The bonus payment is made in 30 January 2019.

6. Other expenses consist of:

VND
million
Self-assessed penalty for late payment of CIT in previous years 500
Penalty for violation of contract 120
Staff parties for new year, Christmas and birthdays 200
2,000

Required:

Compute deductible expenses for the year 2018 of Moc Co

EXERCISE 4 – DETERMINE DEDUCTIBLE AND NON-DEDUCTIBLE
EXPENSES

Below is expenses information extracted from the income statement of SMV, a 100%
foreign owned company, for the year ended 31 December 2018

Note VND VND

million million
Cost of goods sold 1 150,000
Financial expenses 8,000
In which
Interest expense (460)
Selling expenses 40,000
Administrative expenses 2 75,000
Other expenses 3 20,000
Notes:
1. This consist of the following:
VND
million
Depreciation of an internal hospital for employees inside the 500
factory
Depreciation of gym facilities for employees to use after work 150
Amortization of a piece of land leased from the industrial park
management which was later abandoned 400
2,000

2. This item includes:

- Clothing expenses paid in cash of VND3.0 million/staff. The company also

provided clothing in kind amounting to VND3.5 million/staff to the same
members of staff.
- An imported four-seat car purchased from a Vietnamese car dealer on
January 2018. The company paid VND1,540 million, inclusive of 10% VAT
of which 50% was paid in cash and registration fee of VND300 million
(exempt from VAT).
3. Other expenses consist of:
VND
million
Recollection of CIT under-declared of previous years during the 1,000
tax audit for the period 2015-2017
Penalty for late delivery of goods 500
Sponsor for the event in Nguyen Hue Street, HCMC, on the 750
condition that the company’s logo appeared in the list of
sponsors and standees/board across the street and the company
received the certificate of sponsor

Required: Compute deductible expenses for the year 2018 of SMV

EXERCISE 5 – DETERMINE CIT LIABILITY

An Gia is a Vietnamese incorporated company. Its principle activity is the manufacture

of home care products for both local sale and export. An Gia has one wholly owned
subsidiary (Sub) in Vietnam.

The profit and loss account of An Gia for the year ended 31 December 2015 is given
below:

Note VND VND

million million
Sales revenues: 1 180,000
Net sales 180,000
Cost of goods sold 2 (100,000)
Gross profit 80,000
Financial expenses (12,000)
In which
Interest expense 3 (7,000)
Administrative expenses 4 (15,000)
Other income 5 15,000
Other expenses 6 (6,000)
Profit before tax 32,000
Corporate income tax (22%) (7,040)
Profit after tax 24,960

Notes:

1. On 31 December 2015, An Gia issued an invoice of VND1,000 million for the local
sale of their products to a buyer. As the products (together with risk and rewards of
ownership) was only delivered to the buyer in January, the revenue and cost of
goods sold were therefore not recorded in the FS of An Gia for the year 2015, and
the accountant decided not to adjust the revenue of VND1,000 million in the draft
CIT return.

2. Cost of goods for destroyed of VND500 million in a fire at An Gia’s warehouse.

The goods were not insured.

3. Actual interest expenses incurred but not yet settled to lenders, since the loans have
not matured. The loan is for production purpose.

4. Administrative expenses include the following:

VND million
- Expenses without invoices 2,000
- Administrative penalty on tax compliance 500
- Staff parties for new year, Christmas and birthdays 2,000
- Uniform allowances paid in cash to 500 staff 600
 - Depreciation of office equipment 1,500
(the equipment has all been fully depreciated for tax purposes)

5. The other income is a dividend received from Sub amounting toVND500 million.

6. Other expenses include the following:

VND million
- Scholarship given to students of the Economic University 1,000
(supported by minutes signed between An Gia and the University)
- Golf membership to Director level 600
- Irregular bonus to employees in 2010 3,000
(due to its irregular nature, this bonus has not been stated in
either their labour contracts or the collective labour agreement of An Gia)

Other notes:

The tax losses of An Gia of previous year are as follows:

- 2009: VND7,000 million (VND5,500 billion has been ultilised in 2012, 2013 and
2014)
- 2010: VND3,000 billion

Required:

Compute An Gia Co Ltd’s total corporate income tax liabilities for the year ended 31
December 2015.

