F6-TAXATI0N-2020 EXAM

PERSONAL INCOME TAX (PIT)

1. Mr Quang Phan, a 35-year-old Vietnamese tax resident, works for Hash Vina, a foreign invested
company in Vietnam.

He was relocated back to Vietnam on 1 January 2018 after a three-year secondment to Hash
Australia, a sister company of Hash Vina. In 2018, Mr Quang received VND200 million monthly gross
salary plus a performance bonus equivalent to VND360 million for his work in Australia. During 2018
Hash Vina also paid for two return airfare tickets costing VND46 million in total for Mr Quang to visit
his 35-year-old wife and 16-year-old son who live in Australia.

Base salary (per month) for social insurance, health insurance and unemployment insurance, etc for
the year 2018: VND 27,800,000

What is Mr Quang Phan’s annual personal income tax (PIT) liability (in VND millions – to be
rounded only in the final PIT calculations) in the year 2018?

A. VND799 million
B. VND673 million
C. VND803 million
D. VND791 million

2. Mr. David is assigned to work in Vietnam. Mr. David is treated as Vietnamese tax resident which
cases?
(1) Staying in Vietnam for 183 days or more
(2) Staying in Vietnam for less than 183 days but having a house rental contract with term of more
than 183 days and Mr. A is unable to prove that he is a tax resident of another country
(3) Staying in Vietnam for 183 days or more but not having a regular accommodation in Vietnam
(4) Staying in Vietnam for less than 183 days and not having a regular accommodation in Vietnam
(5) Staying in Vietnam for 183 days or more and he is a tax resident of another country.

A. Only (1)
B. (1) and (2)
C. (1), (2) and (3)
D. (1), (2), (3) and (4)
E. (1), (2), (3) and (5)

3. Which of the following statements are correct?

(1) Tax resident is taxed on worldwide income, irrespective of where the income is paid and
received;
(2) Tax non-resident is taxed on Vietnam-sourced income only, irrespective of where the income is
paid and received.
(3) Both tax resident and non-resident are taxed on worldwide income, irrespective of where the
income is paid and received.
(4) Both tax resident and non-resident are taxed on Vietnam-sourced income only, irrespective of
where the income is paid and received.
(5) For PIT on salary and wage, tax resident is subject to progressive tax rates and tax non-resident
is subject to flat tax rate
A. Only (1)
B. (1) and (2)
C. (1), (2) and (3)

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 D. (1), (2) and (4)
E. (1), (2), and (5)

4. Which of the following are conditions for an individual to be considered as a tax resident in Vietnam?

(1) The individual physically stays in Vietnam for a total of 183 days or more in a calendar year
(2) The individual physically stays in Vietnam for a total of 183 days or mare in a consecutive 12-
month period from the first day of physical presence in Vietnam
(3) The individual physically stays in Vietnam for a total of 183 days or more in 2 calendar years
(4) The individual only stays in Vietnam for a few months in a calendar year, but his father-in-law
has a place of residence in Vietnam
(5) The individual only stays in Vietnam for a few months in a calendar year, but he has a rented
house(s) to stay in Vietnam with a term of 2 years

A. 1 and 3 and 4
B. 1 and 4 and 5
C. 1 and 2 and 5
D. 2 and 4

5. Mr. Nam is a Vietnamese tax resident. In 2017, he directly adopted the following persons:
(1) His son, 15 years old, a student of a high school in Ho Chi Minh City
(2) His first daughter, 19 years old, a student of Finance University. She worked part-time and
earned VND1,000,000 per month in the year.
(3) His second daughter, 21 years old, a student of Economics University. She worked part-time
and earned VND2,500,000 per month in the year.
(4) His wife, 45 years old. She can work well but she is staying at home to do housework only.
(5) His niece, 22 years old. She is disable but still can work and earn VND1 million/month

In which case Mr Nam can claim tax deductions?

A. Only (1)
B. (1) and (2)
C. (1), (2) and (3)
D. (1), (2) and (4)
E. (1), (2), and (5)

6. Which of the following benefits that are provided by employer to employees being exempted from
PIT?

(1) Certain allowances and subsidies such as allowances which are paid in accordance with
Labour Code and Law on Social Insurance (termination allowance, maternity allowance,
unemployment allowance, overtime allowance, etc)
(2) Toxic/regional allowances under the limit set out by competent authorities, ect
(3) Car allowance in cash
(4) Relocation allowance for the actual expenses incurred for relocation to another count after
assignment in Vietnam with full invoices and supporting documents
(5) Business related expenses which are provided on a deemed basis such as stationary
business trip expenses, telephone, uniforms
(6) Training expenses paid directly to the service providers to improve skills and knowledge
necessary for the works

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 A. 1 and 2 and 3 and 4
B. 1 and 2 and 5 and 6
C. 3 and 4 and 5 and 6
D. 1 and 2 and 4 and 6

7. Michael, an US national, has decided to go to an international assignment to Vietnam, to manage a

subsidiary of his current employer in the US. Because his family is still living in the US, Michael
cannot stay in Vietnam permanently to monitor his company, he traveled back and forth an stayed in
Vietnam for a total of only 135 days in the tax year 2016. Because it is much more expensive to stay
in the 5-star hotels for each of his trips to Vietnam, Michael decided to rent a serviced apartment on a
full-time basis for an initial fee of 3 years.

Which of the following is correct for Michael’s case?

A. Michael is a non-tax resident in Vietnam

B. Michael subject to PIT in Vietnam on income portion relating to his working in VN only
C. Michael subject to PIT in Vietnam on income portion relating to his working in US only
D. Michael subject to PIT in Vietnam on world-wide income

8. Which of the following items of income would NOT be subject to personal income tax in
Vietnam?

(1) Medical support for fatal disease from the employer to the parent-in-law of an employee
(2) One time round trip home leave air fares for the family of an expatriate employee
(3) Kindergarten tuition fees for the children of a Vietnamese employee working abroad
(4) Voucher issued by the employer to an employee for lunches in the canteen operated by the
employer

A 1, 2 and 3
B 2, 3 and 4
C 1, 2 and 4
D 1, 3, and 4

9. Which of the following income items are exempt from PIT?

A. One-off relocation allowance paid to expatriates on assignment to Vietnam
B. Bus rental for all staff to go from home to office and vice versa
C. Both A and B are correct
D. Both A and B are incorrect

10. Which of the following conditions is an individual determined as a tax resident of Vietnam?
A. Presenting in Vietnam for 183 days or more within a calendar year
B. Presenting in Vietnam for 183 days or more within 12 consecutive months from the date of first
arrival in Vietnam
C. Having a rented house with cumulative period of 183 days or more within a tax year and is
certified as a tax resident of another country
D. A&C are correct
E. A&B are correct
F. All are correct

11. How to determine a tax year of a Vietnamese tax resident?

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 A. Tax payer self determines and registers with tax authority within 10 days from arrival in Vietnam,
that will be fixed after that
B. Based on full calendar year
C. Based on 12 consecutive months from the first date of arrival in Vietnam
D. A&B are correct
E. B&C are correct

12. How could taxable housing benefit be calculated?

A. The actual apartment rental payments
B. The lower between 15% of total taxable gross income (excluding housing benefit) and actual
housing benefit
C. The lower between 15% of total taxable gross income (including housing benefit) and actual
housing benefit
D. 15% of total taxable gross income

13. On 1 April 2017, Mr. Dung, a Vietnamese national, starts employment with a new employer, AWZ
Co., Ltd. AWZ has a policy whereby both the employer and the employee contribute to a voluntary
pension fund approved by the Government. The monthly contributions for the employer and the
employee, respectively, are VND4.5 million and VND2 million.

What is the amount of the deduction Mr. Dung can claim against his taxable income for the above
contributions in 2017?
A. VND9 million
B. VND78 million
C. VND24 million
D. VND18 million

14. Which of the following can be considered as deduction for PIT purposes?
A. Voluntary insurance, including social, health and unemployment insurance
B. Family relief of VND3.6 million/month for tax payer’s parents beyond working age having income
more than VND1 million/month
C. Contributions to charity set up by the individual’s himself
D. Contributions to charity, donation or humanitarian organisations set up or recognized by the
government

15. David first arrived in Vietnam on 10 January 2016 and subsequently visited Vietnam many times, so
David registered for a regular place of residence as stated in his residence card. In his first tax year,
he stayed in Vietnam for 95 days for the period from 10 January 2016 to 9 January 2017.

