SAPP Academy Tel 0466 709 888

8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

CORPORATE INCOME TAX

Section A – Multiple choice questions
1. At the end of 2019, company, BND Co, paid bonuses to its board of directors of VND3,000
million. Each of the five directors is paid an equal amount of bonus. Two out of the five directors
are not involved in the daily management of the company’s business. What is the amount of tax
deductible expenses which BND Co will be able to claim for the year 2019?
A. VND3,000 million
B. VND1,200 million
C. VND1,800 million
D. VND0 million
Answer: 3,000 x 3/5 = 1,800. The expenses for three out of five board members who are involved
in daily management would be deductible.
2. In 2020, company DMS Co purchased materials from suppliers who are households doing
business. DMS Co wanted to use the list of goods purchased (without invoices) to claim tax
deductible expenses for these purchases. What is the threshold of annual revenue which
households doing business must satisfy for DMS Co to use the list of goods purchased method
to claim for the purchases as a tax deductible expense?
A. VND300 million
B. VND200 million
C. VND100 million
D. VND50 million
Answer: According to Article 6, point 2.4 of Circular 78/2014/TT-BTC
3. TLN Co is a Vietnamese limited liability company. Hanada Co, a Japanese company, is
considering transferring its capital contribution in TLN Co to Nahada Co, an Indian company.
Which party will be responsible for making the tax declaration for the above transaction?
A. Hanada Co only
B. Nahada Co only
C. Nahada Co and TLN Co
D. TLN Co only
Answer: According to Article 12, Clause 8 point b of Circular 156/2013/TT-BTC
4. In 2012, company CTC Co contributed capital of VND500 million to Company Z. In 2014, CTC
Co transferred 60% of the capital it held in Company Z to a foreign company for VND450 million.
At that time the retained earnings of Company Z were VND5 million. CTC Co incurred transfer
expenses of VND10 million. What is the taxable income/(loss) of CTC Co from the transfer?

1
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

A. VND50 million (loss)

B. VND140 million
C. VND145 million
D. VND147 million
Answer: VND450 million – VND500 x 60% – VND10 million = VND140 million.
5. 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
D. VND528 million
Answer: No adjustment required because the car has more than nine seats and so is depreciable
in full
6. HNKV Co is a one member limited liability company, which is wholly own by HKV, a company
incorporated in Bermuda. In 2021, 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 2021. 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 yearend only
A. 1 and 3
B. 1 and 4
C. 2 and 3
D. 2 and 4
Answer: The buyers will be responsible for making a capital gains tax declaration since they are
local entities. According to point 2, Article 16 of Circular 151, HNKV Co is not required to file a
corporate income tax (CIT) finalisation at the time of conversion when it is a conversion from a
limited liability company to a joint stock company

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 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

7. 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 2020. The final tax
liabilities of PROVI Co per its CIT finalization return for 2020 was VND11 billion. The company
settled the additional tax obligations as per its CIT finalisation return for 2020 on 31 March 2021.
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 2021
B. Based on VND2.2 billion, payable from 31 January 2021
C. Based on VND2.2 billion, payable from 1 April 2021
D. Based on VND3 billion, payable from 31 January 2021
Answer: (Tax underpaid = VND11 billion – VND8 billion = 3 billion 20% of the final CIT liabilities =
VND11 billion x 20% = 2.2 billion. The excess of underpaid tax over 20% = 3 – 2.2 billion = VND0.8
billion)
Where provisional quarterly corporate income tax (CIT) is lower than the finalised CIT liability by
20% or more, the excess over that 20% is subject to a penalty from the deadline for the tax
payment for Quarter IV of the year, in this case 31 January 2015 – Article 17 of Circular 151/2014
supplementing Article 12a of Circular 156/2013.

Note: The new provisional quarterly corporate income tax will be applied for ACCA exam in
June 2022.
According to the latest information at Point b, Clause 6, Article 8 of Decree 126/2020/ND-CP,
the provisional quarterly corporate income tax (CIT) is lower than the finalised CIT liability by
25% or more → The excess of underpaid tax over 25%

8. 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 when a fixed asset being a construction is
put into operation
(2) Gains and losses must be offset when a fixed asset being a construction is put into operation
(3) All gains and losses that occur during the investment phase must be recognised in the first
year after the project is put into operation
(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

3
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer: D The net foreign exchange gains/losses after offsetting are allocated over a period of
up to five years from the project being put into use – point 2.22, Article 6 of Circular 78/2014.
9. RETRA Co, a company specialising in developing real estate projects, has an apartment and
villa development project in the centre of Hanoi, which is expected to be completed in 2018. The
estimated total revenue and profits from this project are VND2,000 billion and VND300 billion,
respectively. RETRA Co has been collecting money in advance from customers and in 2014 the
total proceeds received were VND200 billion, on which provisional tax of 1% was duly paid on
receipt. What is the taxable income from the project of RETRA Co for the purposes of its 2014
corporate income tax (CIT) finalisation return?
A. VND0 billion
B. VND30 billion
C. VND200 billion
D. VND300 billion
Answer: Collections in advance from customers for which costs are not determinable and 1%
provisional tax is paid are not taxable income in the year of collection – Article 17, point 1 of
Circular 78/2014/TT-BTC.
10. On 1 July 2017, NLAM Co leased an asset for four years and paid the whole rent of VND600
million in advance. On 1 July 2019, NLAM Co decided to shorten the lease period to three years.
The company expects that it will have to pay a penalty of VND60 million when it terminates the
lease in 2020 in order to receive a refund of one year of the original lease payment. What is the
deductible expense for NLAM Co with regard to the lease in the year ended 31 December 2019?
A. VND150 million
B. VND75 million
C. VND165 million
D. VND170 million
Answer: VND150 million (600 million/4 years) Only the original lease allocation per the lease
period is allowed – point 2.16 Article 6 of Circular 78/2014
11. In 2020, enterprise B receives contributed capital from enterprise A. 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 corporate income tax amount and has fully paid CIT,
including enterprise A’s income according to the reduced enterprise income tax amount. Please
advise whether A will be exempt from CIT and how much?
A. A will receive VND 90 million and will be exempt from CIT on this amount
B. A will receive VND 80 million and will be exempt from CIT on this amount
C. A will receive VND 100 million and will pay tax VND 20 mil on its CIT return
D. A will receive VND 80 million and will be exempt from CIT on this amount

