MS HANH WAS RELOCATED FROM HANOI TO HO CHI MINH CITY TO BE IN CH...

2010, Ms Hanh was relocated from Hanoi to Ho Chi Minh City to be in charge of the office there. Ms Hanh receivedthe following remuneration and benefits from MKB during 2010:– Salary: VND1,300 million (including a 13th month bonus).– Performance bonus: VND600 million.– Support tuition fee for her son, who is 18 years old and studying in a school in the US: USD20,000.– Tuition fee for her daughter, who is 16 years old and studying in an international school in Vietnam: VND378 million.– A private car for her own use: The total costs paid for the car by MKB in 2010 were VND120 million, and areliable estimated allocation of her use of the car was: 20% for transportation between her home and firm’s office;50% for the firm’s business; and 30% for her private usage.– Gym group membership card: MKB paid VND567 million to purchase the card which can be used for three years.The card is jointly used by the firm’s three partners, whose names are clearly stated on the card and cannot beused by anyone else.– An apartment in Ho Chi Minh City rented for her by MKB at a cost of VND31·5 million per month.– MKB employed a part-time tax accountant to help prepare personal income tax returns for the firm’s compliance.The total cost of the tax accountant’s services in 2010 were VND120 million but this cost cannot be allocatedto any specific person. Ms Hanh also asked the accountant to help prepare her individual finalisation income taxreturn in 2009 and gave the accountant a mobile phone which had cost VND6 million as a gift in return for theseservices. – As 2010 is the fifth year that Ms Hanh has worked for MKB, she was awarded a ‘loyalty gift’ of a 15-day tourfor two (Ms. Hanh and her husband) to the US which cost VND100 million per person at the end of 2010. Thefirm paid the full tour cost directly to the travel agent. Ms Hanh extended her trip for another ten days to meetwith clients in the US (three days) and to visit her son (seven days), at a cost of USD5,000. Ms Hanh settledall of the costs for the extension to her trip using the firm’s corporate credit card, which MKB recorded as anadvance to her because she had committed to pay back the whole amount to the firm.– Ms Hanh’s remuneration package from MKB is gross of tax and compulsory insurance payable on her part.Ms Hanh’s husband, Mr Quang, who is 61 years old, is a freelance real estate investor. He used to be very successful,but due to the market situation in 2010, he did not have any real estate transactions during the year. The total marketvalue of the real estate assets Mr Quang currently holds is VND20,000 million, all of which are in the constructionstage. Ms Hanh’s mother and father are 70 and 75 years old, respectively, and live with her and her family. In 2010, herparents did not have any income except for a remittance of USD10,000 from Ms Hanh’s brother who lives in the US.The money was remitted to Mr Hanh’s father, who converted all of the money to VND in order to invest in BTB, ashare listed in the stock market. Unfortunately, due to a fraud, BTB shares were removed from the market at the endof 2010, and Mr Hanh’s father had to sell all of the shares purchased at a total loss of VND200 million.In July 2010, Ms Hanh’s daughter was invited to act in a short advertising clip, for which she received VND5·8 million.Required:(a) State the conditions for family deduction (relief) for children, spouses and parents. (7 marks)(b) For each person in Ms Hanh’s family, state, giving reasons, whether he/she would be treated as a dependantof Ms Hanh, and calculate the total amount of personal deductions (reliefs) that Ms Hanh can claim in herpersonal income tax return. Note: you should assume that Ms Hanh had provisionally registered all of her family members as dependantsat the beginning of the year. (5 marks)(c) Calculate the personal income tax (PIT) that Ms Hanh is liable to pay for the year 2010.Note: you should list all of the items mentioned in the question, indicating with ‘0’ those items which are nottaxable. (13 marks)(25 marks)3 HNSN, a Korean construction company, is negotiating a contract with AHN JSC, a Vietnamese joint stock company,for a turnkey project for the construction of and equipment supply for a paper mill in Thai Nguyen Province. Basedon HNSN’s budget, they intended to quote the following price in the contract:Item AmountUSD millionMachinery and equipment supplied to the mill 80Design of the mill 7Construction of the mill and installation of the machinery and equipment 10Supervision of construction and installation 4Commission, testing and warranty 1·2Training services for key staff of AHN in operating the mill 0·5The above contract price is calculated based on HNSN’s intention to negotiate with AHN that AHN will be responsiblefor all foreign contractor tax (FCT) payable in Vietnam. A part of the construction works, with the value of USD8 million (exclusive of value added tax (VAT)) will be sub-contracted to a local supplier. In calculating the construction price of USD10 million, HNSN has taken intoaccount the impact of the VAT at 10% that will be charged by the local supplier. The machinery and equipment will be imported from Korea with AHN as the importer of record, while all the otheractivities (including training) will be carried out by HNSN’s personnel in Vietnam. HNSN has estimated that it will take two years to complete the construction and so due to its length, the project willconstitute a permanent establishment (P/E) of HNSN in Vietnam. Based on its experience in operating in otherdeveloped countries, HNSN believes that the project constituting a P/E will have the following consequences: