Circular No. 45/2018/TT-BTC guiding the management regime, depreciation calculation, and asset depreciation for fixed assets at agencies, organizations, units, and fixed assets assigned by the State to enterprises for management without counting as state capital in enterprises.

CIRCULAR

Guidelines for the management, depreciation, and amortization of fixed assets

at agencies, organizations, units, and fixed assets assigned by the State to enterprises for management without counting the State capital component in the enterprise

The Minister of Finance issues this Circular to guide the management, depreciation, and amortization of fixed assets at agencies, organizations, units, and fixed assets assigned by the State to enterprises for management without counting the State capital component in the enterprise.

Pursuant to the Law on Management and Use of Public Assets dated June 21, 2017;

Pursuant to the State Budget Law dated June 25, 2015;

Pursuant to Decree No. 151/2017/NĐ-CP dated December 26, 2017 of the Government detailing certain provisions of the Law on Management and Use of Public Assets;

Pursuant to Decree No. 87/2017/NĐ-CP dated July 26, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Director of the State Asset Management Department;

The Minister of Finance hereby promulgates this Circular to guide the management, depreciation, and amortization of fixed assets at agencies, organizations, units, and fixed assets assigned by the State to enterprises for management without counting the State capital component in the enterprise.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

Article 1. This Circular stipulates the management, depreciation, and amortization of fixed assets at state agencies, public service units, people's armed forces units, Party organs of the Communist Party of Vietnam, organizations using state budget funds (hereinafter referred to as agencies, organizations, units), and fixed assets assigned by the State to enterprises for management without counting the State capital component in the enterprise.

Clause 2. The management, depreciation, and amortization of special fixed assets and dedicated fixed assets at people's armed forces units as provided for in Clause 1 and Clause 2 of Article 64 of the Law on Management and Use of Public Assets shall be implemented according to specific regulations of the Minister of National Defense and the Minister of Public Security.

Clause 3. The management and depreciation of infrastructure fixed assets serving national interests and public interests as provided for in Clause 2 of Article 4 of the Law on Management and Use of Public Assets shall be implemented according to specific regulations of the Minister of Finance.

Article 2. Applicability

Article 2. The management, depreciation, and amortization of fixed assets stipulated in this Circular shall apply to:

a) Fixed assets at state agencies, public service units, people's armed forces units, Party organs of the Communist Party of Vietnam, political-social organizations;

b) Fixed assets such as office premises and activity bases of social-political occupational organizations, social organizations, social-occupational organizations, and other organizations established under the laws on associations as provided for in Clause 1 of Article 69 and Clause 2 of Article 70 of the Law on Management and Use of Public Assets;

c) Fixed assets assigned by the State to enterprises for management without counting the State capital component in the enterprise.

Article 3. It is encouraged for social-political occupational organizations, social organizations, social-occupational organizations, and other organizations established under the laws on associations to apply the provisions of this Circular to manage, depreciate, and amortize fixed assets not within the scope specified in Clause 1 of Article 69 and Clause 2 of Article 70 of the Law on Management and Use of Public Assets.

Chapter II

PROVISIONS ON FIXED ASSET MANAGEMENT

Article 3. Provisions on criteria for identifying fixed assets

1. Criteria for identifying tangible fixed assets

Tangible fixed assets are those with physical form, having independent structure or being a system consisting of several separate parts interconnected to perform one or more specific functions, satisfying both of the following criteria simultaneously:

a) Having a useful life of one year or longer;

b) Having an original cost of ten million dong or more.

2. Criteria for identifying intangible fixed assets

Intangible fixed assets are those without physical form that have been created through investment costs by agencies, organizations, units, or enterprises, or formed through operational processes, satisfying both of the criteria set forth in Point a and Point b of Clause 1 of this Article.