Please identify David’s residency status

A. Non-resident
B. Resident
C. Cannot identify
D. If he has a rented house over 183 days, he will be considered as tax-resident

16. Mr. Peter is a foreigner who first comes to Vietnam on 20 April 2015. In 2015 up to 31 December, Mr.
Peter has stated in Vietnam for 130 days. In 2016 up to 19April, Peter has stayed in Vietnam for 50
days. For the remaining period in 2016, he stayed in Vietnam 50 days in total.

Please identify his residency status in 2 relevant years

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 First year Second year
A. Resident Resident
B. Resident Non-resident
C. Non-resident Resident
D. Non-resident Non-resident

17. The wages of Mr. An on an ordinary working day is VND80,000/hour. When working overtime on a
working day, he is paid 150% of the normal working hours and additional 30% on each hour after
9:00PM

Please calculate the tax-free income for each hour working after 9:00PM

A. 40,000 VND/hour
B. 64,000 VND/hour
C. 24,000 VND/hour
D. 80,000 VND/hour

18. Mr Johnson is General Director of Tea Company. During the year, he is provided a company car of
which rented cost coke has to pay is USD 2,500 per month. The company has a policy of employees
only using their company car for business purposes, however Mr Johnson’s wife used the car 90% for
private purposes and Coke never kept any records substantiating the 10% business use of the car.

If this situation shown to the Tax Authority, how much is the non-taxable car benefit of Mr
Johnson during the year?

A. 0
B. USD30,000
C. USD 27,000
D. USD3,000

19. Mr Ho is a tax resident in Vietnam. In 2014 he received income from Country X, on which Country X
had imposed personal income tax at its domestic rates. Mr Ho is not a resident in Country X.

Which of the following statements correctly describes Mr Ho’s entitlement to a tax credit in
Vietnam for the tax imposed by County X?

A No tax credit can be claimed in Vietnam

B A tax credit can be claimed in Vietnam only if Country X has a double tax avoidance agreement
(DTA) with Vietnam

C A tax credit can be claimed in Vietnam even if Country X does not have a DTA with Vietnam, but
only up to the amount of personal income tax payable under the Vietnamese tax regulations on the
income

D A tax credit can be claimed in Vietnam for the full amount of the overseas tax without any
conditions or restrictions

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20. Mr James has been working in Vietnam since 1 October 2004 for ABC Vietnam Limited, a foreign
invested enterprise established under the Law on Foreign Investment in Vietnam. Mr Lam completed
his assignment in Vietnam on 30 September 2016 and return to his home country on this day. Before
repatriation, James received 10-year ceremony bonus of USD3,000 paid by the parent company in
his home country on 1 June 2016. US$1,000 was deducted from this amount as the tax liability he
incurs in his home country.

The company has calculated his total taxable income for tax finalization purposes up to September
2016 is USD70,000. Total tax liability in Vietnam (including bonus) is VND300 mil.

Please advise the maximum amount Mr James can claim as tax credit in Vietnam

A. 22.5 mil VND

B. 23 mil VND
C. 12.86 mil VND
D. 67.5 mil VND

21. Mr Viet is holding investments in carious domestic companies, during 2016, she has received
dividend from A JSC, a listed company, of VND25,000,000 cash and 10,000 shares with face value of
VND10,000/share.

Please advise the tax treatment on dividend income of Mr Viet

A. No tax
B. Tax payable on capital investment of VND2,500,000
C. Tax payable on capital investment of VND1,250,000
D. Tax payable of 25,000,000 on capital investment and share investment

22. Mr Albert, a Canadian citizen, arrived in Vietnam on 18 September 2016 to work under an
employment contract. He stayed in Vietnam for the whole of the time until 19 June 2017 when he
completed his employment contract and left Vietnam.

What is the amount of personal relief to which Mr Albert will be entitled to for his paid in Vietnam?