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 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer: The income enterprise A receives from capital contribution is VND 90 million [(VND 100
million - (VND 100 million x 20% x 50%)], and enterprise A will be exempt from enterprise income
tax on this amount
12. In 2019, enterprise B suffers a loss of VND 20 billion. In 2020, 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 2020, the remaining VND 5 billion
will be carry-forward to 5 consecutive years after 2020
D. Clear the whole loss of VND 15 billion against the income 2020, the remaining VND 5 billion
will be carry-forward to 5 consecutive years after 2019
Answer: According to Article 9, point 2 of Circular 96/2015
13. Car Dealer Company sells 2 cars on 10 month installment basis. Total installment payment is
VND250 million/car. If lump sum payment price is VND200 million/car, how much is the turnover
for CIT purposes?
A. 500 mil VND
B. 200 mil VND
C. 250 mil VND
D. 400 mil VND
Answer: For goods and services sold on installment or deferred payment, it is the lump-sum
selling prices of goods or services, excluding installment or deferred payment interests –
According to Article 5, point 3.c of Circular 78/2014
14. Company payroll shows that (VND’000):
Salary 1,278,000
Allowance 200,000
Total payable 1,478,000
Less personal income tax (350,000)
Net payable to the employee 1,128,000
Out of the total salary, there was VND100,000,000 paid to some permanent employees who do
not sign any labour contract with the company.
Please calculate salary and allowance cost accepted for CIT purposes.
A. 1,128 billion VND
B. 1,378 billion VND
C. 1,478 billion VND
D. 450 billion VND

5
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer: 1,478 billion – 100 million = 1,378 billion. According to Article 6, point 2.6 consolidated
document 66/2019/VBHN-BTC
15. Which are fully deductible for CIT purpose?
(i) Life insurance premium
(ii) Golf membership and fees
Incentives for initiatives, improvement without basis (e.g. no internal regulations, no
(iii)
assessment council)
(iv) Special bonus on 1 May and 2 Sept as per the company financial policy
Uniform without invoice, paid by cash directly to employee: 8,500,000 VND per year per
(v)
person.
A. All
B. (i) and (iv) and (v)
C. (i) and (iv)
D. (i) and (ii) and (iv)
E. (iv) only
Answer: Article 4 Circulars 96/2015
(i) Point 2.11: Are not deductible if excess 3million VND/person
(ii) Point 2.14; If not related to production and business activities are not deductible
(iii) Without basis are not deductible
(iv) Fully deductible
(v) Point 2.7 :The expense of outfits in cash to the employee in excess of 05 (year) million /
person / year are not deductible
16. In July 2020 the Company borrowed from its individual shareholders VND1,000,000,000 at
the interest rate of 1.8%/month. At that time the State of Vietnam’s prime rate was 1%/month.
Please calculate the deductible interest for the Company in 2020?
A. 90 mil VND
B. 108 mil VND
C. 60 mil VND
D. 100 mil VND
Answer: 1,000,000,000 x 1.5% x 6 months = 90,000,000
Interests paid for production and business loans borrowed from subjects other than credit
institutions or economic organizations in excess of 150% of the prime interest rate announced
by the State Bank of Vietnam at the time of borrowing is non-deductible – According to Article
6, point 2.17 consolidated document 66/2019/VBHN-BTC

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 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

17. A company has a registered charter capital of VND100,000,000 which the shareholders
committed to contribute fully in 2015. By end of 2015 the shareholders only contribute
VND50,000,000 and in 2016 the Company borrowed VND200,000,000 at the rate of 12%/year.
Please calculate the non-deductible interest.
A. 12 mil VND
B. 6 mil VND
C. 24 mil VND
D. 18 mil VND
Answer: 50,000,000 x 12% = 6,000,000 According to Article 6, point 2.18 consolidated document
66/2019/VBHN-BTC
18. Company R is the developer of a residential complex, it collect advance payments from the
customers for sale of apartments when the foundation of the buildings is completed but is unable
to determine the expenses corresponding to the prepayments it receives from the customers.
Total prepayments until 2020 when the apartments are handover are as follows:
Year Prepayment Provisional CIT
2018 US$20,000,000 US$200,000
2019 US$30,000,000 US$300,000
2020 US$10,000,000 US$100,000
Total costs of the apartments amount to US$45,000,000. Please calculate the CIT payable
(additional) Company R has to pay upon hand-over.
A. 2.4 mil USD
B. 0.6 mil USD
C. 3 mil USD
D. 4 mil USD
Answer: According to Article 6, point 2.18 consolidated document 66/2019/VBHN-BTC
Total CIT = (60 mil – 45 mil) x 20% = 3 mil
Provisional CIT = 0.6 mil
CIT payable (additional) Company R has to pay upon hand-over = 3 mil – 0.6 mil = 2.4 mil

7
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

19. Pepzi and Cosa are two Vietnam wholly owned subsidiaries of the foreign company Peco.
Pepzi has tax loss in 2019 and continues its loss position in 2020 while Cosa is profitable in both
2019 and 2020. Which of the following is correct?
A. Loss of Pepzi cannot off-set with profit of Cosa
B. Loss of Pepzi can off-set with profit of Cosa
C. Pepzi, Cosa and Peco can off-set loss and profit together
D. Loss of Pepzi can off-set with profit of Peco
Answer: There is no provision for any form of consolidated filing or group loss relief
20. 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 might be subject to penalty of 25% of the
underdeclared or over-claimed amount
A. (1) and (2)
B. (2) and (3)
C. (1) and (3)
D. (2) and (4)
Answer:
(2) is false – The enterprises will be required to submit an annual finalization and remit any
outstanding tax arising from such finalization by the 90th day following the close of its fiscal year
(According to Vietnam’s Tax administration law No 38/2019/QH14)
(4) is false – Under-payment or over-claimed of tax refund might be subject to penalty of 20% of
the underdeclared or over-claimed amount (According to Decree 125/2020/NĐ-CP)
21. During 2020, company A paid total interest of VND500,000,000 for the two loans as follows:
• 5-year loan of VND2,000,000,000 from Sacombank which bears simple interest of 10% pa
• The remaining interest expenses are relating to its 4-year loan of VND1,000,000,000 from its
individual shareholders.