Clause 3. Based on the characteristics of assets actually used in industries, sectors, localities, and management requirements, the Minister, Head of a ministry-level agency, or agency under the Government, or other central agencies (hereinafter referred to as the Minister or Head of a central agency), People's Committee of provinces and centrally-administered cities (hereinafter referred to as the Provincial People's Committee) may issue a list of assets that do not meet the criteria set forth in Clause 1 and Clause 2 of this Article as fixed assets for assets under the management of ministries, central agencies, or localities (according to Model No. 02 prescribed in Appendix No. 02 issued together with this Circular) in either of the following two cases:

a) Assets (excluding buildings, construction works, architectural structures) with a cost value from VND 5,000,000 (five million dong) to less than VND 10,000,000 (ten million dong) and a usage period of one year or longer;

b) Assets that are easily damaged or broken equipment with a cost value of VND 10,000,000 (ten million dong) or higher.

Clause 4. The criteria for identifying fixed assets based on value for assets stipulated in Clause 1 of Article 16 of this Circular shall be implemented according to the regulations applicable to enterprises.

Article 4. Classification of fixed assets

1. Classification based on the nature and characteristics of the assets, including:

a) Tangible fixed assets

- Type 1: Buildings, construction works; including: Office buildings; warehouses; conference halls; clubhouses; cultural centers; sports training and competition venues; conservation and museum buildings; kindergartens; workshops; classrooms; lecture halls; dormitories; clinics; health resorts; guesthouses; residences; official residences; other buildings and construction works.

- Type 2: Architectural structures; including: Storage areas, reservoirs, parking lots, drying yards, playgrounds, sports fields, swimming pools; drilled wells, dug wells, fences, and other architectural structures.

- Type 3: Motor vehicles; including: Motor vehicles for official duties of various positions, motor vehicles for general official duties, specialized motor vehicles, motor vehicles for state reception, and other motor vehicles.

- Type 4: Other transportation means (excluding motor vehicles); including: Road transportation means, railway transportation means, waterway transportation means, air transportation means, and other transportation means.

- Type 5: Machinery and equipment; including: Common office machinery and equipment; machinery and equipment for general activities of agencies, organizations, and units; specialized machinery and equipment, and other machinery and equipment.

- Type 6: Long-lived trees and working animals and/or producing products.

- Type 7: Other tangible fixed assets.

b) Intangible fixed assets

- Type 1: Land use rights.

- Type 2: Copyrights and related rights.

- Type 3: Industrial property rights.

- Type 4: Rights over plant varieties.

- Type 5: Application software.

- Type 6: Brand of public service units (including factors of capacity, quality, reputation, historical factors, traditional depth of public service units, and other factors capable of generating economic rights and benefits for public service units).

- Type 7: Other intangible fixed assets.

2. Classification based on the source of formation of the assets, including:

a) Fixed assets formed through purchase;

b) Fixed assets formed through construction investment;

c) Fixed assets transferred through allocation or transfer;

d) Fixed assets received as gifts or promotional items;

đ) Fixed assets discovered during inventory checks that were not previously recorded in accounting books;

e) Fixed assets formed from other sources.

Article 5. Special fixed assets

1. Fixed assets that cannot be determined for formation costs or whose actual value cannot be assessed but require strict physical management (such as antiques, exhibits in museums, mausoleums, historical sites classified as heritage), and fixed assets that are the brand of public service units but whose formation costs cannot be determined shall be considered special fixed assets.

2. Based on the actual situation and management requirements for the assets specified in Clause 1 of this Article, the Minister, the Head of Central Agencies, and the People's Committee of provinces shall issue a list of special fixed assets under their respective jurisdictions (in accordance with Model No. 03 stipulated in Appendix No. 02 issued together with this Circular) to ensure uniform management.

3. The original cost of special fixed assets for accounting records and registration in the National Database on State Assets shall be determined based on an agreed price. The agreed price for special fixed assets shall be set at 10,000,000 VND (ten million dong).

Article 6. Subjects for Accounting Records of Fixed Assets

1. Assets used independently and identified as a single subject for fixed asset accounting books.

2. A system consisting of multiple individual asset parts interconnected to perform one or several specific functions, such that the absence of any part renders the entire system non-operational, shall be recognized as a subject for accounting records of fixed assets.