A. VND0 mil
B. VND90 mil
C. VND81 mil
D. VND108 mil

23. Ms Oanh was one of the founding members of C Ltd. In 2017, she sells 5% charter capital in C Ltd at
VND3,000,000,000. Her original contributed amount of VND1,000,000,000 for such 5%. For this sale
Oanh has paid brokerage fee of 2% on sale price, legal fees of VND10,000,000 for her lawyer in
drafting the sale agreement. In addition, Oanh claimed that she has paid interest of VND100,000,000
for the loan she borrowed to contribute to the company, however after she borrowed the money,
Oanh has invested in many companies and is unable to provide any documents proving that the loan
was only used for capital contribution to C.

Please calculate Oanh’s PIT liability for the above transaction

A. 386 mil VND

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 B. 366 mil VND
C. 600 mil VND
D. 586 mil VND

24. Ms Ha has following income in 2017 – Received interest of VND500,000,000 including:

(i) VND300,000,000 from her deposits at the HCMC branch of a foreign bank; and
(ii) VND200,000,000 from lending money to her investee companies.

Please calculate Ms Ha’s PIT liability on the above income:

A. 25 mil VND
B. 15 mil VND
C. 10 mil VND
D. 20 mil VND

25. Ms Khanh has some investment in real estate market. She had 3 piece of land since 2016. In 2017,
she bought a house in February 2017 at VND4,000,0000,000 for living. This is the first house Khanh
owns. In December 2017 Ms Khanh decided to sell this house at VND5,000,000,000. Ms Khanh paid
1% of sale price for brokerage fee.

Please calculate Ms Khanh’s PIT liability on the above income:

A. 100 mil VND

B. 0 mil VND
C. 20 mil VND
D. 19 mil VND

26. Mr Hung Le bought 2 pieces of land at VND1,000,000,000 each in February 2016. He sold 1 piece to
his sister at VND1,200,000,000 in May 2017 and did not incur any expenses. He is still keeping the
other piece, hoping for a higher price.

Please calculate Mr Hung’s PIT liability on the above investment

A. 24 mil VND
B. 0
C. 20 mil VND
D. 40 mil VND

27. Mr Hoang bought a house in June 2017 at VND2,000,000,000. Because Hoang just got married
earlier, the house was registered under the name of both persons. In July 2017 the couple sold the
house for a good price of VND4,000,000,000. Hoang’s wife did not own any house or land at the time
of selling.

Please calculate Mr Hoang’s PIT liability on the above investment

A. 20 mil VND
B. 60 mil VND
C. 80 mil VND
D. 40 mil VND

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28. Mr John, an expatriate staff, employed by KBM Company in Vietnam from 1 January 2017 on
permanent basis, under an official labour contract. The company pays him very high income, so he
does not need to look for any other kind of income except income from KBM.

State the tax declaration and payment obligations of Mr John’s tax finalization for the year-end 2017

A. KBM is responsible to make a finalization declaration on behalf of John, withhold and pay any
outstanding tax to the State Budget (within 90 days after the end of the tax year)
B. John is responsible to make his own finalization declaration and pay any outstanding tax to
the State Budget (within 90 days after the end of the tax year)
C. KBM’s tax consultant is responsible to make a finalization declaration on behalf of John,
withhold and pay outstanding tax to the State Budget (within 90 days after the end of the tax
year)
D. No tax finalization required for John

29. During the year Ms Hoa worked as a part-time lecturer for a financial training center on how to get
rich in the stock market (in addition to her permanent job). Her total lecturer’s for the year amounts to
US$25,000, after withholding PIT by the training center.

Please advise the withholding PIT amount of training center (USD1 = VND22,500) for Ms Hoa’s
case

A. 63.75 mil VND

B. 51.14 mil VND
C. 62.20 mil VND
D. 70.83 mil VND

30. Frank is a non-tax resident working in Vietnam and pay tax in Vietnam. Frank claims that he was also
subject to US tax on the income he received from Vietnam with all supporting documents. Advise
Frank if he could claim a credit of US tax from total Vietnam’s PIT liability

A. Frank can claim tax paid in the US if it meets all conditions stated under PIT regulations
B. Frank cannot claim his PIT paid
C. Frank cannot claim his PIT in Vietnam but can consider to bring for tax claim in the US (follow
the US tax regulations)
D. Frank can claim PIT refund automatically following DTA between Vietnam and US

