Paper F6 (VNM)
Fundamentals Level – Skills Module
Taxation
(Vietnam)
Specimen questions for June 2015
Time allowed: 2 hours
This is not a full specimen paper, it is a selection of
specimen questions to give an indication of the style of the
This paper is divided into two sections:
questions. It includes three multiple choice questions and
one long
Section A –question.
ALL 45 questions are compulsory and MUST be
attempted
The fullBexam
Section – ALL will
FIVE consist
questionsofare
the following:
compulsory and MUST be
Section A –attempted
15 multiple choice questions for 2 marks each
Section B – Four 10 mark questions and two 15 mark
Do NOT open this paper until instructed by the supervisor.
questions
Youquestions
All must NOT write in your answer booklet until instructed by the
are compulsory.
supervisor.
To see
This an example
question of the
paper must notfull specimen
be removed exam,
from please refer
the examination to
hall.
the F6 (UK) Specimen Paper.
The Association of Chartered Certified Accountants
The Ministry of Finance of the Socialist Republic of Vietnam
SUPPLEMENTARY INSTRUCTIONS
1. Calculations and workings need only be made to the nearest VND, unless instructed otherwise.
2. All apportionments should be made to the nearest month.
3. All workings should be shown when answering Section B.
TAX RATES AND ALLOWANCES
The following tax rates and allowances are to be used in answering the questions
Value added tax (VAT)
Standard rate 10%
Reduced rate 5%
Corporate income tax (CIT)
Standard rate for enterprises 22%
Foreign contractor tax (FCT)
Value added rates as a percentage (%) of taxable turnover: %
1. Services (except oil drilling), leasing of machinery and equipment, and insurance. 50.1
2. Oil drilling services. 70.1
3. (a) Construction and assembly and installation where the tender includes
the supply of materials, machinery and equipment in the construction work. 30.1
(b) Construction and assembly and installation where the tender does not
include the supply of materials, machinery and equipment in the construction
work. 50.1
4. Transportation and other business and production. 30.1
Corporate income tax rates as a percentage (%) of taxable turnover: %
1. Trading: distribution and supply of goods, raw materials, supplies, machinery
and equipment associated with services in Vietnam (including the supply of
goods in the form of on-the-spot export (except processing goods for foreign
organisations and individuals); supply of goods under DDP, DAT, DAP terms
of Incoterms). 1
2. Services, leasing of machinery and equipment and insurance. 5
3. Management services of restaurants, hotels and casinos. 10
4. Leasing of aircraft, aircraft engines, aircraft spare parts and sea going vessels. 2
5. Construction and installation regardless of whether the tender includes or does not
include the supply of materials, machinery and equipment in the construction work. 2
6. Other production or business activities and transportation (including sea and
air transportation). 2
7. Assignments [transfer] of securities, reinsurance and commissions from reinsurance. 0·1
8. Derivatives. 2
9. Loan interest. 5
10. Income from royalties. 10
2
Personal income tax (PIT)
Regular income tax rates for Vietnamese citizens and other residents in Vietnam
Portion of monthly Tax rate
assessable income %
(VND million)
Up to 5 5
Over 5 to 10 10
Over 10 to 18 15
Over 18 to 32 20
Over 32 to 52 25
Over 52 to 80 30
Over 80 35
Net to gross calculator
N < 4,750,000 G = N/0·95
4,750,000 < N < 9,250,000 G = (N – 250,000)/0·9
9,250,000 < N < 16,050,000 G = (N – 750,000)/0·85
16,050,000 < N < 27,250,000 G = (N – 1,650,000)/0·8
27,250,000 < N < 42,250,000 G = (N – 3,250,000)/0·75
42,250,000 < N < 61,850,000 G = (N – 5,850,000)/0·7
N > 61,850,000 G = (N – 9,850,000)/0·65
Gross basis % Tax
G < 5,000,000 5 T= 0·05G
5,000,000 < G < 10,000,000 10 T= 0·1G – 250,000
10,000,000 < G < 18,000,000 15 T= 0·15G – 750,000
18,000,000 < G < 32,000,000 20 T= 0·2G – 1,650,000
32,000,000 < G < 52,000,000 25 T= 0·25G – 3,250,000
52,000,000 < G < 80,000,000 30 T= 0·3G – 5,850,000
G > 80,000,000 35 T= 0·35G – 9,850,000
Notes:
G: Gross income N: Net income T: Income tax
Non-resident tax rate on employment income: 20% on Vietnam sourced income
PIT rates on other income
Resident Non-resident
Investment income 5% 5%
Capital transfers 0·1% of selling price, or 0·1% of selling price
20% on taxable gain
Transfers of property 2% of selling price, or 2% of selling price
25% on taxable gain
Royalties/Franchises 5% of the income in 5% of the income in
excess of VND 10 million excess of VND 10 million
Prizes/Inheritances 10% of the income in 10% of the income in
excess of VND 10 million excess of VND 10 million
3 [P.T.O.