3. A system comprising multiple individual asset parts interconnected, where each component has a different usage period and independent operational function, and requires separate management of each asset part, each part shall be recognized as a subject for accounting records of fixed assets.

4. Working livestock and/or those producing products, with each animal valued at 10,000,000 VND (ten million dong) or more, shall be identified as a subject for fixed asset accounting books.

5. A garden within an independent land plot with a value of 10,000,000 VND (ten million dong) or more (excluding the value of land use rights); or individual long-term trees with a value of 10,000,000 VND (ten million dong) or more shall be recognized as a subject for accounting records of fixed assets.

Article 7. Determination of Original Cost of Tangible Fixed Assets

The determination of the original cost of tangible fixed assets prescribed in point a, Clause 1, Article 4 of this Circular (except for special fixed assets prescribed in Article 5 of this Circular) is as follows:

1. The original cost of fixed assets formed through purchases is determined according to the following formula:

Where:

a) Trade discounts, price reductions, or penalties imposed on the seller (if applicable) are amounts deducted from the invoice value in cases where the invoice value includes trade discounts, price reductions, or penalties imposed on the seller.

b) Other costs (if applicable) are reasonable costs directly related to the acquisition of fixed assets that the agency, organization, unit, or enterprise has incurred up to the date of putting the fixed asset into use. In cases where common costs arise for multiple fixed assets, these costs shall be allocated to each fixed asset according to appropriate criteria (quantity, invoice value of the fixed asset generating common costs).

2. The original cost of fixed assets formed through construction investment is the settlement value approved by the competent authority in accordance with laws on construction investment.

a) In cases where the asset has been put into use (after completion of investment construction) but has not yet been settled and approved by the competent authority, the agency, organization, unit, or enterprise shall record and account for the fixed asset from the date of the Acceptance Certificate for putting the asset into use. The recorded original cost is a provisional cost. In this case, the provisional cost shall be selected in the following priority order:

- Proposed settlement value;

- Value determined by the Acceptance Certificate A-B;

- Approved project budget value.

b) Upon approval of the settlement by the competent authority, the agency, organization, unit, or enterprise shall adjust the provisional recorded original cost on the accounting books to the approved settlement value; simultaneously, re-determine the remaining value indicators, accumulated depreciation of the fixed asset to adjust the accounting books and conduct accounting as prescribed.

c) In cases where a project includes multiple components or assets (subjects for accounting records of fixed assets) but does not have separate budget estimates or settlements for each component or asset, the approved budget estimate or settlement value shall be allocated to each component or asset according to appropriate criteria (construction area, quantity, detailed estimated value of each asset or component) for recording in the accounting books.

3. The original cost of transferred fixed assets received or assigned is determined as follows:

Where:

a) The value stated on the Transfer and Acceptance Certificate is the original cost of the fixed asset being tracked in the accounting books or the remaining value of the transferred fixed asset reassessed at the time of submission to the competent authority for decision on transfer (for assets not yet tracked in the accounting books).

The agency, organization, unit, or enterprise with the transferred asset or tasked with formulating a plan for handling the asset shall be responsible for reassessing the value of the asset (for assets not yet tracked in the accounting books) before submitting it to the competent authority for decision on transfer of the asset. The reassessment of the asset value is based on the remaining quality of the asset and the actual new purchase price of the asset at the time of transfer.

Where:

- The percentage of remaining quality of the asset is determined based on the condition of the asset, the depreciation period of similar assets, and the usage period of the asset.

- The purchase price of the asset is the market price of a new asset of the same type at the time of transfer.

- The construction cost of the asset is determined according to the following formula:

b) Other costs (if applicable) are reasonable costs directly related to the acceptance of transferred fixed assets that the accepting agency, organization, unit, or enterprise has incurred up to the date of putting the fixed asset into use. In cases where common costs arise for multiple fixed assets, these costs shall be allocated to each fixed asset according to appropriate criteria (quantity, value of the fixed asset generating common costs).

