17 f F6 Vietnam Tax FCT Answers for Multiple Choice Questions 2015 Exam En

F6_Vietnam Tax

Foreign Contractor Tax_Answers for Multiple Choice Questions

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1. Question 1:

- Scenario 1: Company X, who is located overseas, signs a contract to buy cloth from Vietnamese Company A and requests Company A to deliver the goods to Vietnamese Company B (in the form of on-spot import/export by laws). What tax status of X? A. X is not subject to FCT B. Payment from B to X is subject to FCT C. Payment from X to A is subject to FCT D. B is subject to FCT B. Payment from B to X is subject to FCT Company X sells cloth to Company B, delivers goods inside Vietnam (via Company A) and earns income from its selling cloth to Company B.

- Scenario 2: Company Y, who is located overseas, signs a contract to process cloth with Vietnamese Company C and requests Company C to deliver the goods to Vietnamese Company D for further processing (in the form of on-spot import/export by law). Company D buys goods from Company Y for selling them in Vietnam. What tax status of Y? A. Y is subject to FCT for transaction with C B. Transaction between C and D is subject to FCT C. Y is subject to FCT for transaction with D D. Y is not subject to FCT because this is process contract C. Y is subject to FCT for transaction with D Company Y sells and delivers goods in Vietnam to Company D and earns income from Company D.

- Scenario 3: Company Z, who is located overseas, signs a contract to process or buy cloth with Vietnamese Company E (Company Z provides raw materials for Company E) and requests Company E to deliver the goods to Vietnamese Company G for further processing (in the form of on-spot process import/export by law). After processing, Company G returns the goods to Company Z; and Company Z must pay Company G for the processing under the contract. What tax status of Z? A. Z is subject to FCT for transaction with E B. Z is subject to FCT for transaction with G C. Transaction between E and G is subject to FCT D. Z is not subject to FCT

D. Z is not subject to FCT In this case, Company Z shall not be subject to FCT because Z does not earn any income in Vietnam.

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2. Question 2: Company A, who is located overseas, delivers goods to a Vietnamese Company B (or authorizes Company B to perform some services, such as delivery, distribution, marketing, advertising) while Company A is still the owner of goods delivered to Company B (or still take responsibility for the cost, quality of goods/services delivered to Company B; or A impose selling prices for goods/services). What tax status of A? A. A is not subject to FCT B. B is subject to FCT C. A is subject to FCT D. No one is subject to FCT C. A is subject to FCT In this case, Company A is subject to FCT because it trades goods in Vietnam and earns income in Vietnam.

3. Question 3: Company C, who is located in Vietnam, signs a contract to import excavators and bulldozers with Company D who is located overseas. Goods are delivered at a Vietnams border gate. Company D bears all responsibility and costs related to the goods until they arrive at the Vietnams border gate; Company C bear responsibility and costs related to the receipt and transport of goods from the Vietnams border gate. The contracts prescribes that the goods come with a one-year warranty by Company D. Other than that, Company D does not provide any services related to such goods in Vietnam. What tax status of C? A. D is not subject to FCT B. D is subject to FCT because of one-year warranty service C. D is subject to FCT because goods are delivered at a Vietnams border gate D. D is subject to FCT because D bears all responsibility and costs related to the goods

until they arrive at the Vietnams border gate A. D is not subject to FCT

From 01 Oct 2014, if Company D delivers goods to the Vietnams border gate (without being involved in customs clearance) and only provides warranty services, but not other services, it shall not be subject to FCT.

4. Question 4:

Company H of Hong Kong provides material handling services at a port in Hong Kong for Company A in Vietnam. Company A pays Company H for material handling services at the Hong Kong port. What tax status of H? A. H is subject to FCT because it provides service to A B. A is subject to FCT because it pays H

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C. Bothe H and A are not subject to FCT D. H is not subject to FCT D. H is not subject to FCT Material handling services at Hong Kong port are provided and consumed outside Vietnam, thus not taxable in Vietnam.

