PIT

June 2019 (question 2) ( royal/ franchise)

b, The licence fee which tony received from transfer to next start co shall be subject to PIT in
Vietnam in his hand
- By nature, this transaction should be viewed as form of franchise fee/ royals fee and it
shall be subject to PIT at tax of 5% of the amount in excess of VND 10 million.
- However since the licence were paid to Tony by NSV, the tax authorities in Vietnam can
claim it as a part of employment income. ( shall be subject to PIT at a higher tax rate)
June 2019 ( question 6) ( compulsory insurance)
- According to the regulation related PIT, the social, health and unemployment insurance
contributions shall be deducted to PIT purposes to calculate the assessable income.
- The compulsory SHUI contributions paid by employees are capped based on a salary of 20
times the minimum salary. The current cap in 2021 is VND 29.8 million.
December 2018 ( question 2) ( prize)
According to the regulation
1, A cash prize of VND 1320 million accompanied by a certificate of reward issued by the
government authorities shall be free of PIT.
2. The car which Mr Dung Tien received shall be subject to PIT at tax rate of 10% of the
amount excess of VND 10 million.
3. Free of charge flights for one year shall be non- taxable.
The prizes in kind can be treated as prize/ gifts and shall be taxble if these are securities,
capital contribution, real estate or registrable assets.
June 2018 ( question 2) ( sale of real estate)
According to the regulation, the time Mr Thinh Phan would be subject to tax on the sale of
his apartment is the day when the registration procedures were completed ( 20 december
2017) because the buyer is responsible for declaring and paying the tax on behalf of the
seller.
- PIT liability in respect of the sale = 5200*2%=104 VND million
June 2018 ( question 6) ( tax resident)
- For the tax year 2016, the basic period is from 1 august 2016 to 31 july 2017 ( 12
consecutive months)
- For the tax year 2017, the basic period is from 1 january 2017 to 31 december 2017 ( a
calendar year)
- In 2016, From 1 august 2016 to 31 july 2017, he was presented in Vietnam for 205 days
( 80+125) => he would be considered as tax resident
- In 2017, he was presented for 260 days ( 125+135) => he would be considered as tax
resident.
Dec 2017 ( question 2) ( royalty)
According to the current regulation, the income from royalty shall be subject to PIT at the
rate of 5%. The taxable royalty shall be the excess of VND 10 million following to the
transferred contract.
Dec 2017 ( question 6)
According to the current regulation:
- the sale of the shares received as an incentive bonus shall be subject to PIT at 0.1% of
selling price at the time of transfer securities if tony received the share rather than cash
- The sale of the shares received from the exercise of the share options shall be subject to
PIT at 0.1% of the selling price when they are sold
- The dividend from the shares shall be subject to PIT at 5% at the time Tony receiving
dividend
Dec 2018 ( question 2) ( prize)
According to the current regulation, the cash prize, accompanied by a certificate of reward
issued by the government authorities in charge of sports in Vietnam shall be not subject to
PIT purposes
- The car with a market value of VND 800 million from a car assembling company shall be
subject to PIT at the tax rate 10% of the value excess over VND 10 million ( the prize at the
form of the registrable assets will subject to PIT)
- the free of charge fights shall be not subject to PIT
June 2018 ( question 2)
According the the current regulations, relating to transferring property, If the sales contract
agree that the buyer would be responsible for declaring and paying the tax on behalf of the
seller, the time to declare PIT is the time the registration procedures completing. It the sales
contract does not having this agreement, the time to declare is the time the sales contract is
effective. In this case, Mr Thinh Phan would be subject to tax in 20/11/2017 whent the
registration procedures were completed.
PIT liability arising= 5200*2%=VND 104 million
June 2018 ( question 6)
The basic period applicable to Mr Narmey Lukuka for the tax year 2016 is 12 month
consecutively ( from 1/8/2016-31/12/2016) and for the tax year 2017 is a calendar years
( from 1/1/2017 to 31/12/2017).
- because for the tax year 2016, he is presented in Viet nam foe 205 days in 12 months
consecutively, he is tax resident in Vietnam
- for the tax year 2017, he is presented in Vietnam for 260 days in a calendar years, so he is
tax resident in Vietnam
June 2017 ( question 2) ( transfer land)
a, Following to the agreed contract, the seller was obliged to handle the tax filling and
payment. Therefore, the taxing date for PIT purposes is the day when the contract was
effective. It is 15 march 2016.
b, Because there was no specific indication as to the ratio of ownership, the land sale will be
allocated equally between Mr Hung Duong and Ms Hien Duong. When the land was
transferred, the people who had only one land ownership shall be not subject to PIT
PIT liability for Mr Hung Duong = 2%*200million*500*0.5= VND 1000 million
c, The capital contribution shall be not subject to PIT on 15 April 2016 because at that time,
there are not any incomes incurred. After that, if Mr Hung Duong receives any incomes
relating to the capital contribution by HD Co, it shall be treated as investment income and it
shall be subject to PIT at the tax rate 5%.
