000,000 < G < 80,000,000 30 T = 0·3G – 5,850,000G > 80,000...

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

Personal deductions (per month):

Self VND4,000,000

Dependant VND1,600,000

Social insurance, health insurance and unemployment insurance:

Rates

Social insurance (SI) 6%

Health insurance (HI) 1·5%

Unemployment insurance (UI) 1%

Base salary (per month)

The base salary for Social Insurance, Health Insurance and Unemployment Insurance:

VND16,600,000 per month

Rates of exchange

The following rates of exchange are to be used in answering all questions in this paper (unless

otherwise stated):

AUD 1 = VND22,000

USD1 = VND21,000

ALL FIVE questions are compulsory and MUST be attempted

1 Health Blessing Ltd (HB) is a limited liability company established in Vietnam in 2005. HB’s main activity is the

manufacturing of high precision equipment, but the company also imports and sells high-tech health care equipment,

as well as providing installation, maintenance and training services for the equipment that HB or its clients import

into Vietnam.

You have recently been employed by HB as its tax manager, and have been asked by the Finance Director to determine

the company’s corporate income tax (CIT) liabilities for 2012. The following information may be relevant to this task.

HB is located in the Binh Xuyen Industrial Park and was entitled to some CIT incentives as follows

:

– For its manufacturing activities: three years of tax exemption plus seven years of 50% tax reduction from the first

taxable year or in accordance with the CIT regulations. In addition, a concessional tax rate of 15% is available

for 12 years from the first year of operation. The first year of operation was 2005, and first profitable year of

manufacturing activities was 2007.

– For its service activities: a one year tax exemption plus two years of 50% tax reduction from the first taxable year

or in accordance with the CIT regulations. A concessional tax rate of 20% is available for ten years from the first

year of operation. The service activities commenced in 2007 but have made consistent losses in every year since

then.

– For its importation and sales of imported equipment: the tax holiday is the same as for its service activities, but

no concessional tax rate is available. These activities were profitable from the first year of operations, which was