5. Question 5: A foreign organization provides to the Vietnamese Company A with the following services in the countries where Company A issues its GDRs (Global Depository Receipt) and international bonds: professional services, bond management and issuance services, legal consultation, depository services, road show services (trade name promotion activity). Are these services subject to Vietnamese FCT? A. Not subject to FCT B. Subject to FCT C. Only professional services are subject to FCT D. Only road show services are subject to FCT A. Not subject to FCT

Not subject to FCT because these services are performed and consumed outside Vietnam.

6. Question 6: A Vietnamese Company signs a contract with an organization in Singapore according to which Organization in Singapore will (i) run advertisements for sale for products in Singapore market, and (ii) run advertisements on internet for sale of products in Vietnamese market. Vietnamese Company will pay Organization in Singapore for ad services. Are ad services (i) and (ii) subject to Vietnamese FCT? A. (i) and (ii) are subject to FCT B. (ii) is subject to FCT, (i) is not C. (i) and (ii) are not subject to FCT D. (i) is subject to FCT, (ii) is not B. (ii) is subject to FCT, (i) is not

Advertising service outside Vietnam on internet should be still subject to FCT.

7. Question 7:

Vietnamese company A signs a contract to hire a company in Thailand as broker (i) for sale of As goods in Thailand or on the international market, and (ii) for transfer of As real estate in Vietnam. Are broking services (i) and (ii) subject to Vietnamese FCT? A. (i) and (ii) are subject to FCT B. (i) is subject to FCT, (ii) is not

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C. (i) and (ii) are not subject to FCT D. (ii) is subject to FCT, (i) is not C. (ii) is subject to FCT, (i) is not

Only brokerage service for sale of good/services outside Vietnam is not subject to FCT.

8. Question 8: Company A in Vietnam signs a contract with University B of Singapore (i) for provision of training for Vietnamese employees at University B, and (ii) to provide training for Vietnamese employees in Vietnam in the form of online training. Are training services (i) and (ii) subject to Vietnamese FCT? A. (i) and (ii) are subject to FCT B. (i) is subject to FCT, (ii) is not C. (ii) is subject to FCT, (i) is not D. (i) and (ii) are not subject to FCT D. (ii) is subject to FCT, (i) is not

Online training is subject to FCT even though it is performed outside Vietnam.

9. Question 9: Company A in Vietnam signs a contract to buy a production line for a cement factory from Company B overseas. The total contract value is USD 100 million, including USD 80 million of machinery and equipment (some of them are subject to 10% VAT) and USD 20 million for services of installation guide, supervision, warranty, and maintenance. What is VAT liability of B? A. USD 20 million is subject to VAT B. USD 80 million is subject to VAT C. USD 100 million is subject to VAT D. Total contract value is not subject to FCT A. USD 20 million is subject to VAT

Value of the imported M&E (USD 80 million) is not subject to VAT of FCT because they were already subject to VAT at the import.

10. Question 10:

Company A in Vietnam signs a contract to buy a production line for a cement factory from Company B overseas. The total contract value is USD 100 million (VAT-exclusive), including USD 80 million of machinery and equipment, and USD 20 million for services of installation guide, supervision, warranty, and maintenance. What is CIT liability of B? A. Only USD 20 million is subject to CIT

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B. USD 80 million and USD 20 million are subject to CIT at separate CIT rates C. Total USD 100 million is subject to one CIT rate D. Only USD 80 million is subject to CIT B. USD 80 million and USD 20 million are subject to CIT at separate CIT rates

Value of the imported M&E and services are subject to CIT at separate tax rates.

11. Question 11: Foreign Contractor A signs a contract with a Vietnamese entity to supervise the construction of cement factory Z. The contract value is USD 300,000 exclusive of VAT (but inclusive of corporate income tax). Furthermore, the Vietnamese Entity provides accommodations and workplaces for managers of Foreign Contractor A, which are valued at USD 40,000 exclusive of VAT. According to the contract, the Vietnamese Party is responsible for paying VAT on behalf of the foreign contractor. What is taxable amount subject to VAT? A. USD 357,895 B. USD 300,000 C. USD 340,000 D. USD 40,000 A. USD 357,895

The revenue subject to VAT earned by Foreign Contractor A is calculated as follows: Revenue subject

to VAT = 300,000 + 40,000 = 357,894.73 (USD)

(1-5%)