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 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

The State Bank of Vietnam’s prime rate remained stable at 8% pa for 2020. Calculate the non-
deductible interest expenses, if any.
A. 120 mil VND
B. 200 mil VND
C. 300 mil VND
D. 180 mil VND
Answer: According to Article 6, point 2.17 consolidated document 66/2019/VBHN-BTC
• Interest expenses from Sacombank are fully deductible
• Interest expenses from its individual shareholders = 500 mil – (2,000 mil x 10%) = 300 mil
Deductible Interest expenses from its individual shareholders = 8% x 1.5 x 1,000 mil = 120 mil
 Non-deductible Interest expenses from its individual shareholders = 180 mil
22. Saigon Investment (Vietnam) Co. Ltd, a company incorporated in Vietnam, invested in a
company in Cambodia. In 2016 Saigon was paid with a dividend of VND700 mil after paying
corporate income tax in Cambodia at VND300 mil. It also has a taxable income of VND2,000 mil
from domestic business. Tax rate for the company is 20%. Calculate the tax payable of Saigon
Investment (Vietnam) Co. Ltd
A. 400 mil VND
B. 200 mil VND
C. 600 mil VND
D. 300 mil VND
Answer: 2,000 mil x 20% =400 mil
Saigon Investment paid CIT in Cambodia for dividend received  They do not need pay CIT for
this income (According to Article 3 consolidated document 66/2019/VBHN-BTC)
23. CCD Co, a company in Vietnam, reimbursed employees’ expenses for overseas business trips
originally paid by the employees using their personal credit cards. The expenses amounted to
VND50 million in total. Which of the following conditions must be met for CCD Co to treat such
reimbursed expenses as deductible for corporate income tax (CIT) purposes?
(1) The credit card is guaranteed by the company
(2) The expenses are supported by proper documents/invoices
(3) The trip is authorised by a decision issued by the company’s directors
(4) The company policy allows employees to advance expenses for business trips by personal
credit cards
A. 1, 2, 3 and 4

9
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

B. 1 and 4 only
C. 2 and 3 only
D. 2, 3 and 4 only
Answer: According to Article 6, point 2.9 of Circular 78/2014 as amended by Circular 96/2015
24. Ms Huong Nguyen, who gave birth on 1 February 2018, is CEO of HWK Co, a company in
Vietnam. She returned to work on 1 May 2018, despite the company policy and the regulations
allowing her a six-month maternity leave.
When she returned, the company paid her normal salary of VND300 million per month and in
addition, during the three months ended 31 July 2018, she received an overtime allowance of
VND150 million per month (which is within the range of allowed overtime under prevailing labour
regulations). However, Ms Huong Nguyen did not actually work any overtime and the allowance
was paid to compensate her for early return from maternity leave as a result of work
requirements. The company and Ms Huong Nguyen did not claim any maternity leave benefits
from social insurance from May 2018 onwards.
What is the adjustment amount for non-deductible expenses which HWK Co should make in its
corporate income tax (CIT) return for the year ended 31 December 2018 in respect of the
payments to Ms Huong Nguyen?
A. VND1,350 million
B. VND450 million
C. VND0 million
D. VND900 million
Answer: Overtime allowances for Ms Huong is satisfied requirement under Article 4, point 2.10
of Circular 96/2015  HWK Co no need adjust for non-deductible expenses
25. In March 2020, DPN Co, a Vietnamese company, disposed of a machine for VND2,200 million.
The machine was purchased in January 2019 for VND3,600 million with an estimated useful life
of three years. DPN Co’s policy (which is acceptable for tax depreciation) is to provide for a full
month’s depreciation in the month of purchase and no depreciation in the month of disposal.
What is the taxable gain on the disposal of the machine which DPN Co must declare for
corporate income tax (CIT) purposes for its financial year ended 30 June 2018?
A. VND100 million
B. VND2,200 million
C. VND0 million
D. VND800 million

10
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer:
3,600
Accumulated depreciation of machine = x 14 = 1,400
3x 12
Carrying amount of machine = 3,600 – 1,400 = 2,200 million = disposed amount
 No taxable gain from disposal
26. In February 2018, JTF Co, a Japanese investor, sold its capital contribution in TGT Co, a
Vietnamese limited liability company, to a foreign buyer for USD10 million, when the USD buy–
2 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
Answer: VND6,000 million (USD10 million x (23,000 – 20,000) x 20%)
Since JTF Co is a limited liability company, the corporate income tax rate would be 20% on taxable profit.
As TGT Co’s (the target company) functional currency is in VND, according to Article 14.2 of Circular
78/2014 as amended by Circular 96/2015, the sale price must be converted into VND using the USD buying
rate of the commercial bank. Accordingly, the taxable profit would be the difference in exchange rate.
27. NIV Co, a Vietnamese company, rented an office for its operations from 1 April 2019 and paid
a deposit of VND792 million, equivalent to two monthly rental fees, inclusive of 10% value added
tax (VAT). Rent is payable two months in advance. What is the amount of deductible rental
expense which NIV Co can claim for corporate income tax (CIT) purposes in the year ended 31
October 2019?
A. VND5,040 million
B. VND2,520 million
C. VND3,240 million
D. VND2,772 million
Answer:
792
The monthly rental expenses net of value added tax (VAT) = = 360 million
(1+10%) x 2
Deductible rental expense which NIV Co can claim for (CIT) purposes = 360 x 7 = 2,520 million

11
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

28. In 2017, CSP Co, a Vietnamese company, sold 80% of its 100% shareholding in ADC Co,
another Vietnamese company, to a foreign buyer for VND120,000 million. ADC Co was
established in 2008 with capital of VND60,000 million (fully paid up). CSP Co purchased all of the
shares of ADC Co in 2012 from the original founder for an amount of VND100,000 million, as
reflected in the share purchase agreement. The transfer expenses incurred were immaterial.
What is the corporate income tax (CIT) payable by CSP Co on the sale of shares in ADC Co in the
year 2017?
A. VND8,000 million
B. VND3,200 million
C. VND9,600 million
D. VND14,400 million
Answer:
CIT payable = (Selling price of shares – Purchase price of shares – Transfer expenses) x 20%
= (120,000 – 100,000 x 80% – 0) x 20% = 8,000
29. SHDL Co is a Vietnamese company. In 2017, the company contributed capital to SBS Co, a
newly established company in Vietnam, in the form of an indefinite-term land use right (LUR) for
a piece of land in Ho Chi Minh City.
The book value of the LUR recorded in SHDL Co’s accounts before the contribution was
VND100,000 million. The agreed capital contribution value was VND180,000 million. SHDL Co
wants to use the maximum period to allocate the revaluation gain from the LUR to other income
as allowed under prevailing corporate income tax (CIT) regulations.
What is the taxable income figure in respect of the capital contribution of the land use right
(LUR) to SBS Co which SHDL Co should declare on its corporate income tax (CIT) return for the
year ended 31 December 2017?
A. VND80,000 million
B. VND180,000 million
C. VND8,000 million
D. VND16,000 million
180,000 - 100,000
Answer: = 80,000
10
According to Article 7, point 14.b of Circular 78/2014

