Part C
PROVISIONS ON DEPRECIATION OF FIXED ASSETS
Article 9. Principles on depreciation of fixed assets:
1. All fixed assets of an enterprise must be depreciated, excluding the following:
- Fixed assets which have been fully depreciated but are still used in production and business activities.
- Lost fixed assets which have not yet been fully depreciated.
- Other fixed assets which are managed but not owned by the enterprise (except financial leasing fixed assets).
- Fixed assets which are not managed, monitored and included in the enterprise's accounting books.
- Fixed assets used in welfare activities serving the enterprise's laborers (excluding fixed assets serving laborers working in the enterprise, such as mid-shift rest houses, mid-shift refectories, change houses, toilets, clean water tanks, garages, healthcare rooms or clinics, vehicles transporting laborers to and from work, job training establishments, laborers' houses built by the enterprise itself)-
- Fixed assets which are houses and residential land in case the enterprise purchases houses and residential land for which land use rights have been allocated by the State to the enterprise for long-term use; depreciation costs are not required to be calculated for the value of such land use rights.
- Fixed assets formed from non-refundable aid transferred by competent agencies to the enterprise for scientific research purposes.
- Intangible fixed assets being land use rights.
2. Depreciation costs of fixed assets specified at Point 2.2, Section IV, Part C of the Ministry of Finance's Circular No. 130/2008/TT-BTC of December 26, 2008, guiding the implementation of a number of articles of Law No. 14/2008/QH12 on Enterprise Income Tax, and guiding the implementation of the Government's Decree No. 124/2008/ND-CP of December 11, 2008, detailing the implementation of a number of articles of the Law on Enterprise Income Tax, are not allowed to be included in reasonable expenses when calculating enterprise income tax.
3. If the fixed assets used in welfare activities serving the enterprise's laborers specified in Clause 1. Article 9 of this Circular are engaged in production and business activities, the enterprise shall base itself on the time and use of these fixed assets to calculate and include depreciation costs in its expenses and notify it to the managing tax agency for monitoring and management.
4. For fixed assets which have not been fully depreciated and are irreparably damaged, the enterprise shall identify causes and compensation responsibilities of collectives or individuals at fault. Any difference between the residual value of the assets and the compensated sum of money and the recovered value (if any) shall be covered by the enterprise with its financial provisions. If its financial provisions are insufficient, the enterprise may include the deficit in its reasonable expenses when determining enterprise income tax.
5. An enterprise which leases operating fixed assets shall calculate depreciation costs of the leased fixed assets.
6. The lessee of financial leasing fixed assets shall calculate depreciation costs in respect of financial leasing fixed assets in the same manner as it does for its own fixed assets in accordance with the current regulations. In case at the outset of the leasing of assets, the lessee of the financial leasing fixed assets guarantees in the lease contract that it shall not buy the leased assets, the lessee may calculate depreciation costs in respect of the financial lease fixed assets over the leasing period stated in the lease contract.
7. In case of re-valuating a fully depreciated fixed asset for contribution as capital or transfer to another enterprise upon separation, splitting, consolidation, merger or transformation of enterprise, these fixed assets shall be valued by a professional valuation organization and their assessed value must not be lower than 20% of their historical cost. The time of starting to calculate depreciation costs of these assets is the time when the enterprises officially receive the assets for putting into use and the depreciation period is between 3 and 5 years. Specific time shall be decided by the enterprise but must be registered with a tax agency before implementation.
8. For enterprises with 100% state capital that determine their value for equitization according to the discount cash flow method, any positive difference in the state capital between the actual value and book value shall not be recognized as intangible fixed asset and shall be gradually allocated to production and business expenses of the period not exceeding 10 years. The time of stalling to allocate it to expenses is the time an enterprise is officially transformed into a jointstock company (obtaining a business registration certificate).
9. The calculation of depreciation costs or stoppage of calculation of depreciation costs of fixed assets shall be commenced from the date (according to the number of days of the month) on which fixed assets increase or decrease. Enterprises shall account fixed asset increase or decrease under the current regulations on business accounting.
Article 10. Determination of useful life of tangible fixed assets:
1. For brand-new fixed assets (unused fixed assets), the enterprise shall base itself on the frame of useful life of fixed assets provided in Appendix I lo this Circular to determine the useful life of fixed assets.
2. For used fixed assets, their useful life shall be determined as follows:
Useful life of fixed asset = Reasonable value of fixed asset / Sale price of the brand-new fixed asset of the same type (or of equivalent type on the market) x Useful life of the brand-new fixed asset of the same type determined in accordance with Appendix 1 to this Circular.
In which:
The reasonable value of fixed asset is the actual purchase price or actual exchange price (in case of purchase or exchange), the residual value of fixed asset or the value assessed by a professional valuation organization (in case the fixed asset is donated, presented as gift, allocated or transferred from elsewhere) and other cases.
3. Change of useful life of fixed assets:
a/ In case an enterprise wishes to determine the useful life of a fixed asset, brand-new or used, differently from the frame of useful life provided in Appendix 1 to this Circular, the enterprise shall make a plan on the change of the useful life of a fixed asset, clearly explaining the three following matters:
- Technical life of the fixed asset as designed;
- Current conditions of the fixed asset (used time, generation and actual conditions of the assets);
- Impacts of the increase or decrease in depreciation costs of the fixed asset on production and business results and payment of debts to credit institutions.
b/ Competence to approve plans on change of useful life of fixed assets:
- The Ministry of Finance is competent to approve plans of state companies, including parents companies of state economic groups and corporations; subsidiary companies with 100% state-owned charter capital; joini stock companies with 51% or more of charter capital owned by the State within state economic groups and corporations.
