Tài liệu thi môn F6 ACCA Việt Nam cho kỳ thi 2011

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F6. Vietnam Taxation Question s bank June 2011 Intake F6. Vietnam Taxation 2011 2 PART 1 CORPORATE INCOME TAX Q1. Explain the following terms using your own words • Permanent Establishment (5m) PE is a production or business establishment through which a foreign company perform all or part of its business activities in Vietnam and having taxable revenue there from. (2m) For example, a PE may be: branch, operational office, construction site, workshop, plant, mines etc. (2m) In addition, a foreign company may also be viewed/considered/regarded as having a PE in Vietnam if it has agent or representative in Vietnam with the authority to conclude or sign contract on its behalf or regularly deliver goods or render services in Vietnam. (1) • Taxable income (thu nhap chiu thue) and assessable income (thu nhap tinh thue) (2m) Taxable income is determined as revenue from production/trading or rendering of services less deductible expenses plus other income. Assessable income equals to taxable income less exempt income less tax loss carried forward. Q2. A tax payer said that “The tax period is always based on calendar years”. Provide a brief explanation if you do not agree with his/her statement (5m). The statement of tax payer may be not always correct for the following reasons: +In the case, the company chooses its tax period to its financial year which is different with calendar year and it was accepted by the tax department (e.g. it apply the fiscal year from 1 July to 30 June instead of 1 January to 31 December). F6. Vietnam Taxation 2011 3 Q3. A foreign company received income from providing construction supervision services to your company (established in Vietnam). The general director of the foreign company told you that the service fees will not be subject to Vietnam CIT as his company is incorporated outside of Vietnam. Explain whether you agree or disagree with his view (4 marks). The general director’s view is not correct. Under/According to/In accordance with/Pursuant to the prevailing CIT regulations, a foreign company having income from doing business in Vietnam is subject to CIT liability. Notwithstanding the above, if there is a DTA (Double Taxation Agreement) between Vietnam and foreign country where the foreign company is located, the foreign company may be not subject to CIT liability should it has no PE in Vietnam. Nevertheless, if there is no DTA, the foreign company shall be subject to CIT liability. Q4. A joint stock company commenced it business on 1 July 2008. Its fiscal year is from 1 January to 31 December. Details of the company income and expenses are as follows: Net profit before tax as per their accounts: • From 1 July 2008 to 31 December 2008: VND245,500,000 • From 1 January 2009 to 31 December 2009: VND786,900,000 The following expenses may not be allowed for deduction: 2008 2009 Expenses that are not supported with proper invoices 12,670,000 18,870,000 Depreciation expenditure in excess of the stipulated level 34,560,000 35,785,000 Non-deductible unrealized foreign exchange loss from assets balances 7,600,000 32,650,000 In 2009, the company identified a turnover of VND54,600,000 that the accountant did not account for in the tax return of 2008. The relevant expenses in respect of this turnover are VND37,900,000 (assume that these expenses are fully deductible and was also not accounted last year). F6. Vietnam Taxation 2011 4 Calculate assessable income for each relevant period. Calculation of CIT of XYZ Co. For year 2008, 2009 Unit: VND 2008 2009 A Net profit before tax per accounts 245,500 7 86,900 B Less: 1 Expenses of the added back turnover - 37,900 37,900 245,500 7 49,000 C Add: 1 Turnover that was not taxed last year 54,600 2 Expenses not supported with proper invoices 12,670 18,870 3 Exceed depreciation expenditure 34,560 35,785 4 Non-deductible unrealized foreign exchange loss 7,600 54,830 32,650 141,905 D Taxable income 300,330 890,905 E Assessable income (Assuming no exempt income, no losses carried forward, and no science and technology fund allocation) 300,330 890,905 Q5. For the purposes of determining