12. Question 12: Foreign Contractor A signs a contract to build cement factory Z with a Vietnamese entity. The total contract value is USD 10 million inclusive of VAT. According to the main contract, Foreign Contractor A shall delegate part of the construction (stipulated in the main contract signed with the Vietnamese entity) to Vietnamese Sub-contractor B, which is valued at USD 01 million exclusive of VAT. Furthermore, during the construction process, Foreign Contractor A buys building materials (bricks, cement, sand, etc.), other goods and services such as stationery, car rental and hotel rooms for experts, etc. to serve the contract execution. What is taxable amount subject to VAT? A. USD 10 million B. USD 9 million C. USD 11 million D. USD 10 million less value of building material which A purchased B. USD 9 million

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In this case, the revenue subject to VAT earned by foreign contractor A is calculated as follows: Revenue subject to VAT = USD 10 million USD 1 million = USD 9 million Do not subtract the value of raw materials, goods and services such as car rental, hotel rooms, stationery, etc. from the revenue subject to VAT of Foreign Contractor A.

13. Question 13: Company A overseas provides postal (express) services from abroad to Vietnam (inbound) and from Vietnam to abroad (outbound). What are VAT treatments? A. Inbound revenue is subject to VAT, outbound revenue is not. B. Outbound revenue is subject to VAT, inbound revenue is not. C. Both inbound and outbound revenue are subject to VAT D. Both inbound and outbound revenue are not subject to VAT B. Outbound revenue is subject to VAT, inbound revenue is not.

+ Revenue from inbound (from abroad to Vietnam) postal services is not subject to VAT

(whether service charges are paid by the consignor or consignee); + The whole revenue earned by Company A from outbound postal services is subject to

VAT (whether service charges are paid by the consignor or consignee).

14. Question 14: Vietnamese Company B provides postal services from abroad to Vietnam (inbound) and vice versa (outbound). To provide these services, Company B pays (shared fee) to the Overseas Company C an amount of X USD. What are VAT treatments of money received by C? A. Inbound shared money is subject to VAT, outbound shared money is not. B. Both shared inbound and outbound money are subject to VAT. C. Outbound shared money is subject to VAT, inbound shared money is not. D. Both shared inbound and outbound money are not subject to VAT C. Outbound shared money is subject to VAT, inbound shared money is not. + With regard to inbound postal services (whether service charges are paid by the

consignor or consignee) the amount of X USD received by Company C is not subject to VAT;

+ With regard to outbound postal services (whether service charges are paid by the consignor or consignee), Company B shall declare, withhold, and pay VAT on the X amount paid to Company C.

15. Question 15:

Foreign Contractor A signs a contract to build power plant X for a Vietnamese entity. The contract value is USD 75 million (inclusive of VAT).

- Scenario 1: Value of each business activity can be separated including USD 50 million for machinery and equipment (M&E); and USD 25 million for construction, and installation and services as follows:

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(i) Value of M&E subject to VAT: USD 30 million. (ii) Value of M&E not subject to VAT: USD 15 million. (iii) Value of warranty services for M&E: USD 5 million. (iv) Value of design of technological line and other design services: USD 5 million. (v) Value of workshops, other auxiliary systems, construction, and installation: USD 15 million. (vi) Value of supervision services and installation guide: USD 3 million. (vii) Value of operation training and test run services: USD 2 million. Upon importation, VAT on USD 30 million of M&E has been paid. Value of M&E not subject to VAT is USD 15 million. What is VAT liability of Foreign Contractor A? A. (i) is subject to VAT at 2%; (iii), (iv), (v), (vi), (vii) are subject to VAT at 5%. B. (i), (iii) are subject to VAT at 2%; (iv), (v), (vi), (vii) are subject to VAT at 5%. C. (iii), (iv), (v), (vi), (vii) are subject to VAT at 5%. D. (v) is subject to VAT at 3%; (iii), (iv), (vi), (vii) are subject to VAT at 5% D (v) is subject to VAT at 3%; (iii), (iv), (vi), (vii) are subject to VAT at 5% Foreign contractor shall only pay VAT on the value of services and construction/ installation in the contract signed with the Vietnamese entity. Value of services (warranty, design, supervision, installation guide, technical training, test run) is USD 15 million, which applies 5% VAT on revenue from service provision; value of construction and installation is USD 15 million, which applies 3% VAT on revenue from construction and installation (VAT is not imposed on value of imported machinery and equipment).