(Example 1 in Appendix No. 03 issued together with this Circular).

4. The original cost of fixed assets received as gifts or through promotional activities shall be determined as follows:

Where:

a) The value of the gifted asset is determined according to the provisions of the laws on establishing the ownership of all people over assets and handling assets that have been established as owned by all people.

b) The value of the asset obtained through promotional activities is determined by the agency, organization, unit, or enterprise receiving the promotion based on the market price of similar assets or those with the same technical standards and origin.

c) Other costs (if any) are reasonable expenses directly related to receiving fixed assets as gifts or promotional items that the agency, organization, unit, or enterprise has incurred up to the time the fixed asset is put into use. In cases where common costs arise for multiple fixed assets, allocate the costs to each fixed asset according to appropriate criteria (quantity, value of fixed assets incurring common costs).

5. The original cost of fixed assets discovered in inventory but not previously recorded in accounting books shall be determined as follows:

Where:

a) The value recorded on the Inventory Verification Report is the remaining value of the fixed assets discovered in inventory at the time of revaluation during the inventory process.

The agency, organization, unit, or enterprise discovering excess fixed assets must revalue the assets' worth to record on the Inventory Verification Report and determine the original cost for recording in the accounting books. The revaluation is based on the remaining quality of the assets and the actual purchase price of new assets at the time of inventory.

Where:

- The percentage of remaining quality of the asset is determined based on the asset, the depreciation period of similar assets, and the usage period of the asset.

- The purchase price of the asset is the market price of a new asset of the same type at the time of the inventory check.

- The construction cost of the asset is determined according to the following formula:

b) Other costs (if any) are reasonable expenses incurred by the agency, organization, unit, or enterprise up to the time the fixed asset is put into use. In cases where common costs arise for multiple fixed assets, allocate the costs to each fixed asset according to appropriate criteria (quantity, value of fixed assets incurring common costs).

Article 8. Determining the Original Cost of Intangible Fixed Assets

The determination of the original cost of intangible fixed assets specified in point b, Clause 1, Article 4 of this Circular (except for special intangible fixed assets specified in Article 5 of this Circular) is as follows:

1. The original cost of intangible fixed assets being land use rights for cases where the value of land use rights must be determined to include in the asset value as stipulated in Article 100 of Decree No. 151/2017/ND-CP dated December 26, 2017 of the Government detailing certain provisions of the Law on Management and Use of State Property (hereinafter referred to as Decree No. 151/2017/ND-CP) is the value of land use rights determined according to Clauses 1, 2, and 3 of Article 102 of Decree No. 151/2017/ND-CP plus (+) taxes (excluding tax refunds) and fees and charges as prescribed by laws on fees and charges.

2. The original cost of intangible fixed assets being land use rights for land leased by the State with payment made once for the entire lease period according to land laws, where the lease payment has been made without originating from the state budget, and land acquired through transfer of land use rights where the transfer payment has been made without originating from the state budget is the one-time lease payment for the entire lease period, the transfer payment for land use rights already paid, plus (+) compensation and land clearance costs for cases where the State leases land with a one-time lease payment for the entire lease period (if any and in cases where these costs have not been included in project investment capital, production and business costs, or approved by competent authorities to offset against lease payments due).

3. The original cost of intangible fixed assets specified in point b, Clause 1, Article 4 of this Circular (except for land use rights specified in Clauses 1 and 2 above) is the total costs incurred by the agency, organization, unit, or enterprise to acquire such intangible fixed assets (in cases where these costs have not been included in project investment capital, production and business costs, or approved by competent authorities to offset against financial obligations payable under the law).

Article 9. Use of Original Cost of Fixed Assets

1. The original cost of fixed assets determined according to Clause 3 of Article 5, Article 7, and Article 8 of this Circular is used for recording in accounting books and declaring to enter information into the National Database on State Property.