31. Mr. Vu invested in listed share in Vietnam in 2017. During the year, he had the following transactions:

(i) 5 sale transactions of listed stocks valued at VND20,000,000,000, before 0/5% brokerage
fees payable to the securities and 0.1% PIT withheld by the securities company. The total
purchase costs of these 5 sale transactions are VND 18,000,000,000
(ii) 10 sale transactions of listed stocks with gross income at VND90,000,000,000. The total
purchase costs of these transactions are VND91,000,000,000.
(iii) 2 sale transactions of OTC stocks valued at VND25,000,000,000, including 0.5%
brokerage fee and 0.1% PIT. The total costs of these stocks are VND24,500,000,000

Please calculate Mr Vu’s PIT liability on this investment?

A. 100 mil VND

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 B. 175 mil VND
C. 135 mil VND
D. 215 mil VND

32. How could overlapped tax paid from the 1st tax year declaration be determined?
A. PIT liability of 2nd tax year - PIT liability of 1st tax year
B. PIT liability of 2nd tax year/PIT liability of 1st tax year
C. PIT liabiity of 2nd tax year x overlapped months/12
D. PIT liability of 1st tax years x overlapped months/12

33. When should we prepare PIT finalization for a foreign tax resident of Vietnam?
A. For full calendar year
B. For the 1st tax year
C. For assignment termination
D. A&B are correct
E. All are correct

34. Mr. Hung wins a prize of VND100 million from lottery tickets. How much PIT is he required to pay to
the tax authority?
A. VND4.5 million
B. VND5 million
C. VND9 million
D. VND10 million

35. What is the tax treatment for dividends derived from shares granted to the employees?
A. Dividend received on share awards before vesting date: treated as employment income and
subject to PIT at progressive tax rates
B. Dividend derived on Share Awards after vesting date when the ownership of shares have been
transferred to the expatriate: treated as income from capital investment subject to PIT at 5%
C. Dividend has been paid tax and not subject to PIT anymore
D. A&B are correct

36. Ms. Mai is a Vietnamese national with no dependents. On 1 January 2017, she signed a gross
employment contract with salary of VND260 million per month. Her employer is not required to
withhold compulsory insurance from her income.

What is the amount of Ms. Mai’s monthly net take home income?

A. VND81.15 million
B. VND78 million
C. VND178.85 million
D. VND182 million

37. In February 2018, Mr May and Ms Man, two Vietnamese tax residents, were the equal co-winners of
a promotion prize, a car which had a market value of VND990 million, inclusive of 10% VAT, from a
real estate company.

What is the amount (in VND million, rounded by one decimal) of Ms Man’s personal income tax
(PIT) liability on the above promotion prize?
A. VND48ꞏ5 million
B. VND44ꞏ5 million
C. VND49ꞏ0 million

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 D. VND44ꞏ0 million

38. Mr Jung Nam-Oh is a Korean citizen employed by EPR KR, a company in Korea. From March 2018
to June 2018, Jung was assigned to work in Vietnam on a short-term project for EPR VN Co, a
subsidiary of EPR KR. During that time Jung was present in Vietnam for 98 days. EPR Group cannot
separate his income attributable to the project in Vietnam from his total employment income from
EPR KR. In 2018, Jung’s annual gross employment income from EPR KR was USD400,000 and EPR
VN Co also paid for a golf course membership at a cost of VND100 million for his use whilst in
Vietnam. In 2018, Mr Jung Nam-Oh had two dependants in Korea.

What is the total personal income tax (PIT) liability (rounded to VND millions) in Vietnam for Mr
Jung Nam-Oh in the year 2018?
A VND1,880 million
B VND525 million
C VND519 million
D VND1,900 million

39. In 2017, Ms Mai Pham, a Vietnamese citizen, purchased 100,000 shares in TBC Bank in 2017 when
the price per share was VND30,000 (three times par value). The shares were listed on the official
stock exchange and in 2018, TBC Bank announced a 20% dividend per share, of which half would be
paid in cash and half in the form of bonus shares. The market price of the shares at the time of
announcement was VND50,000 per share. Ms Mai Pham had no intention of selling these shares in
2018.