Duration 15 minutes
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EXERCISE 6 – DETERMINE CIT LIABILITY (QUESTION 5 – JUNE 2019)
VBS Co is a company with diversified operations in various industries including farming.
In June 2018, the company prepared its draft corporate income tax (CIT) return for the
fiscal year ended 31 March 2018. The draft CIT return is detailed below and may contain
errors:
Items
Accounting profit before
tax
Add: gain on disposal of
machine
Add: depreciation of
facilities for employees
Add: 100% of the cost of
goods for trading,
destroyed in a warehouse
flood in March 2018
Add: expenses without
supporting invoices
Add: school fees excess
Add: costs for conducting a
feasibility study for a
project later abandoned
Add: summer trip for
employees to Da Lat in
September 2017 for team
building activities
Amounts Notes
(VND Mil)
26,800
350 Please see note (1) below
980 VND200 mil of this figure is
attributable to the kindergarten;
VND350 mil relates to a sports centre
for morning and afternoon exercises;
VND180 mil relates to a clinic; and
the remaining amount relates to a
library
1,800 Following inspection, an insurance
company paid VBS Co compensation
in April 2018 based on 60% of the cost
of goods. The compensation money is
not reflected in the accounting profit
figure above
2,500 VND1,800 mil of this figure relates to
the purchase of farming products
directly from farmers. These were
covered by Form 01/TNDN; however,
the company accountant is concerned
this documentation is not sufficient for
tax purposes
400 Please see note (2) below
500 The project was abandoned
immediately before its commercial
launch due to technical issues.
Recovery is not possible
2,000 The trip was equally sponsored by
VBS Co and a trade union. The
company paid the full invoiced
amount of VND2,000 mil and
recognised this as an expense in the
accounting records. Reimbursement
 from the trade union of VND1,000 mil
was recorded as other income
Adjusted profits before tax 35,330
Tax (20%) 7,066

Detailed notes:

(1) The machine was purchased on 1 January 2016 at a cost of VND7,200 mil and had an
expected useful life of four years at that time. It required major repair work during the
period from 1 January 2017 to 31 March 2018 and it was not used during this entire
period. Following this, the machine was sold and generated an accounting gain which
was added back in the CIT return. For accounting purposes, the machine was depreciated
as normal during the repair period. However, the company’s accountant is not sure if the
depreciation expense is deductible for tax purposes. Therefore, the gain on disposal was
added back as a prudence measure.

(2) The company agreed to pay school fees for the children of four executives of the
company, who are all Vietnamese individuals. According to all labour contracts, total
school fees which are to be borne by the company are capped at VND350 mil per year,
per employee. However, the total fees paid by the company to schools during the year
amounted to VND1,800 mil, and the excess was recovered from the individual
executives. The total expense of VND1,800 mil has already been recognised in the
accounting profit for the year ended 31 March 2018. However, the excess has not been
recognised because it was received in May 2018. VBS Co’s accountant thinks the excess
recovered from the executives should be non-deductible.

Required:

Calculate (in VND millions) the corporate income tax (CIT) liability to be declared by
VBS Co for the year ended 31 March 2018, based on the above information. Note: You
should start your computation with the profit before tax of VND26,800 mil, and list all of
the items specifically referred to in the table and the notes above, showing their correct
treatment and indicating by the use of ‘0’ any item for which no adjustment is required.
EXERCISE 7 – DETERMINE CIT LIABILITY (QUESTION 1 – JUNE 2019)

IVST Co is a Vietnamese company which operates in various industries, contributes

capital to various projects and invests in the shares of listed companies. In 2018, IVST
Co received the following information regarding its investments in jointly operated
projects in Vietnam. Each project separately records and distributes profits after tax to
investors based on their relevant share in the project:

Project Operating Other income IVST Co’s Tax incentives (on

profits before before tax – share operating profits only)
tax – 2018 2018 (VND
(VND mil) mil)
Nam An 600,000 10,000 60% The project is entitled to
50% tax reduction on
operating profits before
tax, and 15% tax rate for
the whole life of the
project
Con Co 800,000 25,000 80% The project is entitled to
tax exemption on
operating profits before
tax
Dai Nam 680,000 20,000 50% None

In 2018, IVST Co also received total dividends amounting to VND120,000 mil from
investments in listed companies in Vietnam. In addition, IVST Co received VND180,000
mil representing its share of profits before tax and its own expenses from a business co-
operation contract in Vietnam which it invested in with LST Co, another Vietnamese
company. IVST Co incurred own expenses (fully supported by documents) of
VND25,000 mil earning that profit share.