turnover for CIT, state the point in time when turnover is derived in respect of: • goods; and • services: For the sales of goods, taxable point of time is when the ownership and risk in association with the goods is transferred from the buyer to seller. For the provision of services, taxable point of time shall be upon the completion of services or issuance of invoice, whichever comes earlier, regardless of the payment has been made or not. F6. Vietnam Taxation 2011 5 The company delivered goods to its customer in the tax period. However, at the end of tax period the company has not yet received the goods acceptance note from its customer as agreed in the sale contract so that it can issue the invoice. Explain the tax treatment on this turnover. Although it is not clearly as to the ownership and risk associated with the goods was transferred from the seller to the buyer (given the seller not yet received the goods acceptance note), considering the company had delivered goods to its customers in the tax period, it is likely that the ownership and risk had been transferred and hence, it is qualified to recognize the revenue in the tax period. In accordance with the CIT regulations, the fact that the invoice is not issued will not impact to the recognition of revenue. Q6. Explain on how turnover is determined where the business establishment is: • a VAT deduction method tax payer; and • a VAT direct method tax payer. Q7. For sales of goods on installment basis, explain the treatment on determining the turnover and income for CIT purposes in respect of: • The installment amount excluding interest on installment; and • Interest on installment. Q8. Using your own words, explain the CIT treatment in respect of income received from overseas investment and the associated tax paid in the foreign country. + + Deduct / Credit Creditable input VAT F6. Vietnam Taxation 2011 6 Q9. Details of income of the Brick Co. during tax period 200X as follows: Turnover from production and trading of goods 500,000,000 Deductible expenses in relation to generating the above turnover 350,000,000 Interest on bank deposit 45,000,000 Unrealized foreign exchange gain (assets balance) 12,700,000 Fee on the right to use the compan y’s patent 20,000,000 After-tax dividend received from the long-term securities investment (in a domestic company) (exempt) 46,500,000 Net income received from overseas investment project 300,000,000 Foreign tax paid on the overseas income 75,000,000 Opening balance of the provision for inventory devaluation. There is no movement of this provision account during the fiscal year. 57,000,000 Level of the provision for inventory devaluation as determined in accordance with the Ministry of Finance guidance at the year-end 38,500,000 Calculate the assessable income. Brick Co’s applicable CIT rate is 25%. Show your workings where necessary and give explanation on each item that is not included on your calculation of taxable income. BrickCo. Ltd Calculation of CIT FY200x VND VND Turnover from production and trading of goods 500,000,000 Less: deductible expenses 350,000,000 Gross Income 150,000,000 Add: other income Interest on bank deposit 45,000,000 Unrealized foreign exchange gain (assets balance – Note 1) - Fee on the right to use the company patent 20,000,000 After-tax dividend received from the long-term securities investment (in a domestic company) – Note 2 - Income received from oversea investment (=300,000,000+75,000,000) 375,000,000 F6. Vietnam Taxation 2011 7 Reversion of the provision for reduction on inventory price (57,000,000-38,500,000) 18,500,000 458,500,00 Taxable income 608,500,000 Assessable income (Assuming no losses carried forward, and no science and technology fund allocation) 608,500,000 Tax payable @ 25% 152,125,000 Less: Tax paid overseas (Note 3) 75,000,000 Remaining tax payable 77,125,000 Note: 1. In accordance with Circular 177, unrealized foreign exchange gain from the revaluation of assets balances denoted in foreign currency is not taxable for CIT purpose. 2. In accordance with Circular 130, after tax dividend is exempt for CIT purpose. 