Circular No. 13-TC/ĐTXD guiding the establishment and utilization of the basic depreciation fund left for enterprises and amending and supplementing certain points in the depreciation system for fixed assets.

CIRCULAR

DIRECTIVE OF THE MINISTRY OF FINANCE NO. 13-TC/DTXD DATED MARCH 10, 1985 GUIDING ON THE ESTABLISHMENT AND USE OF THE BASIC DEPRECIATION FUND TO BE LEFT FOR ENTERPRISES AND AMENDING AND SUPPLEMENTING SOME POINTS IN THE REGIME OF DEPRECIATION OF FIXED ASSETS
BASICALLY RETAINING FOR ENTERPRISES AND AMENDING AND SUPPLEMENTING SOME
POINTS IN THE DEPRECIATION REGIME OF FIXED ASSETS

To implement Resolution No. 156-HDBT dated November 30, 1984 of the Council of Ministers on some issues to improve state-owned industry, aiming to enhance the sense of responsibility in management and protection of socialist property; to increase financial autonomy of enterprises in investment construction, procurement, and modernization of fixed assets, the Ministry of Finance guides the establishment, management, and use of the basic depreciation fund for fixed assets as follows:

I. REGARDING THE ESTABLISHMENT AND USE OF THE DEPRECIATION FUND
BASICALLY RETAINING FOR ENTERPRISES

1. Enterprises that are independent economic accounting units are entitled to set aside and retain a portion or all of the basic depreciation.

2. The level of basic depreciation retained by enterprises:

- Based on the basic depreciation rate already stipulated in Decision No. 215-TC/CĐTC dated October 2, 1980 of the Ministry of Finance and some supplementary amendments to the regime of depreciation of fixed assets to be mentioned in Part II below, taking into account the nature of fixed assets and the technical renewal requirements of each enterprise, the competent ministry shall specify the percentage (%) of basic depreciation to be left for various types of enterprises under their jurisdiction within the maximum limit prescribed (as attached in this Circular). Before announcing for enterprises to apply, it must obtain the agreement of the Ministry of Finance.

- Enterprises may use the entire amount of basic depreciation extracted from fixed assets invested with credit bank funds to repay loans. After repaying the loan, if the enterprise continues to extract depreciation, that part of the basic depreciation will be retained and included in the self-owned capital for basic construction investment of the enterprise.

- Enterprises may retain the entire amount of basic depreciation extracted from fixed assets invested with self-owned capital to continue forming self-owned capital for basic construction investment of the enterprise.

- For fixed assets due for major repairs but deemed necessary for technical renewal without periodic major repair, upon approval by the superior management authority, enterprises may use the major repair fund of such fixed assets to supplement self-owned capital for basic construction investment.

3. Principles for using and managing the basic depreciation fund retained for enterprises.

- The amount of basic depreciation retained for enterprises is part of the self-owned capital for basic construction investment of the enterprise. Enterprises may use it for replacing equipment, maintaining production capacity, and supplementing new construction projects or deepening small-scale projects (with a capital recovery period of less than five years).

- Self-owned capital for basic construction investment extracted from the depreciation of fixed assets from the development promotion fund and welfare fund must be immediately deposited into the "initial self-owned capital for basic construction investment" account opened at the Investment and Construction Bank. Its use must comply with the current State regulations on the establishment, management, use, and adjustment of self-owned capital for basic construction investment of state-owned enterprises.

II. SOME OTHER POINTS AMENDING AND SUPPLEMENTING THE DEPRECIATION REGIME OF FIXED ASSETS ISSUED TOGETHER WITH DECISION
NUMBER 215-TC/CĐTC OF OCTOBER 2, 1980 OF THE MINISTRY OF FINANCE

1. Amend the conditions regarding fixed assets stipulated in Article 1 of the depreciation regime for fixed assets as follows:

Labor materials meeting both of the following criteria are considered fixed assets:

+ Having a value of 10,000 dong or more

+ Being used for over one year

2. Supplement Article 8 to include fixed assets that only calculate basic depreciation, not major repair depreciation:

+ Technical books, typical design drawings, invention patents.

+ Working animals and those producing products.

3. Amend Article 11 as follows:

Fixed assets that have been fully depreciated but still participate in production shall continue to be subject to basic depreciation and included in product cost. Enterprises may allocate this depreciation to the development promotion fund of the enterprise without submitting it to the State budget.

4. Amend Article 12 as follows:

Fixed assets that have not been fully depreciated but are damaged and unable to participate in production shall still be subject to basic depreciation, which shall not be included in product cost but extracted from profits to establish the development promotion fund of the enterprise.

5. Amend Article 13 as follows:

For fixed assets serving mining operations in tunnels or auxiliary works in basic construction... where the utility and lifespan of the fixed assets exceed the duration of the work they serve, after the work is completed, if the fixed assets cannot be used for other purposes, the basic depreciation rate shall be determined based on the planned volume of production or the time period during which the fixed assets must serve.

6. Repeal Article 29 concerning the submission of surplus major repair depreciation funds not used.

III. IMPLEMENTATION PROVISIONS

This Circular takes effect from January 1, 1985. Ministries, sectors, and financial agencies are responsible for guiding and supervising units and enterprises to implement the depreciation regime for fixed assets issued together with Decision No. 215-TC/CĐTC and the supplementary provisions in this Circular.

Provisions of ministries, sectors, provincial people's committees, city people's committees, and special zone people's committees that conflict with this Circular shall not be enforceable.

ANNEX

BASIC DEPRECIATION RATE RETAINED FOR ENTERPRISES
(Attached to Circular No. 13-TC/DTXD dated March 10, 1985)