- Scenario 2: The main contract does not separate value of each business activity and only

specifies that the contract value include machinery, equipment, design services, supervision services, installation guide, technical training, and test run services. There are not adequate documents proving the payment of VAT on machinery and equipment during importation. What is VAT liability of Foreign Contractor A? A. USD 75 million is subject to VAT at 2% B. USD 75 million is subject to VAT at 5%. C. USD 75 million is subject to VAT at 3% D. USD 75 million is not subject to VAT C. USD 75 million is subject to VAT at 3%

Foreign Contractor A shall pay 3% VAT on the whole contract value, which is USD 75 million.

- Scenario 3: Foreign contractor A signs contracts with subcontractors to delegate the construction and installation works with supply of raw materials, and Foreign Contractor A only provides the services (such as supervision service, installation guide etc.). What is VAT liability of Foreign Contractor A? A. Value of services is subject to VAT at 5% B. Value of services is subject to VAT at 2% C. Value of services is subject to VAT at 3% D. Total contract value of USD 75 million is subject to VAT A. Value of services is subject to VAT at 5%

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Only value of services is subject to 5% VAT. 16. Question 16:

Korean Contractor H, who does not follow Vietnamese accounting system (VAS), signs a contract with Company B in Vietnam to provide machinery and equipment with installation and test run services for USD 10 million. The contract does not separate the value of machinery and equipment from the value of services. What is VAT liability of Foreign contractor H? A. Total contract value of USD 10 million is subject to VAT at 5% B. Total contract value of USD 10 million is subject to VAT at 2% C. Total contract value of USD 10 million is subject to VAT at 3% D. Total contract value of USD 10 million is not subject to VAT

D. Total contract value of USD 10 million is subject to VAT at 3%

3% VAT shall apply.

17. Question 17:

In January 2015, Foreign Contractor A signs a contract with a Vietnamese entity to provide petroleum services for USD 01 million. Before obtaining the tax registration certificate (for payment of VAT by deduction method), Foreign Contractor A incurs an input VAT of USD 5,000 on purchased goods/services. On 15 March 2015, the Vietnamese entity pays USD 100,000 to Foreign Contractor A (exclusive of VAT and inclusive of corporate income tax). The Vietnamese entity pays VAT on behalf of Foreign Contractor A, which equals (=) 100,000 x 10% = 10,000 (USD). On 01 May 2015, Foreign Contractor A applies for a registration and is issued with a tax registration certificate by the tax authority. In May 2015, the Vietnamese entity pays USD 200,000 to Foreign Contractor A (exclusive of VAT and inclusive of corporate income tax). Thus, output VAT incurred by Foreign Contractor A in May is USD 20,000 (= 200,000 x 10%). Input VAT of Foreign Contractor A incurred during the period from 01 May 2015 to 30 May 2015 is USD 2,000 (Foreign Contractor A already has a tax code during this period). Foreign Contractor A transfers all invoices and receipts incurred in May 2015 to the Vietnamese entity in order for the Vietnamese entity to declare and pay VAT on behalf of Foreign Contractor A. What is payable VAT of Foreign Contractor A in May 2015? A. Payable VAT is 18,000 USD B. Payable VAT is 20,000 USD C. Payable VAT is 13,000 USD D. Payable VAT is 28,000 USD A. Payable VAT is 18,000 USD

VAT payable by Foreign Contractor A in the tax period May 2015 is USD 18,000 (=USD 20,000 USD 2,000). Foreign Contractor A must not deduct USD 5,000 of input VAT incurred before May 01, 2015.