2. The original cost of fixed assets determined according to Clause 3 of Article 5, Article 7, and Article 8 of this Circular is not used in cases where organizations sell assets, transfer land use rights, determine values for joint ventures or joint operations, use fixed assets to pay investors when implementing construction projects under build-transfer contracts, or use fixed assets to participate in public-private partnership projects. Determining the value of fixed assets in these cases is carried out according to the Law on Management and Use of State Property, Decree No. 151/2017/ND-CP, and related laws.

Article 10. Change in Original Cost of Fixed Assets

1. The original cost of fixed assets may be changed in the following cases:

a) Reassessing the value of fixed assets according to the decision of a competent state agency;

b) Implementing upgrades, expansions, or repairs of fixed assets according to a project approved by the competent authority or person;

c) Removing or installing additional parts of fixed assets;

d) Adjust the value of land use rights for cases specified in Clause 1 of Article 8 of this Circular according to Clause 1 of Article 103 of Decree No. 151/2017/ND-CP.

2. When changes occur in the original cost of fixed assets (excluding land use rights as specified in point d, Clause 1 of this Article), the agency, organization, unit, or enterprise must prepare a Record detailing the reasons for the change; simultaneously, re-determine the original cost and remaining value of the fixed assets to adjust the accounting books and perform accounting according to regulations.

(Example 2 in Appendix No. 03 issued together with this Circular).

In cases where upgrading, expanding, or repairing fixed assets involve multiple components or assets (accounting subjects for fixed assets) but are not settled separately for each component or asset, allocate the settlement value approved by the competent authority to each component or asset for recording in the accounting books according to appropriate criteria (construction area, quantity, detailed estimated cost for upgrading, expansion, or repair of each asset or component).

3. When there is a change in the original cost of fixed assets, which is the right to use land, the agency, organization, unit, or enterprise shall prepare a Record detailing the reasons for the change in the original cost; simultaneously, they shall re-determine the value of the right to use land to adjust the accounting books and conduct accounting in accordance with the regulations.

The original cost of intangible fixed assets, which is the right to use land, for cases specified in Clause 1 of Article 8 of this Circular shall be re-determined including the re-determined value of the right to use land plus (+) taxes (excluding refundable tax amounts) and fees and charges as prescribed by laws on fees and charges.

The re-determination of the value of the right to use land shall be carried out according to the formula prescribed in Clause 1 and Clause 2 of Article 102 of Decree No. 151/2017/NĐ-CP, with indicators such as land area, purpose of land use, land price, and the adjustment factor for land prices at the time of re-determining the value of the right to use land.

Article 11. Management of Fixed Assets

1. All existing fixed assets at agencies, organizations, units, and enterprises must be strictly managed in terms of physical items and value in accordance with the provisions of laws on managing and using state assets and related laws.

2. Agencies, organizations, units, and enterprises have the responsibility to establish fixed asset cards and accounting records for all existing fixed assets of their agencies, organizations, units, and enterprises in accordance with the current accounting system; conduct annual inventory checks on existing fixed assets; report to the higher-level financial authority to unify accounting adjustments between the results of the inventory check and the accounting books (if necessary); and report on the management and use of assets in accordance with the laws on managing and using state assets.

3. Fixed assets that have been fully depreciated but are still usable must continue to be managed in accordance with the law.

Chapter III

PROVISIONS ON THE CALCULATION OF DEPRECIATION AND AMORTIZATION OF FIXED ASSETS

Article 12. Scope of Fixed Assets Subject to Depreciation and Amortization

1. Existing fixed assets at agencies, organizations, and units, and fixed assets managed by enterprises from the State without being part of the State capital at the enterprise must be subject to depreciation, except for the cases stipulated in Clauses 2 and 3 of this Article.

2. Fixed assets at public service units must be amortized according to the provisions of Article 16 of this Circular, including:

a) Fixed assets at public service units that self-fund regular expenses and investment;

b) Fixed assets at public service units that must fully amortize fixed assets into service prices as prescribed by law;

c) Intangible fixed assets of public service units not falling within the scope specified in points a and b of this clause when used for business operations, leasing, joint ventures, or joint operations without forming a new legal entity as prescribed by law.

