YOU SHOULD IGNORE ANY IMPLICATIONS OF VALUE ADDED TAX (VAT), AND TH...

4. You should ignore any implications of value added tax (VAT), and the provisional CIT declared by GVC on thecash collected in advance.(30 marks)2 Truong Khue, 34 years old, is a successful businessman and a well-known speaker in Vietnam. He is the Chairmanand also Chief Executive Officer (CEO) of Gifted Brains Co (GBC), a limited liability company in Vietnam specialisingin the organisation of soft skills training courses. The original chartered capital of GBC is VND 5,000 million, of whichKhue holds 80%. Khue actively participates in the day-to-day management of the company’s operations, and in thedelivery of its training courses. In addition, he is invited to speak at many educational events, seminars and activitiesin Vietnam and overseas, at which he speaks and receives remuneration as an individual (not under GBC’s name).Khue also spends most of his free private time in translating famous educational books in English, followinginstructions by publishers, and in writing articles for newspapers.Khue qualifies for three dependants for the year 2013: his 62-year-old mother, and two daughters who are both below17 years old.During the year 2013, Khue had income from various sources, as follows:– Salary as CEO of GBC: VND 200 million per month.– Bonus from GBC: VND 300 million.– Dividends from the profit distribution of GBC: VND 600 million (GBC paid a dividend to all of its shareholdersaccording to their shareholding ratio on 31 December 2013). – Speaker remuneration: gross amount of VND 890 million (the net receipt after personal income tax (PIT)withholding was VND 801 million).– Royalties for translating books for publishers and writing articles: VND 560 million. – Awards from the Ministry of Education for his contributions to the community, accompanied by a Certificate ofContribution Award issued by the Ministry of Education: VND 20 million.All of Khue’s personal expenses for his trips, both to domestic and overseas events, where he was invited to speak asan individual, are paid for by GBC. The total amount of these expenses in 2013 was VND 400 million.On 1 January 2013, GBC converted some of its retained earnings of VND 5,000 million to equity capital. Eachshareholder was entitled to an equivalent number of bonus shares (i.e. one new share for every one original shareheld). From a tax perspective, this entitlement would be viewed as a distribution from the company . Immediately after the conversion, Khue sold 25% of his investment in GBC to his friend, Aman Tan, for an amountequivalent to VND 3,500 million. Aman is a Singaporean resident, who wants to become the strategic partner of GBC.On the same date that he purchased the capital contribution from Khue, Aman also agreed to assign the copyright ofhis special course ‘Train the gifted brains’, for a contractual value of USD 250,000, to GBC for localisation andexploitation in Vietnam. Aman is also to receive an additional royalty from GBC every time GBC provides thecustomised course to students. On 31 December 2013, GBC paid Aman an amount of VND 2,000 million for suchadditional royalties. Required:(a) Calculate in respect of Truong Khue for the year 2013: (i) His taxable and non-taxable income from remuneration and investment. (11 marks)(ii) The personal income tax (PIT) PAYABLE on his taxable income from remuneration and investment.(8 marks)(b) Calculate in respect of Aman Tan for the year 2013, his PIT LIABILITY on his income derived from Vietnam,assuming he is not present in Vietnam in 2013. (6 marks)Note: All calculations should be in VND million, rounded up to one decimal.(25 marks)3 TMTX Co (TMTX) is a Vietnamese company operating in various fields of business, which enters into many contractswith foreign companies. In 2013, TMTX entered into three contracts with foreign companies under the terms andconditions described below:Foreign company Contractual amount Activities of foreign company, terms and conditionsMN Co (MN) which hasUSD 1,000,000 MN sold machinery and equipment to TMTX under DeliveryDuty Paid (Incoterms) (‘DDP’) terms. MN did not provide anyno permanentestablishment (P/E) inadditional services in Vietnam, including warranty provisions. Vietnam TMTX paid 50% of the contract amount on 1 July 2013, andthe remaining 50% on 30 November 2013.All tax incurred in Vietnam is to be borne by TMTX.ATX constructed a factory (including the supply of materials andUSD 1,500,000, ofATX Co (ATX) whichdoes have a P/E inwhich:equipment for the factory) for TMTX in Vietnam.Vietnam but does not– USD 1,200,000 isTMTX settled 40% of the contract amount on 1 Decemberadopt Vietnamese