- Provincial-level Finance Departments are competent to approve plans of independent state companies attached to ministries or provincial-level People's Committees and enterprises of other economic sectors headquartered in their localities.
Within 20 days after their plans on change of useful life of fixed assets are approved, enterprises shall register them with managing tax agencies for monitoring and management.
c/ Enterprises may change the useful life of each fixed asset only once. The prolonged useful life of a fixed asset must neither exceed its technical life nor change business results of an enterprise from profit into loss or vice versa in the year of decision on the change. When an enterprise changes the useful life of a fixed asset in contravention of regulations, the Ministry of Finance or the managing tax agency of the enterprise shall request it to comply with regulations.
4. In case there arise impacting factors (e.g. upgrading or removal of one or some parts of the fixed asset) with a view to prolonging or shortening the designated useful life of a fixed asset, the enterprise shall re-determine the useful life of the fixed asset based on the three above-mentioned standards and concurrently make a written record clearly stating the bases which lead to the change in the useful life of the fixed asset, and submit it to competent authorities specified at Point b. Clause 3, Article 10 of this Circular for decision.
Article 11. Determination of useful life of intangible fixed assets:
1. The useful life of intangible fixed assets shall be determined by enterprises themselves, however the maximum useful life must not exceed 20 years.
2. The useful life of intangible fixed assets being fixed-term land use rights is the duration during which the use of land is permitted according to regulations.
3. The useful life of intangible fixed assets being copyright, intellectual property rights arid rights to plant varieties is the period of protection indicated in protection titles according to regulations (excluding the extended time of protection).
Article 12: Determination of useful life of fixed assets in a number of special cases:
1. For investment projects in the form of Build - Operate - Transfer (BOT), the useful life of their fixed assets shall be determined to start from the time when the fixed assets are put into use to the time of termination of such projects.
2. For a business cooperation contract (BCC) with the participation of a foreign party, under which the foreign party shall transfer the project to the State of Vietnam without compensation upon termination of the contract, the useful life of the fixed assets to be transferred shall be determined to start from the time when such fixed assets are put into use to the time of termination of the project.
3. For a production line of military nature and directly serving national defense or security tasks in defense or security firms, pursuant to this Circular, the Ministry of National Defense or the Ministry of Public Security shall decide on the frame of useful life of these assets.
Article 13. Methods of depreciation of fixed assets:
1. The contents of the straight line method: the declining balance method and the units-of-production depreciation method are provided in Appendix 2 to this Circular.
2. Based on the ability to meet the conditions stipulated for each fixed asset depreciation method, enterprises are allowed to select depreciation methods suitable for each kind of its fixed assets.
a/ Straight line method:
Fixed assets engaged in business activities may be depreciated according to the straight line method.
Enterprises operating and gaining high economic efficiency are allowed to conduct rapid depreciation of their fixed assets in order to quickly renew technologies. Fixed assets engaged in business activities and eligible for rapid depreciation include machinery, equipment; measuring and experimental instruments: equipment and means of transport; tools used for management: and working animals and gardens of perennial trees. When conducting rapid depreciation, enterprises shall ensure that they get profits in their business. In case enterprise conduct rapid depreciation over two times the prescribed frame of use life of fixed assets provided in Appendix I to this Circular, the depreciation cost exceeding the rapid depreciation level (over two times) may not be included in their reasonable expenses upon calculating enterprise income tax of the period.
- Declining balance method:
The declining balance method applies to enterprises with technologies requiring rapid renewal and development.
- Fixed assets engaged in business activities and depreciated according to the declining balance method must concurrently meet the following conditions:
+ Being brand-new (unused);
+ Being machinery and equipment; measuring and experimental instruments:
c/ Units-of-production depreciation method!
Fixed assets engaged in business activities and depreciated according to this method include machinery and equipment which concurrently meet the following conditions:
- They are directly related to the production of products;
- The total quantity or volume of products turned out on the basis of the designed capacity of fixed assets is determinable;
- The average actual use capacity during the months of the fiscal year is not lower than 50% of the designed capacity.
3. An enterprise shall register with its managing tax agency the fixed asset depreciation method that it has selected before applying such depreciation method. In case the depreciation method selected by the enterprise fails to meet the prescribed conditions, the tax agency shall, within 30 days after receiving the enterprise's registration of the fixed asset depreciation method (counted based on the postmark), notify this in writing to the enterprise for the latter to change its depreciation method as appropriate.
4. The depreciation method selected and registered by the enterprise to apply to eacli fixed asset must be applied consistently in the course of using such fixed asset, except when there is a change in the method of using it for generating more benefits to the enterprise or there is a significant change in the method of estimating economic benefits generated for the enterprise.
In special cases requiring change of the depreciation method, the enterprise shall clearly explain the change of the method of using the fixed asset or estimating economic benefits generated for the enterprise with respect to the fixed asset for which the depreciation needs to be changed and it may not change the depreciation method for each fixed asset for more than twice during the course of using it and shall send a written report thereon to its managing tax agency.
Tìm kiếm
Thông tư 203/2009/TT-BTC (Bản Word)
Thông tư 203/2009/TT-BTC (Bản Pdf)