3. CIT in accordance with Vietnamese regulation = VND375,000,000*25% = VND93,750,000, higher than the tax paid overseas. Therefore, tax credit is VND75,000,000 only. F6. Vietnam Taxation 2011 8 Q10. Presented below is the draft profit and loss account of Woods Co. Ltd for financial year ended 31 December 2009. The company principal activity is production and trading of confectionary. Woods Ltd is a VAT deduction method tax payer. Note VND million Net sales 1 3,400 Less Cost of sales 2 2,120 Gross profit 1,280 Add: Financial income 3 120 Less: Financial expenses 4 80 Less: Selling expenses 5 290 Administrative expenses 6 340 Net profit from operation 690 Add: Other income 7 270 Less: Other expenses 20 Net profit before tax 940 Notes: (1) Excluding VAT and after deduction of the cash discount of VND75,000,000, which is not supported by proper invoice/voucher. There is a sale turnover of VND24,000,000 exclusive of VAT that is recognized this year (the associated expenses is VND20,000,000), but was already included in the taxable income last year. (2) Including an excess of VND70,000,000 of depreciation expense of an machinery over the stipulated level. (3) Including an unrealized foreign exchange gain of VND36,000,000 on the year-end revaluation of receivables and payables. (4) Including an interest income on deposit of VND15,000,000 that is wrongly accounted to financial expenses. (5) Including: - The amount advertising/promotion/marketing expenses, totaling VND 37,000,0000 which is the excess over the stipulated 10% limit. - A bad debt written-off of VND10,000,000 not in accordance with the prevailing regulations - Additional provision of doubtful debt of VND38,000,000 not in accordance with the prevailing regulations (6) There is a donation to an event raising fund to protect the environment using the company products. The company accounted this as an administration expense item at the production F6. Vietnam Taxation 2011 9 price of VND20,000,000. If these goods are priced at market price the amount will be VND22,000,000. (7) Including the after-tax income earning from contribution of capital to a domestic joint venture company of VND40,000,000. This also includes a net income from the assignment of the land use rights of VND200,000,000. Deductible expenses in respect of the assignment of land use right is VND800 million. Wood Co. Ltd Calculation of CIT FY2009 VND VND Net profit before tax 940 Adjustments Cash discount of VND75,000,000, which is not supported by proper invoice/voucher (Note 1) 75 Taxable revenue already included in the taxable income last year. (Note 2) (24) depreciation expense of an machinery over the stipulated level. 70 Unrealized foreign exchange gain (36) Including an interest income on deposit of VND15,000,000 that is wrongly accounted to financial expenses (=15*2=30mil) 30 A&P exceeding cap 37 bad debt written-off of VND10,000,000 not in accordance with the prevailing regulations 10 Additional provision of doubtful debt of VND38,000,000 not in accordance with the prevailing regulations 38 There is a donation to an event raising fund to protect the environment using the company products 22 Including the after-tax income earning from contribution of capital to a domestic joint venture company of VND40,000,000. (40) 182 Total assessable income 1,122 Total assessable income excluding transfer of land use right 922 CIT liability (25% *922) (excluding transfer of land) 230.5 Assessable income from the transfer of land 200 CIT liability from the transfer of land 50 F6. Vietnam Taxation 2011 10 Total CIT liability 280.5 Notes: 1. Cash discount not properly supported by … is not deductible. 2. Required: Compute Woods Ltd tax payable for 2009 tax year. The company applicable tax rate is 25%. Q11. Describe the principles to determine non-deductible expenses for CIT purposes. Q12. Explain when expenses are deductible? Provide some examples together with your answer. [...]