What is Ms Mai Pham’s Vietnamese personal income tax (PIT) liability (in VND million) in the
year 2018 in relation to the dividend?
A VND5 million
B VND15 million
C VND25 million
D VND0 million

40. Mr Nobi Takeshi, a 50-year-old Japanese, was assigned by his parent company, Daisu Co Ltd, to its
Vietnamese subsidiary, Daisu Vietnam Co Ltd (Daisu Vietnam), from 1 January 2013 to 15 July 2014.
He is treated as a tax resident in Vietnam in 2014.

Mr Nobi’s adopted son, Suneo, moved to Vietnam with him on 1 January 2013. Suneo became 18
years of age on 1 May 2014.

Mr Nobi made compulsory insurance contributions in Japan, equivalent to VND8 million per month
throughout his time in Vietnam. In April 2014, Mr Nobi donated VND50 million to a qualified centre
which cares for handicapped children.

Mr Nobi married his interpreter, Ms Ngoc Le, on 1 February 2014. Ms Ngoc Le is 38 years old and
divorced. She has two children of her own from her previous marriage, Tung aged 15 years and
Quang, aged 10 years. Ms Ngoc Le also has a handicapped sister with no income, whom she has
directly cared for during the last two years.

When Ms Ngoc Le got married, she terminated her employment with Daisu Vietnam and became a
housewife. On the termination she received VND36 million, being the settlement of her salary for
January 2014. She did not have any income from February 2014 onwards.

When working with Daisu Vietnam, Ms Ngoc Le entered into a voluntary pension contribution
agreement with a pension fund which operates in accordance with the Ministry of Finance’s

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 regulations. She continued the agreement and contributed VND1ꞏ2 million per month until 15 July
2014 when she and Mr Nobi left Vietnam and returned to Japan.

After their departure, Ms Ngoc Le kept her Vietnamese citizenship until 31 December 2014.
On their marriage, Ms Ngoc Le agreed with Mr Nobi that he would claim all dependant
reliefs/deductions available to them according to the regulations.

Required:

Calculate all the possible personal income tax (PIT) deductions from taxable income which:

(a) Mr Nobi Takeshi is entitled to in 2014; (7 marks)

(b) Ms Ngoc Le is entitled to in 2014. (3 marks)
Note: Make all calculations in VND millions, rounded to one decimal.
(10 marks)

41. a) For the purposes of part (a) of this question you should assume that today’s date is 31 December
2015.

Mr Tommy Morning, who is 48 years old, and a US citizen, was assigned to work in his company’s
subsidiary in Vietnam, MCS Vietnam Co (MCS-V), from 1 January 2015. His wife, Juliana, who is 40
years old, followed him to Vietnam as a housewife without income. The couple have two children,
Jennifer aged 19 years and Lewis aged 15 years. Lewis joined his parents in Vietnam, but Jennifer
continued her college education in the US.

Tommy’s remuneration with MCS-V in 2015 consisted of the following:

– Annual salary: USD300,000 for the 12-month period.
– Performance bonus: one month’s salary plus USD35,000 performance incentives.
– Housing: MCS-V rented a house for Tommy and his family for USD3,500 per month and paid the
rent directly to the landlord.
– Tuition fees: MCS-V reimbursed Tommy for the university tuition fees for Jennifer in the US of
USD20,000 and the school fees for Lewis in Vietnam of USD15,000.
– Air fares: MCS-V reimbursed air fares for two round trips back to the US for Tommy and his wife.
According to MCS-V’s records, the air fare cost for one round trip is USD3,000 per person.
– Medical insurance: MCS-V purchased medical insurance for each member of Tommy’s family who
were present in Vietnam at a cost of USD1,000 per month per person.
– Car: MCS-V hired a car with a driver at a cost of VND20 million per month to transport Tommy
between his house and the office.
– Accumulation insurance: MCS-V purchased an accumulation insurance for Tommy with a foreign
insurer at a cost of USD3,000 per month. The cumulative contributions plus 6% per year will be paid
to Tommy either on the five-year anniversary of the commencement of the policy, or one year from
the termination of his employment with MCS-V, whichever comes earlier.