Required:

(a) Briefly explain the treatment of income from investments (received both before and
after tax) by a Vietnamese company according to prevailing CIT regulations.
(b) Calculate the total amount of tax exempt income of IVST Co in 2018.
(c) Calculate the total tax liability of IVST Co from non-exempt investment income.
EXERCISE 8 – DETERMINE CIT LIABILITY (QUESTION 5 – DECEMBER
2018)

HTM Co is a limited liability company, established in Vietnam, and specialising in the

manufacture of consumer products. The company’s draft financial statements show profit before
tax of VND80,000 million for the year ended 31 December 2017.

During a review of the draft financial statements, and before preparing the tax return of the
company, the chief accountant of the company noted the following items which may potentially
need adjustments in the tax return:

(1) HTM Co purchased a machine for VND96,000 million on 31 March 2015. The original useful
life of the machine was decided to be eight years (the regulated useful life schedule for the
machine is from 8 to 12 years). On 1 October 2017, the company decided that the remaining
useful life of the machine would be four years. The depreciation expense included in the draft
financial statements reflects the original useful life of the machine.

(2) HTM Co rented a house at a cost of VND100 million per month from an individual from May
2017. The house was used as a showroom for the company’s products. HTM Co paid a deposit at
the beginning of May 2017, based on two months’ rent in advance, and paid the rent at the
beginning of each month. The lease contract states that HTM Co is responsible for the
individual’s deemed personal income tax (PIT) and value added tax (VAT), each tax being
calculated at 5% of the rent. In the draft financial statements, HTM Co has recorded the rent
deposit, rent payments and tax payments as expenses.

(3) In the 2016 financial statements, HTM Co made a provision of VND8,500 million, being 17%
of the salary fund actually paid out in 2016. By 1 July 2017, HTM Co had paid VND6,500
million out of the provision. The remaining VND2,000 million was forfeited (i.e. not paid) and no
adjustment has been made for this in the draft financial statements. The amount of salary fund
actually paid during 2017 (excluding the above wage provision for 2016) increased by 50% from
2016. This amount, when divided by the total number of employees, is equivalent to an average
of VND6·25 million per employee per month. HTM Co intends to make a similar provision of
17% of the salary fund actually paid during 2017. This amount is planned to be paid within the
first quarter of 2018. This provision has not yet been made in the draft financial statements,
however, it can be included in the audited financial statements.

(4) In 2017, the premium expenses for voluntary pension insurance for employees totalled
VND16,000 million. The benefits were clearly stated in the collective labour agreement of HTM
Co.

Required:

Calculate (in VND millions) the CIT liability to be declared by HTM Co for the year ended 31
December 2017, based on the profit before tax in the draft financial statements and the above
information. Note: You should start your computation with the profit before tax of VND80,000
mil in the draft financial statements, and list all of the items specifically referred to in (1) to (4)
above, indicating by the use of ‘0’ any item for which no adjustment is required.
EXERCISE 9 – TAX LOSS CARRIED FORWARD (QUESTION 1 – DECEMBER
2018)

LMK Co is a foreign invested company, established in Vietnam in 2011. According to the

regulations at the time it was licensed to operate, LMK Co was entitled to two years’ corporate
income tax (CIT) exemption plus a further three years’ 50% tax reduction, with the same
circumstances being required as per the current regulations for the tax holiday to commence. The
tax returns of the company from the year of establishment to date showed the following results:

Years Taxable income/(tax losses) – Years Taxable income/(tax losses) –

VND Mil VND Mil
2011 (35,000) 2012 (2,000)
2013 (15,000) 2014 (5,000)
2015 8,000 2016 14,000

During 2017, the local tax authorities conducted a tax inspection of the company relating to the
period from 2011 to 2016. The investigation resulted in the adjustment for some items which
reduced the tax losses in 2011 and 2012 by VND6,000 million for each year; and also reduced the
tax losses of 2013 and 2014 by VND5,000 million and VND1,000 million respectively. In 2017,
the company generated taxable income of VND22,000 million according to the draft tax return.
You should assume all the taxable income/tax losses were generated from LMK Co’s main
business operations.