12
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

30. CLT Co is a Vietnamese company employing 1,200 employees in 2017. The company has a
policy to provide uniforms to employees in both cash and in kind. In 2017, the total uniform
expenses paid by CLT Co was VND12,800 million, of which VND8,000 million was paid in cash to
employees. 40% of the expenses in kind are not supported by proper documents. How much of
CLT Co’s uniform expenses are non-deductible for corporate income tax (CIT) purposes in 2017?
A. VND8,880 million
B. VND3,920 million
C. VND9,920 million
D. VND1,920 million
Answer: VND3,920 million ((8,000 – (1,200 persons x 5 million/person)) + ((12,800 – 8,000) x
40%))
Non-deductible uniform expense in case = 8,000 – 1,200 persons x 5 million/person = 2,000 mil
Non-deductible uniform expense in kind = 12,800 – 8,000) x 40% = 1,920 mil

 Total Non-deductible uniform expenses = 3,920 mil

According to Article 6.2.6 of Circular 78/2014, as amended by Circular 96/2015, uniform expenses
in cash can be deductible up to VND5 million/person/year, while uniform expenses in kind can
be deductible in full subject to proper documents.

13
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2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Section B – Response case questions

Question 1:
INVEX Co, a limited liability company, is fully owned by a Hong Kong-based company. INVEX Co
is located in a high-tech park in Long An, where it manufactures a memory device used in laptops
and mobile phones.
INVEX Co was established in 2014 with one factory which had a total design capacity of 1 million
units per year. The original investment certificate entitled the company to the following
corporate income tax (CIT) incentives:
– Four years tax exemption, plus nine years 50% tax reduction, commencing from the first year
of generating taxable income; and
– 15 years 10% concessional tax rate, commencing from the first year of generating taxable
revenue. INVEX Co first generated taxable revenue and taxable income in the years 2015 and
2016, respectively. In 2020, INVEX Co completed an expansion project involving additional
investment in fixed assets of VND40 billion to set up a second (new) factory with additional
design capacity of 350,000 units per year at the same location as the existing factory. Since
all the products manufactured will be gathered for sale in a central warehouse, it is impossible
for INVEX Co to clearly separate the taxable income resulting from the existing factory and
the new factory.
INVEX Co’s annual report for 2020 showed the following information:
– Total taxable income for 2020: VND21 billion, of which VND3 billion is from other income;
– Total historical costs of fixed assets actually used for production at 31 December 2020:
VND100 billion.
Required:
Calculate INVEX Co’s total corporate income tax (CIT) liability for the year ended 31 December
2020.
Answer:
Ratios of fixed assets used for production
• Expansion investment: 40/100 = 40%
• Original investment = 60%
Original project
Taxable income (21 bil – 3 bil) x 60% 10.8 bil
Tax rate: 10% x 50% (i.e 2020 was the first year of 50% tax reduction, 5%
after 4 years tax exemption 2016 – 2019)
Tax liability (10.8 bil x 5%) 0.54 bil

14
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Expansion project
Taxable income (21 bil – 3 bil) x 40% 7.2 bil
Tax rate: exempt (expansion treated as a new project, being entitled 0%
to tax exemption for 4 years)
Tax liability 0
Other income
Tax liability (3 bil x 20%) 0.6 bil
Total tax liabilities (0.54 bil + 0 + 0.6 bil) 1.2 bil
Question 2:
CRU Ltd (CRU) is the Vietnamese parent company of a group of subsidiaries doing business in the
manufacturing sector. All of the group companies have a year end of 31 December.
On 1 January 2017, CRU purchased a luxury car for VND6,600 million (including 10% value added
tax (VAT)) for the chairman of its board. CRU intended to use the car for six years.
In October 2019, the car was involved in an accident and had to be repaired at a cost of VND792
million (including VAT). The repair was completed on 25 October 2019 and the repair service
company issued an invoice for the full repair costs to CRU on that same date. According to the
repair service agreement, CRU was required to settle 90% of the repair costs in 2019 and the
remaining 10% in February 2020. The first payment was made by bank transfer and the second
in cash.
On 1 November 2019, the chairman decided to contribute the car as a part of CRU’s capital
contribution to CRS Co, a 100% subsidiary of CRU. The value contributed by the car was VND2,400
million (excluding VAT), and CRS Co intends to use the car for four years.
Required:
(a) Calculate CRU Ltd’s deductible depreciation and repair expenses for each of the years ended
31 December 2018, 2019 and 2020 as a result of the above transactions.
(b) Calculate CRU Ltd’s taxable income or loss from the disposal of the car in the year ended 31
December 2019.
(c) Calculate CRS Co’s deductible depreciation expense in respect of the car for the year ended
31 December 2019.

15
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer:
(a)
Deductible expense
(VND million)
2018
Depreciation expense (subject to cap of VND 1,600 million) 267
(=1,600 million /6 years)
2019
222
Depreciation expense (=1.600 mil/6 years x 10/12 months)
Repair costs (fully deductible as invoices issued for 100% and
payment deadline year to come) 720
(=792 mil/1.1)
2020
Repair costs (must be deducted from deductible expenses as
(72)
payment over VND20 million not being paid via a bank)
(=792 mil/1.1 x 10%)
(b)
VND million
Contribution value 2,400
Net book value
• Initial costs per book: 6,000 (=6,600/1.1)
(3,167)
• Accumulated depreciation on accounting book: 2,833
[=6,000/6 years x (24 + 10)/12 months]
Net taxable income/(loss) from disposal (767)
(c) Deductible depreciation expenses = 1.600/4 years x 2/12 months = 67 million
Question 3:
HVNV Co (HVNV) is a Vietnamese company owned by two shareholders, Ms An and Mr Bao, with
the shareholding ratio of 65% and 35%, respectively. HVNV specialises in software development
and the trading of computer hardware. The company’s recent taxable income/(tax losses) from
operations have been as follows:

