Decision No. 2000/QD-BTC of the MINISTER OF FINANCE on the implementation of a trial depreciation regime for fixed assets using the adjusted declining balance method.

DECISION OF THE MINISTER OF FINANCE

Regarding the implementation of a pilot program for depreciation of fixed assets using the adjusted declining balance method

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THE MINISTER OF FINANCE

- Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government stipulating the tasks, powers, and responsibilities of ministries and ministerial-level agencies in state management;

- Pursuant to Decree No. 178/CP dated October 28, 1994 of the Government stipulating the tasks, powers, and organizational structure of the Ministry of Finance;

- To create conditions for enterprises to replace and modernize machinery and equipment towards applying advanced technology and techniques suitable for business requirements and economic development;

- At the proposal of the Director of the Financial Policy Department;

DECISION:

Article 1: Implement a pilot program for depreciation using the adjusted declining balance method for certain fixed assets with high intangible wear and tear that need to be replaced or modernized at five (5) enterprises specified in Appendix I attached hereto.

During the pilot period, the enterprises must ensure profitable production and business operations.

Article 2: Fixed assets participating in business activities and subject to depreciation under the adjusted declining balance method must satisfy the following conditions simultaneously:

+ They are machines and equipment producing products under high-tech industrial projects and new technologies as stipulated in Circular No. 02/2001/TT-BKHCNMT of the Ministry of Science, Technology, and Environment dated February 15, 2001.

2. They are newly invested fixed assets (unused) or used fixed assets with a value of 70% or more (compared to the original cost of fixed assets currently in use by the enterprise, or compared to the selling price of new similar fixed assets or equivalent assets on the market for used fixed assets purchased by the enterprise).

Article 3: The determination of the annual depreciation rate for fixed assets under the adjusted declining balance method shall be carried out in the following steps:

Step 1: Determining the useful life of fixed assets:

Enterprises determine the useful life of fixed assets according to Clause 1, Article 15 of Decision No. 166/1999/QD-BTC dated December 30, 1999 of the Ministry of Finance on the management, use, and depreciation of fixed assets.

Step 2: Determining the annual depreciation rate of fixed assets in the initial years according to the formula below:

Where:

a. The remaining value of fixed assets is determined by subtracting the accumulated depreciation from the original cost of the fixed assets at the end of the previous fiscal year. For newly formed fixed assets, the remaining value for the first year's depreciation calculation is the original cost of the fixed assets.

b. The acceleration rate is determined by the following formula:

- The straight-line depreciation rate is determined as follows:

- The adjustment factor is determined based on the useful life of new fixed assets (as specified in Appendix I - Decision No. 166/1999/QD-BTC) according to the table below:

In the final years, when the annual depreciation rate calculated according to the adjusted declining balance method equals (or is lower than) the average depreciation rate between the remaining value and the remaining useful life of the fixed assets, then starting from that year, the depreciation rate will be calculated by dividing the remaining value of the fixed assets by the remaining useful life of the fixed assets (as illustrated in Appendix II).

Article 4: Enterprises implementing the pilot program for depreciation of fixed assets using the adjusted declining balance method may include annual depreciation costs in reasonable expenses to determine taxable income.

Article 5: Other regulations regarding the management, use, and depreciation of fixed assets shall be implemented in accordance with Decision No. 166/1999/QD-BTC dated December 30, 1999 of the Ministry of Finance.

Article 6: This Decision takes effect from January 1, 2002 until December 31, 2003.

During the implementation process, the Ministry of Finance will coordinate with the enterprises to evaluate the pilot program for depreciation of fixed assets using the adjusted declining balance method.

Article 7: Heads of units under and affiliated with the Ministry of Finance, and enterprises implementing the pilot program are responsible for enforcing this Decision.