d. PIT liabilities in respect of the sale of the capital contribution= 20%* (68000 million-
50000million-7500million)=2100
Dec 2016 (question 2)
a, - The “ cash shares award” Mr Nghia Phan received shall be treated as employment
income. Howerver, at the time of receipt, these amounts would be not subject to PIT. When
Mr Nghia Phan decide to sell these shares, he shall be declare PIT liabilities for the sale of
shares and the employment income from receipt these shares. The difference Mr Nghia
Phan received on 31/12/2015 shall be treated as employment income and be calculated for
PIT purpose in this period.
- The shares awarded under option 2 shall be treated as an employment income. However,
these amount would be deferred for PIT purpose until the time of selling shares. Any income
received from the shares after the award will be treated as investment income.
Dec 2016 ( question 6)
According to the current regulation, the granted options which Tommy received from MCS
Vietnam co shall be treated as an employment income. However, the option granted would
deferred for PIT purpose until Tommy decides to transfer the number of shares from
exercising the option. When he exercised the option, he would not be required to calculate
PIT liabilities. At the time of transfer, he will declare and calculate Pit liabilities from
employment incomes and transfer securities.
June 2016 ( question 2) ( insurance)
According to the current regulation, a non-accumulated insurance fee would be non-taxable
for PIT purposes. An accumulated voluntary life insurance fee paid by an employer direct to
the insurer would be taxable for PIT purposes.
When the insurer is a company incorporated in Vietnam, the insurer is required to withhold
PiT at the rate of 10% of the accumulated fee to the employee at the time of maturity of the
insurance policy
When the insurer is a foreign company, the employment is required to withhold Pit at the
rate of 10% of the accumulated fee at the time of contribution.
June 2016 ( question 6) ( remittance ngoai hoi) ( inherit)
- The remittance from Mr Minh Phu’s parents would be not subject to PIT.
- Mrs Phu’s inheritance of the building from her aunt would be subject to PIT at the tax rate
10% of the income in excess of VND 10 million. In the case, she received inherit from her
parent or close family , it would be not subject to PIT.
- The sale of the inherited building would be subject to PIT at the tax rate of 2% of selling
price or the price stated by the local People’s committee which ever is higher.
FCT
Dec 2018 ( question 3)
According to the current regulation, the cost of the spare parts to be purchased from
MCEQVN to implement the contract shall be non- deductible from taxable revenue to FCT
purposes.
- If the subcontract- MCSIVN prepare tax declaration by declaration method or hybrid
method, the value of the services to be subcontracted to MCSIVN will be deductible from
taxable revenue.
Dec 2018 ( question 3) ( DTA)
- Agado would be exempt from the corporate income tax (CIT) portion of the foreign
contractor tax (FCT) in Vietnam if the business activities of Agado are categorised as
‘business profits’ and Agado did not carry on business in Vietnam through a permanent
establishment.
- Within 15 days from the deadline for the FCT declaration, the Vietnamese party in the
contract (i.e. TSQR Co in this case) is required to submit a notification dossier about the DTA
exemption to the tax authorities (including, for example, a notification form, copy of service
agreement, certified copy of residency certificate of Agado in Hong Kong, etc).
June 2018 ( question 3)
According to the current regulations, the taxable revenue for a shipping line for FCT
purposes includes the total freight costs received from customers from a Vietnam port to
the destination port. The taxable revenue can be reduced by any freight cost already subject
to CIT in Vietnam and the freight costs paid to Vietnamese enterprises as they take part in
the transportation.
June 2017 ( question 3)
Dec 2015 ( question 3)
a. Contract 1: the price of e-nophi will be fixed and determined by ELPPA Co for each period.
Therefore, ELPPA Co will be subject to FCT. The CIT tax rate applied is 1% and the VAT tax
rate applied is 0%.
- Contract 2: Since the terms of delivery will be DDP to Ho Chi Minh City, BookMac Co will be
subject to FCT. The CIT tax rate is 1% and the VAT tax rate is 0%. The advertising costs for
the products in Vietnamm will be excluded to calculate FCT liabilities. The replacement any
defective laptop will not be subject to FCT.
b. Since the terms of delivery will be CIT to Ho Chi Minh City port and the risk will be
transferred from uploading port in Malaysia, PH Co will not be subject to FCT. The warranty
service of the components will also not be subject to FCT.
c.

CIT
June 2019 ( question 1) ( income from investment)
According to article 7 point 21 and article 8 point 6 of circular 78 /2014 as amended by
circular 96/2015 and 130/2016:
1. Income from investment received from business operation before CIT is treated as other
income and it is subject to CIT at the normal tax rate.