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18. Question 18: Foreign Contractor A signs a contract with a Vietnamese entity to supervise the construction of Cement Factory Z. The contract value is USD 285,000 exclusive of VAT and CIT. Furthermore, the Vietnamese entity provides accommodations and workplaces for managers of Foreign Contractor A, which are valued as USD 38,000 exclusive of VAT and CIT. According to the contract, the Vietnamese entity is responsible for paying VAT and CIT on behalf of the Foreign Contractor. What is taxable amount subject to CIT? A. USD 323,000 B. USD 285,000 C. USD 340,000 D. USD 38,000

B. USD 340,000

Revenue subject

to CIT =

285,000 + 38,000 = 340,000 (USD)

(1- 5%)

19. Question 19:

Foreign Contractor A signs a contract to build Cement Factory Z with a Vietnamese entity. The total contract value is USD 9 million exclusive of VAT. According to the main contract, Foreign Contractor A shall delegate part of the construction (stipulated in the main contract signed with the Vietnamese entity) to Vietnamese Sub-contractor B, which is valued at USD 01 million exclusive of VAT. Furthermore, during the construction process, Foreign Contractor A buys building materials (bricks, cement, sand, etc.), other goods and services such as stationery, car rental and hotel rooms for experts, etc. to serve the contract execution. What is taxable amount subject to CIT? A. USD 9 million B. USD 8 million C. USD 10 million D. USD 8 million less value of building material which A purchased

C. USD 8 million

In this case, the revenue subject to CIT earned by foreign contractor A is calculated as follows: Revenue subject to CIT = USD 9 million USD 1 million = USD 8 million Do not subtract the value of raw materials, goods and services such as car rental, hotel rooms, stationery, etc. from the revenue subject to CIT of foreign contractor A.

20. Question 20:

In the 1

st quarter of 2013, Foreign Airline A earns the revenue of USD 100,000, including USD

85,000 from passenger air tickets, USD 10,000 from airway bills, and USD 5,000 from miscellaneous charges orders (MCOs); USD 1,000 of airport fees is collected on behalf of the State; expense of USD 2,000 is paid for returned tickets.

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What is taxable amount subject to CIT for Quarter I of A? A. USD 100,000 B. USD 99,000 C. USD 95,000 D. USD 97,000

D. USD 97,000

Revenue subject to CIT earned by Foreign Airline A in the 1

st quarter of 2013 is calculated as

follows: Revenue subject to CIT = 100,000 (1,000 + 2,000) = 97,000 (USD)

21. Question 21:

Company A acts as an agent of Foreign Marine Shipping Company X. According to the agent contract, Company A, on behalf of Company X, receives goods to be transported abroad, issues bills of lading, collects charges. Company B of Vietnam hires Company X (via Company A) to transport goods from Vietnam to United State of America (USA) for USD 100,000. Company A hires ships from Vietnamese or foreign companies to carry goods from Vietnam to Singapore for USD 20,000. From Singapore, goods shall be transported to the USA by the ships of Company X. What is taxable revenue subject CIT of X? A. USD 100,000 B. USD 80,000 C. USD 120,000 D. USD 97,000

C. USD 80,000

Revenue subject to CIT of company X is calculated as follows: Revenue subject to CIT = USD 100,000 USD 20,000 = USD 80,000

22. Question 22:

Company A overseas provides postal (express) services from abroad to Vietnam (inbound) and from Vietnam to abroad (outbound). What are CIT treatments? A. Inbound revenue is subject to CIT, outbound revenue is not. B. Outbound revenue is subject to CIT, inbound revenue is not. C. Both inbound and outbound revenue are subject to CIT D. Both inbound and outbound revenue are not subject to CIT

B Outbound revenue is subject to CIT, inbound revenue is not. + Revenue from inbound postal services is not subject to CIT (whether service charges

are paid by the consignor or consignee);

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+ The whole revenue earned by Company A from outbound postal services is subject to CIT (whether service charges are paid by the consignor or consignee).

23. Question 23:

Vietnamese Company B provides postal services from abroad to Vietnam (inbound) and vice versa (outbound). To provide these services, Company B pays (shared fee) to the overseas Company C for an amount of X USD. What are CIT treatments of money received by C? A. Inbound shared money is subject to CIT, outbound shared money is not. B. Both shared inbound and outbound money are subject to CIT. C. Outbound shared money is subject to VAT, inbound shared money is not. D. Both shared inbound and outbound money are not subject to CIT D. Outbound shared money is subject to CIT, inbound shared money is not.

+ With regard to inbound postal services (whether service charges are paid by the

consignor or consignee) the amount of X USD received by Company C is not subject to VAT;

+ With regard to outbound postal services (whether service charges are paid by the consignor or consignee), Company B shall declare, withhold, and pay CIT on the x amount paid to Company C.