Required:

(i) Calculate Mr Tommy Morning’s taxable income and non-taxable income (before any
housing benefits) for the year 2015. (9 marks)

(ii) Calculate Mr Tommy Morning’s personal income tax (PIT) liability from employment for
the year 2015.
(4 marks)

Note: All calculations should be made in VND millions, rounded to zero decimal in every calculation.

(b) You should treat this part as independent of the calculations in part (a).

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 On 1 January 2015, Tommy was granted options to purchase 1ꞏ2 million shares of MCS Vietnam
Co’s parent company, MCS US Inc, at USD1 per share. The options will become vested to him at
various dates over the next four years, provided that he continues to be employed by the MCS group
of companies. Options for the right to purchase 300,000 shares at USD1 became vested on 31
December 2015, when the market price was USD1ꞏ50 per share. Tommy exercised the option to
purchase these vested shares on 2 January 2016 when the market price was USD1ꞏ52 per share.

Required:
Explain the personal income tax (PIT) treatment in Vietnam of the options granted to and
exercised by Mr Tommy Morning in the year 2015. (2 marks)
(15 marks)

42. Mr Hung Duong and Ms Hien Duong are brother and sister. In 2013, they inherited a piece of land of
500 square metres in the city downtown from their parents, for which they have duly settled all
personal income tax (PIT) obligations for the inheritance. There was no specific indication as to the
ratio of ownership in their parents’ will or any other documents.

At the beginning of 2016, they decided to sell the land, and entered into an agreement with an
individual buyer on 1 March 2016. The agreed contractual price was VND200 million per square
metre (being the market price at the time of transfer), and the seller was obliged to handle the tax
filing and payment. The contract was effective from 15 March 2016 and Mr Hung Duong registered
the change in ownership on 30 March 2016. Payments were fully settled on 1 April 2016.

After the sale of the land, on 15 April 2016, Mr Hung Duong used all of the cash received plus
500,000 shares of ABC Co, a listed company on the HNX Stock Exchange, to contribute capital into
HD Co, a limited liability company.

At the time of contribution, the market price of the ABC Co shares was VND15,000 per share. The
value of the capital contribution was agreed based on the actual cash contribution and this market
value for the ABC Co shares. On 1 September 2016, Mr Hung Duong sold the capital contribution in
HD Co to Mr Nam, a Vietnamese individual, for VND68,000 million. The market price of the ABC Co
shares was unchanged.

Required:

(a) Determine the taxing date for personal income tax (PIT) purposes of the land sale made by
Mr Hung Duong and Ms Hien Duong, according to Circular 92/2015. (2 marks)

(b) State the basis on which the taxable income on the land sale will be allocated between Mr
Hung Duong and Ms Hien Duong and calculate (in VND millions) the PIT liability, if any,
payable by Mr Hung Duong.
(3 marks)

(c) Briefly explain the tax treatment of the capital contribution made to HD Co by Mr Hung
Duong on 15 April 2016 and calculate (to the nearest VND millions) the PIT liability incurred, if
any. (2 marks)

(d) Calculate (to the nearest VND millions) the PIT liability incurred by Mr Hung Duong, if any,
in respect of the sale of the capital contribution in HD Co on 1 September 2016. (3 marks)
(10 marks)

43. Mr Nghia Phan, who is 45 years old and a Vietnamese citizen, is the general director of HMCP JSC
(HMCP) a company listed on the Vietnamese stock market.

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 According to his labour contract with HMCP, Mr Nghia Phan’s monthly gross income is VND300
million (covering all benefits in cash and in kind and all taxable). He is also entitled to incentives
based on the performance of the company.

At the end of 2014, HMCP offered Mr Nghia Phan a ‘cashing shares award’ scheme as an appendix
to his labour contract, by which he would receive a nominal award of 1ꞏ5 million shares of HMCP
(with no dividend and voting rights). On 31 December 2015, HMCP would pay him an ‘award’ equal to
the difference between the share price at the beginning of 2015 (of VND12,000 per share) and that
on 30 December 2015. In 2015, HMCP made a substantial profit and the share price on 30 December
2015 had increased to VND20,000 per share.