Required:

(a) Briefly state the principles for carrying forward a loss incurred by an enterprise in Vietnam
according to prevailing CIT regulations.
(b) Determine the tax incentives which LMK Co would apply in the years 2015 and 2016.
(c) Calculate the amount of tax losses which can be utilised and offset against taxable income in
each year for the period 2015 to 2017, and the remaining tax losses which can be carried forward
to 2018 by LMK Co.
EXERCISE 10 – DETERMINE CIT LIABILITY FOR SHARE TRANSFER
(QUESTION 5 – JUNE 2018)

IVX Co is the parent company of a group of companies operating in diversified industries. IVX
Co contributes capital to companies in the group and participates in their operations management,
and undertakes financial investments by purchasing and selling shares in the group companies.
During 2017, IVX Co completed the following transactions:

(1) On 31 March 2017, IVX Co sold its entire 40% capital contribution in IVX-TCL Ltd, a joint
venture limited liability company between IVX Co and TCL (a foreign company), to TCL for
USD6 million. The exchange rate on 31 March 2017 was VND22,800–22,810 (i.e. the bank is
buying and selling 1USD at VND22,800 and VND22,810, respectively). At the time of the capital
transfer, IVX-TCL Ltd was using VND as its functional currency for book-keeping purposes.
The joint venture was set up with a total capital contribution of USD10 million in February 2008
when the exchange rate was VND16,000 for 1USD. The capital contribution in the joint venture
remained unchanged up to the date of sale, and the audited financial statements of IVX-TCL Ltd
as at 31 March 2017 showed the capital contribution using the exchange rate at the time of
contribution.

(2) In October 2017, IVX Co sold 60% of the total shares of IVS JSC (equivalent to 80% of its
total shareholding) to BIH Co, a foreign investor, for VND150 billion. IVS JSC was established
in 2015 as a joint stock company with a share capital of VND100 billion, of which IVX Co
contributed 45% at par value. In January 2017, IVX Co purchased an additional 30% of the
shares in IVS JSC, for VND70 billion. BIH Co settled VND50 billion of the purchase price in
October 2017, and the remaining VND100 billion in March 2018, together with late payment
interest of VND6 billion.

IVX Co incurred transfer expenses of VND200 million and VND150 million (supported by
proper documents) for the transfer of the capital in IVX-TCL Ltd and the shares in IVS JSC,
respectively. IVX Co obtained written confirmation from the tax authorities to apply the first-in-
first-out (FIFO) mechanism for determining the historical cost of the IVS JSC shares.

Required:

(a) Briefly explain the principles to be applied when determining the selling price and historical
costs denominated in foreign currency for CIT purposes where a capital contribution is
transferred and:
(1) the target company uses a foreign currency as its functional currency; or
(2) the target company uses VND as its functional currency.

(b) Calculate (in VND millions) the CIT liabilities to be declared by IVX Co for the transfer of
the IVX-TCL Ltd capital contribution in 2017.

(c) Calculate (in VND millions) the CIT liabilities to be declared by IVX Co for the transfer of
the IVS JSC shares in 2017.
EXERCISE 11 – DETERMINE EXPENSES ADJUSTMENTS (QUESTION 1 –
JUNE 2018)

EDM JSC, a joint stock company in Vietnam operating in the field of developing online learning
courses, was established in 2015 with four founding shareholders. Since its establishment, EDM
JSC has achieved remarkable growth, however, to expand further additional capital investment is
needed. The founding shareholders have successfully issued additional shares in the company to
an angel investor for VND100 bil. The four founding shareholders actively manage the day-to-
day business of the company and the angel investor will supervise but not participate in the
management of EDM JSC’s day-to-day operations. The following items have been reported in the
financial statements of EDM JSC for the year ended 31 December 2017:

1. Payments of VND600 mil made to individual freelance lecturers who are registered as business
individuals. No invoices were available, however, EDM JSC properly prepared the ‘Lists of
goods and services purchased’ as required. Of the above payments, 60% are attributed to lecturers
who have revenue in excess of VND100 mil in the year 2017. All the payments were in excess of
VND20 mil and made in cash.

2. EDM JSC’s employees are allowed to study selected courses on a free-of-charge basis. In
2017, 320 free-of-charge courses, with a total market value of VND180 mil, were provided to
employees. 70% of these courses were work-related training but the remaining 30% were not
work related.

3. Expenses of VND160 mil were incurred on negotiating with the angel investor and issuing the
additional shares.

4. Allowances of VND200 mil were paid to each of the founding shareholders and of VND150
million to the angel investor. Proper receipt documents are available.