24. Question 24:

Bank A has a loan of USD 10 million with a monthly interest rate of 5.2%. The effective period of the contract is 03 years from 01 February 2012 to 01 February 2015. Payments shall be made every 06 months at the beginning of the period. According to the loan contract, A negotiates with Bank B overseas to execute the Interest Rate Swap (IRS) contract, in particular: - The effective period of the contract is 03 years from 01 February 2012 to 01 February 2015.

Payments shall be made every 06 months at the beginning of the period. - Floating interest payable to B is Libor + 0.25% and B has to pay A a fixed interest rate of

5.2%. This means if Libor + 0.25% is higher than the fixed interest rate in the IRS contract, B will receive a difference of interest from A which equals (=) (Libor + 0.25%) (less) interest payable at 5.2%. On the contrary, if Libor + 0.25% is lower than the fixed interest rate in the IRS contract, A will receive a difference of interest from B, which equals (=) 5.2% - (less) interest received by A calculated according to interest rate of Libor + 0.25%.

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Payment time

Libor interest rate (%)

The rate payable to B by A (%)

Libor + 0.25%

The rate payable to

A by B

The rate received by B or

A after offsetting

Difference received by A or B in each period

(USD 1,000)

A B A B

1/2/2012- 31/7/2012

4.80 5.05 5.20 0.15 - 15

1/8/2012 - 31/1/2013

5.00 5.25 5.20 0.05 5

1/2/2013- 31/7/2013

4.90 5.15 5.20 0.05 - 5

1/8/2013 - 31/1/2014

4.95 5.20 5.20 0.00 - -

1/2/2014 - 31/7/2014

4.90 5.15 5.20 0.05 5

1/8/2014- 30/1/2015

5.05 5.30 5.20 0.10 10

What is revenue subject to CIT of B for 2012, 2013, 2014 and 2015? A. USD 15,000; USD 10,000; USD 5,000 and Nil respectively B. USD 10,000; USD 5,000; USD 0 and Nil respectively C. USD 20,000; USD 15,000; USD 10 and USD 5,000 respectively D. USD 5,000; USD 10,000; USD 15,000 and Nil respectively

B. USD 10,000; USD 5,000; USD 0 and Nil respectively

Revenue subject to CIT received by B is calculated as follows: - In 2012 (from January 01, 2012 to December 31, 2012): Total amount B receives from

A: (15,000 - 5,000) = 10,000 (USD); - In 2013 (from January 01, 2013 to December 31, 2013): Total amount B receives from

A: (5,000 - 0) = 5,000 (USD); - In 2014 (from January 01, 2014 to December 31, 2014): B has to pay A totally USD

5,000 (taxable revenue = 0) 25. Question 25:

On 01 January 2015, Treasury Bonds X with a face value of VND 100,000 and a term of 06 months are issued for VND 89,000 per Treasury Bill. After being issued, Treasury Bonds are listed on HNX. Investor A makes some transactions below from 02 January to 01 July 2015 (maturity date):

Transaction date

Buy/Sell Amount Price

2/1/2015 Buy 100 90,000

1/2/2015 Buy 100 92,000

1/3/2015 Sell 70 93,000

1/4/2015 Buy 40 94,000

1/5/2015 Sell 20 95,000

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What is taxable revenue subject CIT with respect to bonds which Investor A receives at maturity date? A. VND 1,000,000 B. VND 1,140,000 C. VND 1,520,000 D. VND 900,000

C. VND 1,140,000

Step 1: determine the amount of treasury bills held on the maturity date: (100 + 100 + 40) (70 +20) = 150 Step 2: Determine the amount, time, and corresponding buying prices of the treasury bills held on the maturity date after subtracting the amount of sold treasury bills according to First-in-first-out rules: 150 treasury bills are held on the maturity date, including: + 10 treasury bills at VND 90,000 bought on January 02, 2015 + 100 treasury bills at VND 92,000 bought on February 02, 2015 + 40 treasury bills at VND 94,000 bought on April 02, 2015 Step 3: Determine the weighted buying price using the formula: Weighted mean of buying prices: [(40 x 94,000 + 100 x 92,000 + 10 x 90,000)/ 150] = 92.400 (VND) Revenue subject to CIT from the treasury bills received by the investor on the maturity date: (100,000 92,400) x 150 = 1,140,000 (VND).