2. Income from investment received from business operation after CIT is exempt from CIT
including the case in which the receiver is entitled to incentives CIT
Dec 2018 (question1) ( carrying forward a loss)
a, According to article 9, circular 78/2014 as amended by circular 96/2015 and 130/2016,
the principles for carrying forward a loss incurred by an enterprise in Vietnam:
1, The enterprise is required to carry forward the tax loss fully and consecutively to offset
against taxable income in subsequent years
2. The loss can be carried forward up to 5 years from the year following the loss-making.
b, According to article 9, circular 78/2014 as amended by circular 96/2015 and 130/2016.
The tax holiday period shall commence from the first year incurring taxable income or 4 th
year incurring revenue if no taxable income has incurred.
Therefore, LMK co shall be exempted to CIT in 2014 and 2015 and 2016 is the first year of
50% reduction
July2020 sample (question 1) ( transfer of a capital contribution)
a, according to article 14, circular 78/2014 as amended by circular 96/2015 and 130/2016:
1, The income from transfer of a capital contribution in a Vietnamese limited liability
company is subject to CIT in Viet Nam at the time of transfer.
2. Capital gain tax shall be determine by: taxable income*20% ( taxable income=selling
price- historical cost- transfer expenses)
3. The selling price is the actual receipt from transfer under contract. In case of the payment
in form of installment payment, the selling price excludes any interest.
4. Historical costs shall be the original capital contribution or the purchase price of the
capital contribution
5. Where both the seller and the buyer are foreign companies, the company whose capital
contribution transferred is responsible for making the capital gain tax declaration.
June 2018 ( business individuals rev < 100mil)
- According to the regulation, the cost of goods and services purchased from business
individuals who have revenue below VND 100 million per year shall be deducted from CIT
purpose if the enterprise properly prepared the “ lists of goods and services purchased” as
required ( in case there is not any invoices).
- In case, the price of the good or service listed in the “ lists of goods and services” is higher
than the market value, the enterprise shall base on the market value for CIT purpose.
- These expenses are not required supporting document related to non-cash payment.
June 2018 ( question 5)
a, according to the current regulation:
- The target company uses a foreign currency
+ the selling price is calculated by foreign currency
+ the historical costs is calculated by foreign currency based on the original capital
contribution or purchased capital
- The target company uses VND
+ the selling price is calculated by the amount foreign currency converted into VND by the
commercial bank’s buying exchange rate at the time of transfer
+ the historical costs is the value in the accounting book in the audited financial
statements with the original capital contribution. And the historical costs is the purchase
price with the purchased capital. In each case, the historical costs is converted to VND with
exchange rate at the time of contribution or purchasing.
June 2018 ( question 1)
According to the current regulations, the cost of goods and services purchased from
business individuals who have revenue below VND 100 million per year would be deducted
for CIT purposes if the enterprises properly prepared the List of goods and services
purchased as required ( no invoice were available). The payments do not required non- cash
payment documentation.
If the tax authorities view that the price in the lists is higher than the market price, the
company is required to recalculate the deductible expense based on the market price.
Dec 2017 (question 1) ( realized foreign exchange differences)
- According to the current regulation, realized foreign exchange differences arising from the
formation of fixed assets in the construction period shall be treated separately. When fixed
assets have been completed, these differences shall be offset and the net gain or loss shall l
be allocated to financial income or financial expense up to 5 years from the year the assets
are put into use.
- In the period from when a company starts its business operations, the “ realized foreign
exchange” differences arising from the formation of fixed assets shall be recorded to
financial income or financial expense in the financial year.
Dec 2017 ( question 5) ( dk khau tru chi phi)
According to the current regulation, the principle conditions for expenses to be deductible:
- The expenses would be actually incurred relating to the operation activities of the
enterprise
- The expenses would be supported by proper documents.
- The invoices which are more than VND 20 million would be paid by noncash payment.
A specific charge for the costs incurred in respect of the service requests made by IVEX Ltd
shall be deducted from CIT purpose if this satisfied all three above condition
The lump sum charge which would be allocated to all the investor’s subsidiaries would likely
be non-deductible because it may be deemed as not incurred in relation to the business
operation and there would be no supporting documents.
Dec 2018 ( question 1) ( carried forward a loss)
a, According to the current regulation, the principles for carrying forward a loss incurred by
an enterprise in Vietnam:
- The enterprises would be required to carry forward a loss incurred fully and consecutively
to offset against taxable income in subsequent years
- the loss shall be carried forward up to 5 years from the following years loss-making.
b, according to the current regulation, the tax holiday shall be applied in the first years when
the enterprise incurring taxable income or the 4th year which the enterprise incurring
revenue if no taxable income incurred.
Therefore, in 2015 the enterprises would be exempt to CIT. In 2016, the enterprise would be
reduced 50% tax and the tax rate 10% would be applied.