Year ended
Software development Trading of computer hardware Combined total
31 December
VND million VND million VND million
2016 Cannot be separated for each activity (9,000)
2017 8,000 7,000 15,000
2018 (10,000) 2,500 (7,500)
2019 15,500 2,000 17,500
2020 (11,000) 3,000 (8,000)

16
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

HVNV is entitled to four years tax exemption plus a nine-year 50% tax reduction for its software
development activity from the first year of profits, which was in 2014. Due to inappropriate
planning, the tax exemptions available in the years 2014 and 2015 were used inefficiently when
the company made small profits but could not identify separately from which of its activities the
profits came. The software activity is also entitled to the 10% tax rate in the 15 years from the
year of first revenue, which was also 2014.
The trading of computer hardware activity is subject to the common tax rate
In 2017, HVNV was instructed in a written ruling by tax authorities that apart from the guidance
under the corporate income tax (CIT) Circulars, the losses must be utilised in a consecutive
manner to fully offset all profits from all activities within five years after their incurrence.
At the end of 2020, as a result of unresolvable disputes, the shareholders decided to split HVNV
into two separate companies according to their current shareholding ratio – AHV (to be held by
Ms An) and BHV (to be held by Mr Bao).
Required:
(a) Calculate (in VND millions) the assessable income for corporate income tax (CIT) for each of
HVNV Co’s activities in the years 2017, 2018, 2019 and 2020 and state the tax rate applicable
in each case. Note: You should use the loss utilisation as required under the CURRENT CIT
regulations.
(b) Calculate (in VND millions) the tax loss carry forward to be allocated to AHV and BHV
respectively after the split.
Answer:
(a)
Software Hardware
VND million VND million
2017
Taxable income 8,000 7,000
Loss from 2011 (must offset against the incentive activity (8,000) (1,000)
first)
Assessable income 0 6,000
Tax rate Exempt 20%
2018
Taxable income (10,000) 2,500
Offset loss between software and hardware 2,500 (2,500)
Assessable income/(loss) (7.500) 0
Tax rate 5% (=10% x 50%) 20%

17
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

2019
Taxable income 15,500 2,000
Loss carried forward from 2013 (7,500) 0
Assessable income 8,000 2,000
Tax rate 5% (=10% x 50%) 20%
2020
Taxable income/(loss) (11,000) 3,000
Offset between software and hardware 3,000 (3,000)
Assessable income/(loss) (8,000) 0
Tax rate 5% (=10% x 50%) 20%

(b)
AHV BHV
VND million VND million
Total loss at the end of 2020 (before the split) VND 8,000 million
Capital split ratio 65% 35%
Allocated loss to each company (5,200) (2,800)

Question 4:

FXVN Ltd is a Vietnamese company established in 2014, whose functional currency is the Vietnam
Dong. From 2014 to June 2016, the company was in the construction period (construction of its
factory and purchase of machinery and equipment) with no operations and no revenues. During
this period, FXVN Ltd had the following transactions in US dollars (USD):

Transactions Amount Date of USD/VND Note regarding

USD transaction exchange accounting recorded of
rate
Purchase of machinery 4 million 1/2/2015 21,450 Recorded as “Payable
on credit for fixed assets”
Receipt of first invoice 3 million 1/12/2015 22,470 Recorded as “Payable
from the construction for fixed assets”
contractor
Settlement of amounts (7 million) 31/12/2015 22,410 Recorded as a
owed for machinery reduction in “Payables
and construction (as for fixed assets”
above)

18
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Receipt of final invoice 3 million 15/2/2016 22,290 Recorded as “Payable

from the construction for fixed assets
contractor
Settlement of final (3 million) 28/6/2016 22,370 Recorded as a
invoice from the reduction in “Payables
construction contractor for fixed assets”
Factory and machinery 1/7/2016 22,340
completed at a total
cost of USD 10 million
and put into use
FXVN Ltd commenced business operations and started generating revenue from 1 July 2016. The
company expects to amortise the foreign exchange differences incurred during the construction
period over the maximum period available as allowed under the prevailing regulations in 2016.
Required:
Calculate (in VND millions) the amount of the foreign exchange differences which FXVN Ltd can
capitalize during the construction period, and the deductible expense from the amortisation of
the capitalised exchange differences allowable for corporate income tax (CIT) purposes, if any,
in the fiscal year ended 31 December 2016
Answer:
Amount
VND million
Foreign exchange differences capitalised
Loss from settlement for the purchase of (21,450 – 22,410) x 4 million (3,840)
machinery
Gain from settlement for the first construction (22,470 – 22,410) x 3 million 180
invoice
Loss from settlement for the final construction (22,290 – 22,370) x 3 million (240
invoice
Total (net) foreign exchange difference to be (3,900)
capitalised
Deductible expenses
Deductible foreign exchange differences 3,900/5 years x 6/12 months 290
(losses) allocated to the year 2016

19
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Question 5:
DPN Ltd is a company established ten years ago in Vietnam, with diversified activities and over
1,000 employees. In its fiscal year ended 30 September 2016, DPN Ltd purchased and constructed
various assets for use as follows:

Usage Description Value Estimated Notes

Items commencement (VND useful life
date million) (years)
1/1/2016 Library and 5.000 10
1 kindergarten for
staff
1/3/2016 Sports center for 6,400 8
2
staff
1/3/2016 Equipment and 2,000 4 50% of the value is
interior of the equipment and 50%
3 sports center of the value is for the
interior of the sports
center
15/4/2016 Pools and tanks for 1,000 10 70% is for the use by
clean water storage all staff of DPN Ltd
and the remaining
4
30% for use by
residents living
nearby
1/6/2016 Equipment See 5 Payment to be made
acquired by finance note by 5 annual
lease from a local payments of VND
annual payments of 1,000 million. The
5 total interest portion
finance company
(DPN Ltd is not the of the whole lease is
owner in the VND 500 million
record)

In addition to the above items, on 1 April 2016 DPN Ltd also received a yacht and a four-seater
car with a market value of VND22,000 million and VND2,000 million (excluding value added tax
(VAT)), respectively, from a client as settlement of a debt for goods purchased from DPN Ltd in
2015. DPN Ltd expects to sell the yacht, but will use the car in its business and has assigned it a
useful life of eight years.