3. The following types of fixed assets are not subject to depreciation or amortization:

a) Fixed assets that are the right to use land for cases where the value of the right to use land must be determined to be included in the value of assets as prescribed in Article 100 of Decree No. 151/2017/NĐ-CP;

b) Special fixed assets as prescribed in Article 5 of this Circular, excluding intangible fixed assets that are trademarks of public service units used for joint ventures or joint operations without forming a new legal entity as prescribed in point c of Clause 2 of this Article;

c) Fixed assets currently leased for use;

d) Fixed assets held in custody, safekeeping, or storage for the State;

đ) Fixed assets that have been fully depreciated or fully amortized but are still usable;

e) Fixed assets that have not yet been fully depreciated or fully amortized but are damaged and cannot be used further.

Article 13. Principles for Calculating Depreciation and Amortizing Fixed Assets

1. Principles for Calculating Depreciation of Fixed Assets

a) The calculation of depreciation of fixed assets shall be conducted once a year in December, before closing the accounting books. The scope of fixed assets subject to depreciation includes all existing fixed assets as prescribed in Clause 1 of Article 12 of this Circular up to December 31 of the year in which depreciation is calculated;

b) Fixed assets as prescribed in point c, Clause 2, Article 12 of this Circular shall calculate depreciation and amortize fixed assets according to the provisions of Article 16 of this Circular;

c) In cases of transfer, division, merger, or dissolution of agencies, organizations, units, or enterprises, the depreciation of fixed assets for the fiscal year in which the agency or authorized person decides on the transfer, division, merger, or dissolution shall be carried out by the agency, organization, unit, or enterprise receiving the assets;

d) In cases where fixed assets are inventoried and re-evaluated according to the decision of the agency or authorized person, the depreciation of fixed assets shall be determined based on the re-evaluated value after the inventory from the fiscal year in which the agency or authorized person determines the re-evaluated value.

2. Principles for Amortizing Fixed Assets

a) The principle of amortizing fixed assets for fixed assets as prescribed in point a and point b, Clause 2, Article 12 of this Circular shall be implemented according to the provisions applicable to enterprises;

b) For fixed assets as prescribed in point c of Clause 2 of Article 12 of this Circular, the provision for depreciation of fixed assets shall begin from the date the fixed assets are put into business operation, leasing, joint venture, or joint operation and cease from the day after the end of the use of the fixed assets in business operation, leasing, joint venture, or joint operation;

c) Amortization costs of fixed assets must be allocated to each activity of public services, business operations, leasing, joint ventures, and associations to account for the costs of each corresponding activity.

Article 14. Determination of the period of use and depreciation rate of fixed assets

1. The useful life and depreciation rate of tangible fixed assets shall be implemented in accordance with the provisions in Appendix No. 01 issued together with this Circular.

For tangible fixed assets used in areas where weather conditions and environmental factors affect the depreciation rate of fixed assets, if it is necessary to specify a different useful life for fixed assets than that prescribed in Appendix No. 01 issued together with this Circular, the Minister or Head of the central agency shall specify in detail after obtaining the agreement of the Ministry of Finance; the People's Committee of the province shall specify in detail after obtaining the agreement of the Standing Committee of the Provincial People's Council. The adjustment of the depreciation rate of fixed assets shall not exceed 20% of the depreciation rate of fixed assets prescribed in Appendix No. 01 issued together with this Circular.

For transferred fixed assets that have not been recorded in the accounting books, the agency, organization, unit, or enterprise with the transferred assets or assigned the task of handling the assets shall determine the useful life and depreciation rate of the transferred fixed assets as a basis for accounting for fixed assets by the agency, organization, unit, or enterprise receiving the transferred assets.