June 2018 ( question 5) ( transfer capital contribution)
According to the current regulation
- when the target company uses a foreign currency as its functional currency, the selling
price is determined based on the foreign currency. The historical cost is determined by the
foreign currency based on the original contribution or purchase.
- When the target company uses VND as its functional currency, the selling price is
determined by the amount converted into VND by the commercial bank’s buying exchange
rate at the time of transfer. The historical cost is based on the record in the audited
financial statement with the original contribution and it is determined by the purchase price
with the purchase capital. In each case, the historical cost is based on the exchange rate at
the time of contribution or purchase.
June 2017 (question 1) ( dep exp)
- Assuming DPN Ltd do not operate in transportation industry:
- The yacht would be sold after receiving from a client, so DPN Ltc do not need to allocate
depreciation expense for the yacht. The depreciation expense for the yacht will not
deducted
- NPN LTd can deduct the depreciation expense based on the amount VND 1.6 billion in
respect of the car. The depreciation expense of the amount excess VND 1.6 billion shall be
non-deductible expense. ( the capital cost is capped at VND 1.6 billion)
June 2016 (question 1) ( interest loan)
According to the current regulation, the interest expenses on loans borrowed to finance
investment would be non-deductible for CIT purposes in the case these loans would be
finance to contributed the remaining unpaid charter following registation. The interest
expenses on loans to finance business operations would be deductible to CIT purposes.
Dec 2015 ( question 1) ( tax incentive for expansion project)
- The expansion project completed in 2014 will be eligible for CIT incentives because:
- This expansion project is qualified for incentives
- because of the expansion project, the capacity would increase 350000 units per year
equivalent to 35% of the original design capacity.
- since it is impossinle to separate the taxable income from the expansion project and the
original project, it will have to apportion the taxable income using the historical cost of the
fixed assets of the expansion project and the total historical costs of the fixed assets actually
used for production

VAT
June 2020 ( question 4) ( exported natural resources)
a, According to the current regulation, the export of unprocessed natural resources which
are sourced domestically with total value of natural resources plus energy costs accounting
for 51% or more are not subject to VAT. It means that, the input VAT shall be neither
creditable or refundable.
- for calculating, the ratio = ( total value of natural resources + energy costs)*100%/ total
production costs
- total production costs shall include total direct costs ( direct labour costs, direct material
costs, direct overhead costs). It shall exclude any indirect costs.
- The ratios is determined base on the finalisation report of the previous year.
June 2019 (question 4) ( invoicing requirement for dependent brach)
- The suppler is still required to issue an invoice for purchases over VND 200000 even if the
customer does not require. The invoices should state “ invoice not required by buyer” or
“buyer did not provide information”
- For the purchases less than VND 200000 where the customer did not require an invoice,
the supplier is required to prepare a list of good or service sold without invoices. At the end
of the day, the supplier is required to issue an invoice showing the total amount of the sales
of the list.
- A revised invoice is not required provided the customer’s tax code is correct. Howerver,
the parties are required to issue a minute for correction.
June 2018 (question 4) ( invoice requirements)
Dec 2018 ( question 4) ( creditable input VAT )
According to the current regulation, during the construction period, as the company has
both exempt and taxable activities, the company can claim creditable/refund input VAT
incurred from non-current assets based on the provisional revenue allocation
- the provision shall be adjusted based on the actual revenue ratio between taxable revenue
and total revenue over 3 years form the year of the first revenue
c, The current rate of annual late tax payment interest if 0.03% per day
According to the regulation, the company is not required to pay any late payment interest
on the reduction adjustment of input VAT from non-current assets.
Dec 2016 ( question 4)
a, For the sale of the goods ( equipment), the time to calculate VAT is the time of transfer
the ownership of the goods. It means that 2 April 2015 is required to issue an invoice and
calculate VAT
b, For the invoices which have a value of less than VND 200000, the enterprises would be
required to issue invoices when the customers request invoice.
- for the invoices which have value of more than VND 200000:
- for petroleum: the enterprises would not be required issue invoice if the customers do
not need. However, at the end of each day, the companies would issue an invoice for total
amount sold with a value of excess of VND 200000
- for other items sold by the convenience stores, issuing the invoices for each sale is
compulsory even if the customer do not need.
c. for the service, the time to issue invoice and calculate VAT is the sooner between the time
when the companies received the advance payment from customer or the time when the
companies completed services partially or fully. In this case, 15 June 2015 is the day to issue
invoices.
VAT lia= (5m+6m*10/30*1/110%)*10%=0.68m
Question 4 (Dec 2015 ) ( hang tieu dung noi bo)
- For the water used for meetings, SCG Co is neither required to issued VAT invoices nor to
declare this output VAT
- For the water used on the vacation trip , SCG Co is required to issue Vat invoices as for
normal sales.