20
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Required:
(a) Calculate (in VND millions) DPN Ltd’s deductible depreciation expense for corporate income
tax (CIT) purposes with regard to each of items 1 to 5 in the fiscal year 2016.
(b) Briefly explain whether DPN Ltd can deduct a depreciation expense in respect of the assets
(yacht and car) received as settlement of the debt for CIT purposes and calculate (in VND
millions) the deductible amount, if any, in the fiscal year 2016.
Answer:
(a)
Depreciation
VND million
5,000 9
Library and kindergarten x 375
10 12
6,400 7
Sports center x 467
8 12
Equipment and interior of the sports center 2,000 7
x 292
(both are fully deductible) 4 12
1,000 5.5
Clean water pools and tanks (only 70% allowed) x 70% x 32
10 12
1,000 x 5 - 500 4
Finance leased equipment x 300
5 12
(b)

Explanation Depreciation
VND million
No depreciation expense is deductible as the yacht is not used
Yacht for the purposes of DPN Ltd’s business (according to Article 0
6.2.2(e) of Circular 78/2014 as revised by Circular 96/2015).
A depreciation expense is deductible, but the capital cost is
Car 100
capped at VND1,600 million (1,600/8 x 6/12)
Question 6:
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 2019–2020, 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 2019, 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 2019, IVEX Ltd invested VND50,000
million in a new production line, which qualified as expansion investment under the corporate

21
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

income tax (CIT) 18 regulations. IVEX Ltd’s total historical costs of fixed assets (including the new
production line) at the fiscal year-end of 31 December 2019 was VND200,000 million.
In 2019, the taxable income declared by IVEX Ltd was VND48,000 million, of which other non-
operating taxable income was VND8,000 million.
In 2020, 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 million in 2020. 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 million were not paid before the deadline for CIT
finalisation. IVEX Ltd’s total actual salary fund in 2020 was VND55,000 million. No provision for
salary fund was made as at 31 December 2020.
2. Purchases without invoices amounted to VND9,200 million, of which VND2,800 million were
purchases of depletions from households who issued IVEX Ltd with lists of the purchases under
form 01/TNDN.
3. Machinery bought in 2017 with a historical cost of VND6,000 million and an estimated useful
life of five years ceased to be used from 1 June 2019 for maintenance. In 2019, IVEX Ltd expected
that this maintenance would take 13 months, but the maintenance was in fact completed on 31
August 2020 and the machinery was put into use again from 1 September 2020. In the draft
financial statements, this machinery was depreciated over 12 months in 2020.
4. Uniform expenses (supported with valid documents) were VND720 million paid in cash, and
VND360 million made in kind. IVEX Ltd had an average of 120 employees during the year 2020.
5. A profits share of VND40,000 million 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 2021, 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 2019 from the original investment,
expansion investment and other activities, and the total corporate income tax (CIT) liability of
IVEX Ltd for the year ended 31 December 2019.
(b) Calculate the taxable income and the tax liability which IVEX Ltd should declare in its CIT
return for the year ended 31 December 2020. Note: You should start your computation with
the accounting profit of VND160,000 million 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.

22
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

(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 2021.
Answer:
(a)
Income from original Income from expansion Other income
investment (VND million) (VND million)
(VND million)
Tax rate 7.5% 20% 20%
(=15% x 50%)
Historic value of fixed 150,000 50,000
assets (=200,000 – 50,000)
Assets allocation 75% 25%
Operating taxable income = 48,000 – 8,000 = 40,000
Allocation of taxable 30,000 10,000
income (=40,000 x 75%) (=40,000 x 25%)
Tax liabilities 2,250 2,000 1,600
(30,000 x 7.5%) (=10,000 x 20%) (=8,000 x 20%)

(b)

VND
million

Accounting profits 160,000

Add back: accured wages and allowances not paid before the CIT finalisation 8,500
deadline (the 17% provision does not apply)
Add back: expenses not supported by documents (9,200 – 2,800) 6,400
Add back: depreciation for eight months in 2020 when machinery was not in use 800
(6,000/5 years x 8/12) – cessation for maintenance over 12 months
Add back: uniforms in cash in excess of VND5 million per person (720 – 120 x 5) 120
Deduct: profit share from BCC (exempt in the same manner as dividends) (40,000)
Total taxable income 135,820
CIT at 20% 27,164

23
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

(c)
Deductibility of expenses According to Article 6 of Circular 78/2014, as amended by Circulars
96/2015 and 130/2016, a company is allowed to deduct expenses which satisfy the following
conditions:

• Being actually incurred in relation to the business operations of the company

• Being supported by proper documents (e.g. invoices) according to prevailing regulations; and
• For invoices over VND20 million (inclusive of value added tax (VAT)), payment is made via a
bank and evidence of this is available.
The deductibility position of the IT support services expenses charged to IVEX Ltd by the
headquarter company would be as follows:

• The charge for expenses incurred at the specific service request of IVEX Ltd would likely be
deductible, if the three conditions (as set out above) are satisfied, as these are actually
services incurred in relation to the business operations of IVEX Ltd.
• The lump sum charge would likely be non-deductible because it would appear to be an
allocation of the headquarter company management costs which may be deemed as not
incurred in relation to the business operations of IVEX Ltd, and there would be no supporting
documents regarding the validity of such charges (e.g. the allocation based on the judgement
of the headquarter company would not be a valid justification for deductibility).
Question 7:
LMK Co is a foreign invested company, established in Vietnam in 2013. 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:
Year Taxable income/(tax losses) Year Taxable income/(tax losses)
(VND million) (VND million)
2013 (35,000) 2014 (20,000)
2015 (15,000) 2016 (5,000)
2017 8,000 2018 14,000
During 2019, the local tax authorities conducted a tax inspection of the company relating to the
period from 2013 to 2018. The investigation resulted in the adjustment for some items which
reduced the tax losses in 2013 and 2014 by VND6,000 million for each year; and also reduced the
tax losses of 2015 and 2016 by VND5,000 million and VND1,000 million respectively.