For excess fixed assets discovered during the inventory of agencies, organizations, units, and enterprises, the agency, organization, unit, or enterprise shall re-determine the useful life and depreciation rate of the excess fixed assets as a basis for accounting for fixed assets.

2. The Minister, Head of Central Agencies, People's Committee of provinces shall issue regulations on the list, usage period, and depreciation rate of intangible fixed assets under their management (in accordance with Model No. 01 stipulated in Appendix No. 02 attached to this Circular).

The usage period of an intangible fixed asset shall not be less than four years and not exceed fifty years.

In cases where it is necessary to specify the usage period of an intangible fixed asset for less than four years, the Minister, Head of Central Agencies, People's Committee of provinces shall specify such period after obtaining the unified opinion of the relevant specialized management Ministries.

Article 15. Method for calculating depreciation of fixed assets

1. The annual depreciation amount of each fixed asset shall be calculated according to the following formula:

Annually, based on the determination of the increased and decreased depreciation amounts arising in the year, agencies, organizations, units, enterprises calculate the total depreciation amount of all fixed assets at the agency, organization, unit, enterprise for that year according to the following formula:

2. For fixed assets whose original cost has changed, agencies, organizations, units, enterprises base on the original cost indicators, remaining value of fixed assets after re-evaluation in accordance with Article 10 of this Circular, and the depreciation rate of fixed assets as prescribed in Article 14 of this Circular to continue calculating depreciation for the remaining years.

3. For fixed assets received from transfer, division, merger, dissolution of agencies, organizations, units, enterprises, the annual depreciation rate of fixed assets recorded in the accounting books of the receiving agency, organization, unit, enterprise is calculated according to the formula prescribed in Clause 1 of this Article; in which the original cost of fixed assets is determined in accordance with Clause 3 of Article 7 of this Circular, and the depreciation rate of fixed assets is as prescribed in Clause 1 of Article 14 of this Circular.

4. The depreciation amount of fixed assets for the last year within the usage period is determined as the difference between the original cost and the cumulative depreciation amount already implemented for that fixed asset.

Article 16. Provisions on Depreciation of Fixed Assets

1. For fixed assets prescribed in point a, point b, Clause 2, Article 12 of this Circular and fixed assets prescribed in point c, Clause 2, Article 12 of this Circular used entirely for business operations, leasing, joint ventures, joint operations, the entity implements the management and depreciation provisions applicable to enterprises.

The entity establishes and sends directly to the tax management authority information on the depreciation rate, depreciation amount in the year (in accordance with Model No. 04 stipulated in Appendix No. 02 attached to this Circular) for monitoring and management; the submission deadline is before January 1st each year.

2. Adjustment of the depreciation rate of fixed assets prescribed in Clause 1 of this Article shall be carried out as follows:

a) For fixed assets prescribed in point a, Clause 2, Article 12 of this Circular, in cases where the depreciation provision in Clause 1 of this Article affects the operation of public service entities, the public service entity reports to the superior management agency (if any) to submit to the Minister, Head of Central Agencies, People's Committee of provinces for consideration and decision on adjusting the depreciation rate of fixed assets to ensure suitability, quality, and public service fee levels provided by the entity;

b) For fixed assets prescribed in point b, Clause 2, Article 12 of this Circular, in cases where the depreciation provision in Clause 1 of this Article affects the operation of public service entities, the public service entity reports to the superior management agency (if any) to submit to the Minister, Head of Central Agencies, People's Committee of provinces for consideration and decision on adjusting the depreciation rate of fixed assets to ensure suitability with the pricing schedule for public services issued by competent authorities in accordance with regulations and not lower than the depreciation rate of fixed assets prescribed in this Circular;

c) For fixed assets prescribed in point c, Clause 2, Article 12 of this Circular used entirely for business operations, leasing, joint ventures, joint operations, in cases where it is necessary to depreciate according to the depreciation rate of fixed assets prescribed in this Circular, the entity using the asset reports to the superior management agency (if any) to submit to the competent authority for approval of the project using the asset for business operations, leasing, joint ventures, joint operations for consideration and decision on adjusting the depreciation rate of fixed assets to ensure suitability.