Personal deductions (per month)
From 1 July 2013
Self VND 9,000,000
Dependant VND 3,600,000
Social insurance, health insurance and unemployment insurance
Rates for the year 2014
Social insurance (SI) 8%
Health insurance (HI) 1·5%
Unemployment insurance (UI) 1%
Base salary (per month) for the year 2014
The base salary for social insurance, health insurance and unemployment insurance is
VND 23,000,000 per month
Rates of exchange
The following rates of exchange are to be used in answering all questions in this paper (unless
otherwise stated):
USD 1 = VND 21,500
4
Section A – ALL 15 questions are compulsory and MUST be attempted
Note: Only three specimen questions provided. For full specimen exam, see F6 (UK) Specimen paper
Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiple
choice question. Do not write out the answers to the MCQs on the lined pages of the answer booklet.
Each question is worth 2 marks.
1 GVC Co is a property development company. In 2014, GVC Co provided some villas to some key employees of the
company free of charge in exchange for commitment of five years of services. The market value of these villas
amounted to VND150,000 million, but this amount was not included in the sales revenue in the audited financial
statements. The construction costs of these villas, amounting to VND100,000 million, were included in the costs of
sales in the audited financial statements.
What amount (in VND million) of adjustments to revenue and costs of sales should the company make in its tax
return for the year ended 31 December 2014 in respect of the above transaction?
With regard to taxable revenue With regard to costs of sales
A Add back 150,000 Deduct 100,000
B Add back 150,000 No adjustment
C No adjustment Deduct 100,000
D No adjustment No adjustment
2 Ms Ngoc Huong was the chief accountant of SBC JSC, with contractual gross-of-tax salary of VND48 million per
month. Ngoc Huong decided to terminate her employment on 31 October 2014. Upon termination, she received
VND15 million from SBC. The payment is the residual amount of her 13th month salary (pro-rata to the months of
service in the year), after SBC JSC withheld provisional personal income tax and deducted the costs for the company’s
laptop which Ngoc Huong wanted to keep for her personal use after the termination.
What would be amount of Ms Ngoc Huong’s taxable bonus in 2014?
A VND0 million
B VND15 million
C VND40 million
D VND48 million
3 Which of the following items reflect the changes in the tax administration regulations applicable from 1 July
2013?
(1) The statute of limitation for tax collection in cases where the tax authorities have identified tax evasion by the tax
payer was limited to ten years
(2) The penalty for late tax payment increases from 0·05% to 0·07% per day for ANY late payment
(3) The penalty for tax under-declaration increases from 10% to 20% of the tax under-declared
A 1 and 2 only
B 2 and 3 only
C 1 and 3 only
D 1, 2 and 3
5 [P.T.O.
Section B – ALL SIX questions are compulsory and MUST be attempted
Note: Only one specimen question provided. For full specimen exam, see F6 (UK) Specimen paper
Please write your answers to all parts of these questions on the lined pages within the Candidate Answer Booklet.
1 Minh Tam JSC (Minh Tam) is a large Vietnamese joint stock company, which was established in January 2010.
Minh Tam trades in industry-specific equipment and also leases this equipment (under operating lease agreements)
and provides services in relation to this equipment. In addition to these main activities, the company also has some
investments in securities and real estate.
The unaudited income statement of Minh Tam for the year ended 31 December 2014 is as extracted below:
Items Notes Amount (VND million)
Sales revenue 1 290,000
Sales reduction 2 (4,000)
––––––––
Net sales 286,000
Cost of sales 3 (168,000)
Administration expenses 4 (28,000)
Selling expenses (47,000)
––––––––
Operating profits 43,000
Other income 5 20,000
Other expenses 6 (8,000)
––––––––
Profit before tax 55,000
––––––––
Notes:
1. On 1 July 2014, Minh Tam leased an item of equipment for three years for a rental of VND500 million per
month. According to the lease agreement, the rental will be reduced by 10% if the customers paid the full three
years rental in advance. In July 2014, the customers paid the rental in full to enjoy the discount, for which Minh
Tam properly issued invoices. In the unaudited income statement, Minh Tam has accounted for the six months
lease revenue, and recorded costs relating to this lease of VND300 million per month. It also has evidence that
this cost will remain stable for the whole of the lease term. Minh Tam has selected to declare tax for the whole
of the lease rental received in advance in 2014.
2. In accordance with Minh Tam’s sales discount policy, those customers who purchase more than ten items of
equipment are given a cash discount of VND50 million. This cash discount is not deducted from the invoiced
amount, but recorded as a sale reduction in the company’s books. During the year 2014, these cash discounts
were given to 12 customers.
3. In addition to the costs of the lease mentioned (as referred to in note 1 above), the following items in cost of
sales are relevant:
– Minh Tam purchased various tools and instruments for assembling and handling parts of the equipment.