The board of directors was very happy with Mr Nghia Phan’s performance in 2015 and they are
considering offering him additional incentives as follows:
– Option 1: a special cash bonus of VND4,800 million, payable immediately on 31 December 2015; or
– Option 2: a cash bonus of VND1,600 million, plus 150,000 shares to be awarded with full rights to
receive dividends, payable immediately on 31 December 2015. The board plans to make a dividend
payment for 2015 of VND1,000 per share in April 2016.

Mr Nghia Phan has three dependants, being his children. His compulsory insurance is calculated
based on the cap of VND23 million per month.

Required:
(a) Describe the personal income tax (PIT) treatment of (1) the ‘cashing shares award’ scheme
and (2) the shares awarded under Option 2 above. (5 marks)

(b) Calculate (in VND millions) Mr Nghia Phan’s PIT liability in Vietnam in the year 2015 under
Option 1 above.
(5 marks)

(10 marks)

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44. Mr Thinh Phan is a 35-year-old Vietnamese citizen. He has a full-time employment as a manager with
TAC Co and has also signed a part-time employment contract with KNT Co for the delivery of soft
skills training courses. Both TAC Co and KNT Co are Vietnamese companies.

Details of the income received by Mr Phan from the two companies in 2017 are as follows:

Mr Phan has a son, Van Phan, who is 16 years old. From January 2018, Van has been enrolled to
study in a secondary school in Australia. In order to fund Van’s tuition fees, in 2017 Mr Phan sold an
apartment for VND5,200 million.

He had purchased the apartment in 2015 for VND4,000 million as an investment and it was never his
sole house. It was agreed in the sales contract that the personal income tax (PIT) incurred from the
transaction would be borne by Mr Phan but that the buyer would be responsible for declaring and
paying the tax. The sales contract was effective from 1 November 2017, however, the registration
procedures were not completed by the buyer until 20 December 2017, when the buyer settled the
payment for the apartment in full.

Required:
(a) Calculate (in VND millions, rounded to one decimal) Mr Thinh Phan’s taxable income and
personal income tax (PIT) liability in respect of his employment income for the year 2017. (7
marks)
(b) Explain, by reference to the relevant provisions, when Mr Thinh Phan would be subject to
tax on the sale of his apartment and calculate his PIT liability in respect of the sale in the year
2017. (3 marks)
(10 marks)

45. Mr Narmey Lukuka is a New Zealand citizen, who works for PGS Co, a company in New Zealand.
PGS Co has invested in a Vietnam company, PGSVN Co. Mr Lukuka was assigned to work in
PGSVN Co in Vietnam from 1 August 2016 to 31 December 2017.

Mr Lukuka was present in Vietnam throughout the period from his first arrival on 1 August 2016 until
his departure on 31 December 2017 as follows:

– From 1 August 2016 to 31 December 2016: 80 days

– From 1 January 2017 to 31 July 2017: 125 days
– From 1 August 2017 to 31 December 2017: 135 days

During his assignment in Vietnam, Mr Lukuka received a salary of USD18,000 per month from PGS
Co, from which PGS Co deducted New Zealand tax of USD5,000 per month and paid the remainder
directly into his account in New Zealand. PGSVN Co also paid Mr Lukuka an allowance of VND50
million per month and rented him an apartment at a cost of USD3,200 per month. On 1 October 2017,
Mr Lukuka received an incentive bonus of USD50,000 from PGS Co for his good performance.
The employment agreement between Mr Lukuka and PGS Co states that all taxes incurred on his
income would be borne by him.

While he was in Vietnam, on 20 September 2017, Mr Lukuka adopted Thien Nam, a Vietnamese
new-born boy.

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 Required:

(a) State the basis period (i.e. the period subject to tax) applicable to Mr Narmey Lukuka for
each of the tax years 2016 and 2017 and explain why he will be considered as tax resident in
Vietnam in both of those tax years.
(3 marks)

(b) Calculate (in VND millions rounded to one decimal) the taxable income and personal
income tax (PIT) liability and PIT payable by Mr Lukuka for each of the tax years 2016 and
2017.
Note: You should ignore insurance contributions and any available overseas tax credits. (12 marks)
(15 marks)

46. Tony Phan

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