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 – 5,850,000G > 80,000,000 35 T = 0·35G – 9,850,000Notes:G: Gross incomeN: Net incomeT: Income taxPersonal deductions (per month):Self VND4,000,000Dependant VND1,600,000Social insurance, health insurance and unemployment insurance:RatesSocial insurance (SI) 6%Health insurance (HI) 1·5%Unemployment insurance (UI) 1%Base salary (per month)The based salary for Social Insurance, Health Insurance and Unemployment Insurance:(1) From 1 January to 30 April 2010: VND13,000,000 per month(2) From 1 May to 31 December 2010: VND14,600,000 per monthRates of exchangeThe following rates of exchange are to be used in answering all questions in this paper (unlessotherwise stated):Euro 1 = VND28,000USD1 = VND21,000ALL FIVE questions are compulsory and MUST be attempted1 The following clients have approached you for advice regarding corporate income tax (CIT) in 2010:(a) Fortune-4ever Ltd (‘Fortune’) is a joint venture company established in Vietnam in 2007 in the field of customergoods manufacturing. Fortune is seeking advice with regard to the tax treatment of the following matters in their finalisation CIT returnfor the fiscal year ended 31 December 2010:(i) Depreciation expenseFortune is considering the appropriate tax depreciation expense for the following assets:(1) An imported four-seat car purchased from a Vietnamese supplier on 1 January 2010. Fortune paid thefollowing amounts to the supplier:– purchase price of VND1,540 million, inclusive of 10% value added tax (VAT), of which 50% waspaid in cash; and– registration fee of VND300 million (exempt from VAT).Fortune expects to use the car for five years.(2) A machine purchased under a finance lease, which commenced from 1 July 2010. Fortune will payfor the machine in ten equal instalments of VND50 million each over five years. The first payment willbe made on 31 December 2010, and the last payment on 30 June 2015. Immediately after the lastpayment, Fortune will pay a nominal price to purchase the machine and then expects to sell it for anominal amount as scrap because the machine would have reached the end of its useful life by then.Fortune also incurred costs of VND50 million to install the machine.If Fortune had purchased the machine outright, it would have cost them VND400 million.All amounts relating to the machine are stated exclusive of VAT.(ii) Distribution expensesFortune incurred the following advertising and promotion expenses during the year, which it accounted forunder the heading ‘distribution expenses’. Valid invoices and supporting documents are available in allcases, unless otherwise stated below.Item Type of expense Amountexcluding VAT VND million1 Discount for customers who buy large quantities of goods, of which:– Discount as a reduction on invoice 1,500– Discount in cash, as one of its dealer’s was liquidated and would not receive any further invoice. This cash payment is not supported by any voucher. 1002 Cost of goods given free in a ‘buy two get one free’ promotion campaign for a new product. The promotion campaign was duly registered with the authorities. 4003 Commissions paid to Fortune’s sales force. 2,0004 Payment discount. 2505 Cost of market research and analysis paid to a consulting firm for a new product to be launched by the end of 2011. 3006 Cost of an overseas tour booked at a travel agency for Fortune’s highly performing distributors. 2,5007 Costs charged by distributors for hiring promoters and speakers to promote Fortune’s products in the distributors’ outlets. 2008 Rental for booths and outlets at festivals. 6009 Display fees for band-rolls of Fortune’s products at shops and supermarkets. 1,20010 Support costs paid to distributors for the travel expenses of the distributor’s sales forces. 35011 Costs of organising customer conferences. 65012 Costs of Fortune’s sample products to be given free to customers at the above conferences. Fortune advanced the whole of this amount but sought reimbursement for 40% of it from the distributors. Fortune duly registered this free-sample distribution with the authorities. 400Required:Advise Fortune-4ever Ltd of the corporate income tax (CIT) treatment of each of the following items in theyear ended 31 December 2010: (i) The deductible depreciation expenses for the car; (4 marks)(ii) The deductible depreciation expenses for the machine purchased under the finance lease; (4 marks)(iii) The amounts of distribution expenses that will be deductible, deductible but subject to a cap and non-deductible. (10 marks)