26. Question 26:

Foreign Contractor A signs a contract to build power plant X for a Vietnamese entity. The contract value is USD 75 million (exclusive of VAT and inclusive of CIT).

- Scenario 1: Value of each business activity can be separated including USD 50 million for machinery and equipment (M&E), and USD 25 million for construction, and installation and services as follows:

(i) Value of M&E: USD 45 million. (ii) Value of warranty services for M&E: USD 5 million. (iii) Value of design of technological line and other design services: USD 5 million. (iv) Value of workshops, other auxiliary systems, construction, and installation: USD 15 million. (v) Value of supervision services and installation guide: USD 3 million. (vi) Value of operation training and test run services: USD 2 million. What is CIT liability of Foreign contractor A? A. (i) subject to CIT at 2%; (ii) (iii), (iv), (v), (vi) subject to CIT at 5%. B. (i), (ii) subject to CIT at 1%; (iii), (iv), (v), (vi) subject to CIT at 5%. C. (iv) subject to CIT at 2%; (ii), (iii), (v), (vi) subject to CIT at 5%. D. (i) subject to CIT at 1%; (iv) subject to CIT at 2%; (ii), (iii),(v),(vi) subject to CIT at 5% D. (i) subject to CIT at 1%; (iv) subject to CIT at 2%; (ii), (iii),(v),(vi) subject to CIT at 5%

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- Scenario 2: The value of each business activity cannot be separated.

What is CIT liability of Foreign Contractor A? A. USD 75 million is subject to CIT at 2% B. USD 75 million is subject to CIT at 5%. C. USD 75 million is subject to CIT at 3% D. USD 75 million is not subject to CIT A. USD 75 million is subject to CIT at 2%

The 2% CIT shall apply to the whole contract value which is USD 75 million.

- Scenario 3: Where Foreign Contractor A signs contracts with local subcontractors to delegate the works inclusive of raw materials and Foreign Contractor A only provide the other services (such as supervision service, installation guide etc.). What is CIT liability of Foreign Contractor A? A. Value of services is subject to CIT at 5% B. Value of services is subject to CIT at 2% C. Value of services is subject to CIT at 3% D. Total contract value of USD 75 million is subject to CIT A. Value of services is subject to CIT at 5%

Value of services is subject to 5% CIT.

27. Question 27: Foreign Contractor A signs a contract with a Vietnamese entity to provide a production line for USD 70 million.

- Scenario 1: Value of machinery and equipment (M&E) and services are separated (i) Value of machinery and equipment: USD 60 million. (ii) Value of technological line design and other design services: USD 5 million (iii) Value of supervision and installation guide: USD 3 million. (iv) Value of operation training and test run services: USD 2 million. What is CIT liability of Foreign contractor A? A. (i) subject to CIT at 1%. (ii), (iii), (iv) subject to CIT at 5%. B. (i), (ii) subject to CIT at 1%; (iii), (iv) subject to CIT at 5%. C. (iv) subject to CIT at 2%; (ii), (iii) subject to CIT at 5%. D. (i) subject to CIT at 1%; (iv) subject to CIT at 2%; (ii), (iii) subject to CIT at 5% A (i) subject to CIT at 1%. (ii), (iii), (iv) subject to CIT at 5%. If the value of machinery and equipment can be separated from value of services, the value of machinery and equipment shall apply CIT rate on trading; the value of design, supervision, installation, training, and test run services shall apply CIT rate on service provision.

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- Scenario 2: Value of machinery and equipment (M&E) and services are NOT separated What is CIT liability of Foreign contractor A? A. Total contract value of USD 70 million is subject to CIT at 5% B. Total contract value of USD 70 million is subject to CIT at 1% C. Total contract value of USD 70 million is subject to CIT at 2% D. Total contract value of USD 70 million is not subject to CIT B. Total contract value of USD 70 million is subject to CIT at 2%

2% CIT shall apply to the whole contract value (USD 70 million).

17 f F6 Vietnam Tax FCT Answers for Multiple Choice Questions 2015 Exam En

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