24
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

In 2019, 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:
Calculate the amount of tax losses which can be utilised and offset against taxable income in
each year for the period 2017 to 2019, and the remaining tax losses which can be carried
forward to 2020 by LMK Co.
Answer:

Year Revised tax losses Latest year for offset

2013 35,000 – 6,000 = 29,000 2018

2014 20,000 – 6,000 = 14,000 2019

2015 15,000 – 5,000 = 10,000 2020

2016 5,000 – 1,000 = 4,000 2021

Year Remained tax losses

2017 • We will offset tax losses in 2013 first  Remained tax losses in 2013 = 29,000 –
8,000 = 21,000
• Tax losses for the year from 2014 – 2016 are remained = 14,000 + 10,000 +
4,000 = 28,000

2018 • We will still offset tax losses in 2013 first:  Remained tax losses in 2013 =
21,000 – 14,000 = 7,000
• Tax losses for the year from 2014 – 2016 are remained = 14,000 + 10,000 +
4,000 = 28,000

2019 • The remained tax losses in 2013 cannot use to offset in 2019
• We will offset tax losses in 2014 first: 14,000 < taxable income  no remained
tax losses
• Next, we will offset tax losses in 2015:  Remained tax losses in 2015 = 10,000
– (22,000 – 14,000) = 2,000
• Tax losses in 2016 are remained = 4,000

 Remaining tax losses which can be carried forward to 2020 by LMK Co = 2,000 + 4,000 =
6,000

25
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Question 8:
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 2020.
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 is 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 funds
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 totaled
VND16,000 million. The benefits were clearly stated in the collective labor agreement of HTM Co.
Required:
Calculate (in VND millions) the corporate income tax (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.

26
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Note: You should start your computation with the profit before tax of VND80,000 million 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.
Answer:
CIT liability to be declared by HTM Co = Taxable income x Tax rate
= (Profit before tax ± Adjustments) x Tax rate

Adjustments
Notes
(VND million)
1. Depreciation expense
The change in useful life of machine  Depreciation expense should be
adjusted for tax purpose:
• Original depreciation = 96,000 /8 years = 12,000
• Total depreciation from April 2015 – September 2017 = 12,000 x 2.5 years
= 30,000
• Residual value before change = 96,000 – 30,000 = 66,000
• New depreciation per year = 66,000 /4 years = 16,500
 Additional Depreciation expense should be deducted for tax purpose
(1,125)
[= (16,500 – 12,000) x 3/12]
2. Rent
Two months’ rent deposit is not expense  This should be added in for tax
200
purpose
Individual tax on rent (no adjustment as HTM will bear individual taxes, the
individual taxes would be deductible expenses Article 6.2.5 of Circular
78/2014 as amended by 96/2015)
3. Provisions
Provision in 2016 not fully utilised within first six months of 2017  This
should be added in for tax purpose (According to the same Circular, Article 2,000
6.2.5)
Allowance for provision in 2017 has not yet been made in the draft financial
statements  This expense should be deducted for tax purpose:
Allowance for provision in 2017 = Salary funds of 2017 x 17%
(12,750)
= Salary funds of 2016 x 150% x 17%
= Allowance for provision in 2017 x 150% x 17%/17%
= 8,500 x 150%
4. Pension

27
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Deductible pension expense = 1mil/1 person/1 month. Therefore the

exceed amount of pension expense should be added for tax purpose
Maximum deductible pension expense
= Number of employee x 12 million
4,000
= (Salary funds of 2017/ Average of VND6.25 million per employee per year)
x 12 million
= (72,000/6.25 x 12 months) x 12 million = 12,000 million
 Non-deductible pension = 16,000 million – 12,000 million
Total adjustments (7,675)
 CIT liability to be declared by HTM Co = (80,000 ± Adjustments) x Tax rate
= (80,000 – 7,675) x 20% = 14,465 (million)
Question 9:
CGB JSC (CGB) is a foreign invested company in Vietnam, whose main operations are to provide
strategic management consulting services to corporate clients in Vietnam and overseas. CGB’s
income statement (I/S) for the year 2019 shows that it earned profits before tax of VND96,000
million. During the preparation of the company’s 2019 corporate income tax (CIT) finalisation
return, the chief accountant noted the following issues to be taken into account. All amounts are
stated exclusive of any applicable value added tax (VAT), except where specifically stated
otherwise:
1. CGB marks up 60% of the costs incurred to calculate the fees charged to clients (i.e. for every
VND100 cost incurred, the profit would be VND60). However, the company also issues invoices
(and charges VAT) in advance to clients based on the estimated costs to be incurred for the jobs.
In a recent tax audit for 2018, the local tax authorities requested and allowed (in writing) CGB to
apply the following mechanism for CIT purposes:
– Recognise revenue for CIT purposes when the invoices are issued to clients; and
– Accrue the costs corresponding with the revenue (per the mark-up set by the company)
recognised in advance into deductible expenses and finalise the calculation for CIT when the job
is completed.
During 2016, CGB had the following jobs which were undertaken across two years:
Job Status Revenue Amount Notes
credited to I/S invoiced in
in VND millions VND millions
Job A Started in 2018, 2018: 1,200 2018: 2,000 Costs corresponding to
completed in 2019 2019: 3,800 2019: 3,000 the revenue invoiced
were allowed to accrued
in the 2018 CIT return

28
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Job B Started in 2019, to 2019: 1,400 2019: 3,600 In 2019 the costs and
be completed in 2020: 5,200 revenue were recognized
2020 in the I/S based on the
mark-up set by the
company, and included
in the profit before tax of
VND96,000 million
Job C Started in 2020 2019: 0 2019: 4,000
2. During 2019, CGB incurred VND1,600 million for non-business related expenses and intends to
exclude all of this amount from deductible expenses. Of this amount, VND600 million was
attributable to staff welfare costs (including weddings/funerals, vacation, support for
transportation during National holidays, etc). However, 20% of these welfare costs were not
supported by documents and another 10% were paid in cash (however, the individual amounts
paid in cash did not exceed VND10 million for each payment). In 2019, the average monthly salary
of CGB’s employees substantially exceeded VND600 million.
3. In 2019, CGB recovered an amount of VND1,200 million from bad debts which had been
written off in its 2018 I/S. The write off was recorded as an expense in the 2018 I/S and the
recovery recorded as income in the 2019 I/S (i.e. included in the profit before tax of VND96,000
million). However, during the tax audit in 2018, the expense for the write-off was rejected for
deductibility by the tax authorities due to insufficient evidence.
Required:
Calculate CGB JSC’s taxable income and tax liability (in VND millions) for corporate income tax
(CIT) purposes for the year ended 31 December 2019, indicating the required adjustments to
the profit before tax of VND96,000 million.
Note: You should list all of the items specifically referred to in notes 1 to 3, indicating by the use
of ‘0’ any item for which no adjustment is required.
Answer:

Item VND Adjustment

million VND million

1a Job A (finalised in 2019)

Total profits for the job (5,000 revenue x 60/160) 1,875

Less: profits taxable in 2018 tax return (2,000 x 60/160) (750)