3. For fixed assets prescribed in point c, Clause 2, Article 12 of this Circular (excluding fixed assets being the brand of public service entities) used both for business operations, leasing, joint ventures, joint operations and for functional activities of public service entities, the following shall be implemented:

a) The unit calculates and determines the total depreciation value in the year of fixed assets according to the depreciation rate of fixed assets prescribed in this Circular;

b) Based on the usage period, frequency of use, or volume of work completed, the entity calculates the allocation of depreciation amount and depreciation in the total depreciation value determined in point a of this clause; establishes and sends to the direct tax management authority information on the depreciation amount and depreciation of assets in the year (in accordance with Model No. 04 stipulated in Appendix No. 02 attached to this Circular) for monitoring and management; the submission deadline is before January 1st each year;

c) The entity allocates the registered depreciation amount to record in the accounting for the cost of providing public services, business costs, leasing, joint ventures, joint operations; records the accounting for depreciation of fixed assets for the depreciation amount.

(Example 3 in Appendix No. 03 attached hereto).

4. For fixed assets being trademarks of public service organizations used for joint ventures, joint operations prescribed in point c of Clause 2 of Article 12 of this Circular, the following shall be implemented:

a) The determination of the value of the brand of public service entities for joint ventures, joint operations is carried out in accordance with the Guidelines of the Vietnam Valuation Standards System, intellectual property laws, and related laws as the basis for the competent authority to approve the value of the brand of the entity participating in joint ventures, joint operations;

b) The value of the brand of public service entities for joint ventures, joint operations approved by the competent authority is allocated corresponding to the time of participation in joint ventures, joint operations according to the project using the asset for the purpose of joint ventures, joint operations to record in the accounting for the cost of the joint venture, joint operation period.

5. Management and utilization of depreciation funds:

The amount deducted for depreciation of fixed assets as stipulated in Clauses 1, 2, 3, and 4 of this Article shall be added to the Fund for Developing Public Service Activities of the unit. In the case where fixed assets are invested in or purchased from borrowed funds or raised capital, the amount deducted for depreciation of fixed assets shall be used to repay principal and interest; any remaining amount (if any) shall be added to the Fund for Developing Public Service Activities of the unit.

Chapter IV

IMPLEMENTATION

Article 17. Transitional Provisions

1. For fixed assets whose rate of depreciation differs from that specified in this Circular compared to the rate of depreciation of fixed assets specified in Circular No. 162/2014/TT-BTC dated November 6, 2014 of the Ministry of Finance on the management system and calculation of depreciation of fixed assets in state agencies, public service units, and organizations using state budget funds, starting from the fiscal year 2018, the annual rate of depreciation of fixed assets shall be determined based on the original cost of the fixed asset and the rate of depreciation of fixed assets specified in this Circular for accounting purposes.

(Example 4 in Appendix No. 03 issued together with this Circular).

2. For fixed assets that have been assigned or transferred before the effective date of this Circular, if such assets were not recorded in the accounting books prior to assignment or transfer, or if they were not re-evaluated during the handover process, the receiving agency, organization, unit, or enterprise shall be responsible for re-evaluating the value of the asset according to Point a, Clause 3, Article 7 of this Circular for accounting purposes, determining the useful life and rate of depreciation of fixed assets as specified in Clause 1, Article 14 of this Circular as the basis for accounting for fixed assets.

Article 18. Effective Date

1. This Circular takes effect from July 2, 2018 and is applicable from the fiscal year 2018.

2. This Circular replaces Circular No. 162/2014/TT-BTC dated November 6, 2014 of the Ministry of Finance on the management system and calculation of depreciation of fixed assets in state agencies, public service units, and organizations using state budget funds.

3. During implementation, if any difficulties arise, agencies, organizations, units, and enterprises are requested to promptly report to the Ministry of Finance for coordination in resolving them./.