5. Courses with a value of VND140 mil were donated to some national schools, and of VND80
mil to a non-licensed private education fund operated by the angel investor.

Required:

(a) Briefly state the principles, according to the prevailing regulations, to be applied when
determining whether a Vietnamese company can deduct the cost of goods and services purchased
from business individuals who have revenue below VND100 mil per year.

(b) Calculate the adjustments EDM JSC should declare in its CIT return for the year ended 31
December 2017 in respect of each of items 1 to 5 above. Note: You should indicate by the use of
‘0’ any item for which no adjustment is required.
EXERCISE 12 – DETERMINE CIT LIABILITY AND EXPENSES
DEDUCTIBLILITY (QUESTION 5 – DECEMBER 2017)

IVEX Ltd is a foreign invested company located in Tan Binh Industrial Park in Ho Chi Minh
City. Although the industrial park was no longer an incentivised area in 2015–2016, IVEX Ltd
was still entitled to the tax incentives stated in the investment certificate at the time of its
establishment when the incentives for companies established in industrial parks were still
available.

In 2015, IVEX Ltd was entitled to the special tax rate of 15% with a 50% reduction for the
original investment as specified in the investment certificate. In 2015, IVEX Ltd invested
VND50,000 mil in a new production line, which qualified as expansion investment under the CIT
regulations. IVEX Ltd’s total historical costs of fixed assets (including the new production line)
at the fiscal year-end of 31 December 2015 was VND200,000 mil.

In 2015, the taxable income declared by IVEX Ltd was VND48,000 mil, of which other non-
operating taxable income was VND8,000 mil.

In 2016, the incentive period of the company expired and IVEX Ltd became subject to the
common tax rate. According to its draft financial statements, IVEX Ltd had accounting profits
before tax of VND160,000 mil in 2016. The following issues which were recorded in the
accounting profits are noteworthy for the purposes of the company’s corporate income tax (CIT)
finalisation:

1. Accrued wages and allowances of VND8,500 mil were not paid before the deadline for CIT
finalisation. IVEX Ltd’s total actual salary fund in 2016 was VND55,000 mil. No provision for
salary fund was made as at 31 December 2016.

2. Purchases without invoices amounted to VND9,200 mil, of which VND2,800 mil were
purchases of depletions from households who issued IVEX Ltd with lists of the purchases under
form 01/TNDN.

3. Machinery bought in 2013 with a historical cost of VND6,000 mil and an estimated useful life
of five years ceased to be used from 1 June 2015 for maintenance. In 2015, IVEX Ltd expected
that this maintenance would take 13 months, but the maintenance was in fact completed on 31
August 2016 and the machinery was put into use again from 1 September 2016. In the draft
financial statements, this machinery was depreciated over 12 months in 2016.

4. Uniform expenses (supported with valid documents) were VND720 mil paid in cash, and
VND360 mil made in kind. IVEX Ltd had an average of 120 employees during the year 2016.

5. A profits share of VND40,000 mil was received from a business co-operation contract (BCC)
which IVEX Ltd had entered into. These profits were after deducting CIT at the rate of 20%,
which was declared and paid by the operator.

From 2017, the foreign investor’s headquarter company is considering charging IVEX Ltd for the
cost of the IT support services it provides. The charge would include a specific charge for the
costs incurred in respect of the service requests made by IVEX Ltd, and a lump sum charge which
would be allocated to all the investor’s subsidiaries based on the judgement of the headquarter
company and which could vary from year to year.

Required:

(a) Calculate the taxable income of IVEX Ltd in the year 2015 from the original investment,
expansion investment and other activities, and the total CIT liability of IVEX Ltd for the year
ended 31 December 2015. Note: The standard rate of CIT in 2015 was 22%.

(b) Calculate the taxable income and the tax liability which IVEX Ltd should declare in its CIT
return for the year ended 31 December 2016. Note: You should start your computation with the
accounting profit of VND160,000 mil and list all of the items specifically referred to in notes 1 to
5, indicating by the use of ‘0’ any item for which no adjustment is required.

(c) Briefly explain the THREE principle conditions for expenses to be deductible by a company
in Vietnam according to the prevailing regulations, and state, giving reasons, whether or not the
charge for IT support services to be made by the headquarter company are likely to be deductible
by IVEX Ltd in the year 2017.