Remaining profits to be taxed in 2019 1,125

Profits recognised in I/S of 2019 (3,800 x 60/160) 1,425

29
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Adjustment: reduce taxable profits (1,125 – 1,425) (300)

1b Job B (In progress in 2019)

Profits taxable in 2019 (3,600 x 60/160) 1,350

Profits recognised in I/S of 2019 (1,400 x 60/160) 525

Adjustment: increase taxable profits (1,350 – 525) 825

1c Job C (not started in 2019 but taxable in 2019)

Profits taxable in 2019 (4,000 x 60/160) 1,500

Profits recognised in I/S of 2019 0

Adjustment: increase taxable profits (1,500 – 0) 1,500

2 Non-business related expenses

Adjustment: Add back non-welfare expenses (1,600 – 600) 1,000

Adjustment: Add back welfare expenses not supported by 120

documents (600 x 20%) 120

Adjustment: Welfare expenses in cash (as not exceeding 0

VND20 million) and remaining welfare expenses

3 Recovery of bad debts

Taxable income in 2016 (the recovery is not taxable in 2016 0

because the write-off was non-deductible in 2015)

Income recognised in 2016 I/S 1,200

Adjustment: reduce taxable profits in 2016 (0 – 1,200) (1,200)

Total adjustments 1,945

Profit per financial statements 96,000

Total taxable income 97,945

Tax at 20% 19,589

30
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Question 10:
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 profits Other income IVST Co’s Tax incentives (on operating
before tax before tax share profits only)
(2018) (2018)
(VND million) (VND million)
Nam 600,000 10,000 60% The project is entitled to 50%
An 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 680,000 20,000 50% None
Nam
In 2018, IVST Co also received total dividends amounting to VND120,000 million from
investments in listed companies in Vietnam. In addition, IVST Co received VND180,000 million
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 million 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 corporate income tax (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.

31
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer
(a)
According to Article 7 point 21, and Article 8 point 6 of Circular 78/2014 as amended by Circular 96/2015:
Investment income received from local business operations BEFORE corporate income tax (CIT) is treated as other income
1
(and is subject to tax at the normal tax rate).
2 Investment income received from local business operations AFTER CIT has been withheld is exempt from CIT
Income AFTER CIT from business operations which are entitled to incentives is also exempt from CIT in the hands of investors
3
if the operators have already declared and, where relevant, paid tax.
(b) Units are measured in VND million
Project Profits after tax Other income after Total net income IVST Co’s shares IVST Co’s tax exempt
from main tax (2) after tax (3) (4) income (5)
operations (1) [(3) = (1) + (2)] [(5) = (3) x (4)]
555,000 8,000
Nam An (=600,000 – 600,000 (=10,000 – 10,000 x 563,000 60% 337,800
x 50% x 15%) 20%)
25,000
Con Co 800,000 (=25,000 – 25,000 x 820,000 80% 656,000
20%)
544,000 16,000
Dai Nam (=680,000 – 680,000 (20,000 – 20,000 x 560,000 50% 280,000
x 20%) 20%)
Listed companies 120,000 120,000
Total 1,393,000
(c) Tax liability on non-exempt investment income = (180,000 million – 25,000 million) x 20% = VND31,000 million

32
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Question 11:
EDM JSC, a joint stock company in Vietnam operating in the field of developing online learning
courses, was established in 2018 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 billion. 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 2020:
1. Payments of VND600 million 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 million in the year 2020. All the payments were
in excess of VND20 million and made in cash.
2. EDM JSC’s employees are allowed to study selected courses on a free-of-charge basis. In 2020,
320 free-of-charge courses, with a total market value of VND180 million, were provided to
employees. 70% of these courses were work-related training but the remaining 30% were not
work related.
3. Expenses of VND160 million were incurred on negotiating with the angel investor and issuing
the additional shares.
4. Allowances of VND200 million 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 million were donated to some national schools, and of VND80
million to a non-licensed private education fund operated by the angel investor.
Required:
Calculate the adjustments EDM JSC should declare in its corporate income tax (CIT) return for
the year ended 31 December 2020 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 .

33
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer:

Item Adjustment VND million

1 Payments to freelance lecturers

Add back: cash payments to individual lecturers with 360

revenue in excess of VND100 million = 60% x VND600
million

2 Free of charge courses for employees

Add back: market price of free-of-charge courses offered to 180

employees
(Free-of-charge goods/services to employees are taxable
at market price)

Deduct: work-related course costs (70% x VND180 million) (126)

(Training expenses to improve employees’ skills for work
are deductible)

3 Investor negotiation and share issue costs

Add back: negotiation and share issue costs (non- 160

deductible)

4 Allowance payments to shareholders

No adjustment: payment to founding shareholders 0

(deductible)

Add back: payment to angel investor (non-deductible) 150

(Allowances to non-participating shareholders, such as an
angel investor not involved in the day-to-day management
of the company, are not deductible)

5 Donations

No adjustment: donations to schools (deductible) 0

Add back: donation to private fund (non-deductible) 80

Total 804

34
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Question 12:
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) 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.
(b) Calculate (in VND millions) the CIT liabilities to be declared by IVX Co for the transfer of the
IVS JSC shares in 2017

35
 SAPP Academy Tel 0466 709 888
8th Floor, Nam A Bank building, 54 Le Thanh Nghi, Hai Ba Trung district, Ha Noi Sapp.edu.vno
2Ard Floor, Green Star Tower, No. 261 Pham Van Dong, Bac Tu Liem district, Hanoi Hotline: 0889 66 22 76
1st Floor, No. 2A Luong Huu Khanh, District 1, Ho Chi Minh City 0889 66 22 67

Answer:
Corporate income tax (CIT) liability on the transfer = (Selling price – Cost of capital – Transfer
expense) x 20%
(a)
VND million
Selling price 136,800
Sales proceeds (USD 6 million x 22,800 – buying exchange rate)
Cost of capital (64,000)
Original in USD converted into VND at VND 16,000 (USD 10 million x 40% x
16,000)
Transfer expense (200)
Corporate income tax (CIT) liability on the transfer at 20% 14,520

(b)
VND million
Selling price 150,000
= Sales proceeds – Late payment interest
= VND150,000 million – 0
Cost of capital (80,000)
= Original contribution (45%) + Additional purchase (15%)
= VND100,000 million x 45% + VND 70,000 million x 15%/30%
= VND45,000 million + VND35,000 million
Transfer expense (150)
Corporate income tax (CIT) liability on the transfer at 20% 13,970

36