... separate value of each activity, explain the tax implications of this case Q10 GB Holdings Plc (GBP), a company incorporated in UK, established a 100% owned manufacturing subsidiary in Vietnam under the Law on Foreign Investment, GB Vietnam Limited 17 F6 Vietnam Taxation 2011 (GBV) GBP has obtained a credit facility with a bank in UK, and re-lended this amount to GBV under a loan contract signed between GBP... years Best Design performed their obligations under the contract both in Vietnam and outside of Vietnam Details of its billing at 30 August 2006 to FVL for the period from 1 April 2005 to 30 August 2006 as follows: 18 F6 Vietnam Taxation 2011 Geological survey performed in Vietnam Designing works performed entirely outside of Vietnam Project management services for the period from 1 March 2006 to 30 August... of this income category? 20 F6 Vietnam Taxation 2011 PART 5 PAST YEAR QUESTIONS 1 JUNE 2007 Exchange rate: Euro 1 = VND20,000 USD1 = VND16,000 AUD1 = VND11,000 Section A – BOTH questions are compulsory and MUST be attempted 1 (a) Identify THREE types of business establishment or activities carried on in Vietnam which are not liable to pay corporate income tax (CIT) in Vietnam (3 marks) (b) Gios Vietnam... possibility of input/output offset 15 F6 Vietnam Taxation 2011 PART 3 FOREIGN CONTRACTOR WITHOLDING TAX Q1 State who is responsible for registering, declaring and paying of tax under a contract signed between foreign contractors with Vietnamese parties, where: (a) Foreign contractors adopting Vietnamese Accounting System; or (b) Foreign contractors not adopting Vietnamese Accounting System (3marks) Q2... one-off payment on 30 June 2006 s responsible for any Vietnam withholding tax arising from the loan contract The loan was registered with the State Bank of Vietnam GBP also granted to GBV the rights to use the brand name of one of its product The contract signed between GBP and GBV on this was registered with the Vietnam relevant authorities in Vietnam First royalty payment of USD225,000 was made by GBV... application fee – USD280 – Excess luggage – USD50 – Immunisations/vaccinations – USD600 22 F6 Vietnam Taxation 2011 While present in Vietnam, Ms Tran noticed that a lot of people were making a lot of money on the stock market in Vietnam On 20 January 2007 she transferred her life savings of USD250,000 into a Vietnam bank’s custodial account and invested heavily in the stock market She was extremely successful... principles (conditions) which must be satisfied to obtain a depreciation 29 F6 Vietnam Taxation 2011 deduction for the purposes of corporate income tax (CIT) in respect of a tangible fixed asset owned by a company (6 marks) (b) List the four categories of fixed asset that may not be depreciated (4 marks) 30 F6 Vietnam Taxation 2011 3 JUNE 2008 Exchange rate: Euro 1 = VND25,000 USD1 = VND16,000 AUD1 =... administrative procedures that must be completed in order for this basis to apply (4 marks) 31 F6 Vietnam Taxation 2011 (c) The scope of corporate income tax includes overseas companies conducting business activities through a resident establishment in Vietnam (i) Define the term ‘resident establishment’ (2 marks) (ii) State when a representative in Vietnam of an overseas company will constitute a resident... Nguyen Ltd (Nguyen) is an enterprise established under the Law on Enterprise in Vietnam It provides janitorial (cleaning) services to State owned enterprises, enterprises under the Enterprise Law, enterprises 33 F6 Vietnam Taxation 2011 under the Law on Foreign Investment in Vietnam and also to companies outside of Vietnam Nguyen currently has a value added tax (VAT) code and uses the tax credit method... limits that apply (10 marks) 34 F6 Vietnam Taxation 2011 4 DECEMBER 2008 Exchange rate: Euro 1 = VND25,000 USD1 = VND16,000 AUD1 = VND15,000 1 Mr Garth Brooks is the general director of Mekong Delta Finance Management (Vietnam) Company Limited (MDFMV), which is a licensed Vietnamese company It provides financial management services to businesses licensed both in Vietnam and in the Cayman Islands Garth . F6. Vietnam Taxation Question s bank June 2011 Intake F6. Vietnam Taxation 2011 2 PART 1 CORPORATE INCOME TAX Q1 in Vietnam under the Law on Foreign Investment, GB Vietnam Limited F6. Vietnam Taxation 2011 18 (GBV). GBP has obtained a credit facility with a bank in UK, and re-lended this amount. a Vietnamese company. FMP did not obtain VAT invoice from this company because the company said that it was going to charge addition 10% for such invoice. F6. Vietnam Taxation 2011