These tools and instruments did not qualify as depreciable fixed assets under Vietnamese accounting
standards. In 2014, these purchases amounted to VND3,300 million (inclusive of VAT at 10%). Minh Tam
has expensed all of these purchase costs in the income statement, but for tax declaration purposes wants
to amortise the tools and instruments in accordance with current regulations.
– The salaries for the board of directors comprise VND7,000 million paid to members who are directly involved
in the management of the company’s operations, and VND2,000 million to members who were not involved
in that management.
– An accrual has been made for occasional bonuses for Lunar New Year Holiday of VND5,500 million. These
bonuses were not provided for in either the Collective Labour Contract or any other documents, except for a
statement in the Labour Handbook stating that ‘the management will consider paying bonuses depending
on the business operations results’. There is no evidence that the bonus payments will be made before the
tax declaration deadline.
6
4. Administration expenses include:
– Per diems paid to employees in cash during business trips (local and overseas) of VND7,000 million. The
amount of the per diems calculated based on the Ministry of Finance’s guidance for Government officials on
identical business trips is VND2,000 million.
– Uniform allowances in cash and in kind made to all employees on 31 December 2014 of
VND3,500 million. On 31 December 2014, Minh Tam had 400 employees.
5. Other income includes interest of VND8,000 million from Government tax-exempt bonds and profits of
VND6,000 million from selling these bonds after receiving the interest. The bonds were purchased for
VND100,000 million and sold for VND106,000 million.
6. Other expenses consist of:
VND million
Self-assessed penalty for late payment of CIT in previous years 500
Self-assessed additional CIT liabilities from previous years
which were discovered during 2014 2,000
Penalty for violation of economic contracts 5,500
––––––
8,000
––––––
Additional information:
1. Proper supporting vouchers/invoices are available for all items unless otherwise stated.
2. Minh Tam’s promotion and advertisement expenses in 2014 do not exceed the regulatory cap.
3. All amounts not described in notes 1 to 6 are taxable/deductible in accordance with the current tax regulations.
4. Minh Tam pays corporate income tax at the standard tax rate of 22%.
Required:
Compute Minh Tam JSC’s corporate income tax liability for the year ended 31 December 2014.
Notes:
1. You should commence your computation with the accounting profit before tax, and list all of the individual
adjustment items specifically referred to in notes 1 to 6, indicating with ‘0’ those items for which no
adjustment is required.
2. You should make all calculations to the nearest VND million.
3. All the amounts above are exclusive of value added tax (VAT), except when specifically stated otherwise.
(15 marks)
End of Question Paper
7
Answers
Fundamentals Level – Skills Module, Paper F6 (VNM) Specimen Answers
Taxation (Vietnam) and Marking Scheme
Section A
1 B The villas in exchange for services should be treated as sales at market price. No adjustment is required for
costs of the villa since these were included in costs of sales.
2 C 48 * 10/12
3 C 2 is not correct because the penalty rate of 0·07% per day is only applicable to late payment in excess of 90 days.
9
Section B Marks
1 Minh Tam JSC
Corporate income tax liability for the year ended 31 December 2014
VND million
Profit before tax 55,000
Adjustments:
– Add: Lease rental received in advance (W1) 4,500 3
– Add: Non-deductible cash discount (12 * 50) 600 1
– Add: Tools and instruments amortisation (W2) 1,500 2
– Salary of board members who were involved in management of operations 0 0·5
– Add: Salary of board members who were not involved in management of operations 2,000 0·5
– Add: Occasional bonus not stated in documents 5,500 1
– Add: Disallowed per diem expenses (7,000 – 2,000 * 2) 3,000 1·5
– Add: Uniform allowance in excess of cap (3,500 – 400 employees * 5) 1,500 1·5
– Deduct: Interest income from tax exempt bonds (8,000) 1
– Profits from selling bonds 0 1
– Add: Late payment penalty for CIT 500 0·5
– Add: Additional CIT liabilities 2,000 0·5
– Penalty for violation of contracts 0 0·5
–––––––
Taxable income 68,100
–––––––
Tax at 22% 14,982 0·5
––––––– –––
15
–––
Workings:
(W1) Lease rental received in advance
Amount
(VND million)
Monthly profit from the lease (500 * 90% – 300) 150 1
Total taxable income to be recognised in 2014 150 * 36 months 5,400 1
Recognised in the income statement 150 * 6 months (July–December) 900 0·5
Amount to be added back in the tax calculation (5,400 – 900) 4,500 0·5
–––
3
–––
(W2) Tools and instruments
Amount
(VND million)
Expenses in the income statement (amount net of VAT) (3,300/1·1) 3,000 1
Deductible amortisation for tax (over 2 years only,
according to Circular 78/2014) (3,300/1·1/2 years) 1,500 0·5
Amount to be added back in 2014 (3,000 – 1,500) 1,500 0·5
–––
2
–––
10
