Vietnam’s new regulations on depreciation of fixed assets

Circular No. 28/2017/TT-BTC of the Ministry of Finance of Vietnam officially takes effect from May 26, 2017 and is applicable since the fiscal year of 2016, which amends and supplements certain provisions related to the depreciation of fixed assets regulated by the Ministry of Finance with important changes.

Circular No. 28/2017/TT-BTC annuls Clause 1 Article 1 of Circular No. 147/2016/TT-BTC dated October 13, 2016 of the Ministry of Finance of Vietnam on amendments to Circular No. 45/2018/TT-BTC dated April 25, 2013 and on guidelines for management, use, and depreciation of fixed assets.

Circular No. 28/2017/TT-BTC amends the third dash in Point dd Clause 2 Article 4 of Circular No. 45/2018/TT-BTC dated April 25, 2013 of the Ministry of Finance on guidelines for management, use, and depreciation of fixed assets.

According to this provision, with regard to the asset being a mixed-use building to be used for both business and sale or lease purposes as prescribed by law, the enterprise shall determine and have the value of separate parts of the building by its purpose recorded.

Specifically, the value of asset (area) of the mixed-use building to be used for business and for lease purposes (except for finance lease): the enterprise shall record the value of the asset (area) as fixed asset, manage, use and depreciate fixed asset as prescribed.

The value of asset (area) of the mixed-use building to be used for sale, the enterprise may not record it as fixed asset and make depreciation and monitor it as an asset for sale.

Criteria for determining value of each type of asset and allocate of the cost of asset to periods in which the asset is used equivalent to separate purposes of use shall be the ratio of value of each area by purpose of use to the work statement amount; or according to actual used area by purpose of use for recording.

If an enterprise has a mixed-use building whose value of asset (area) to be used for business purpose, or for sale or lease purpose might not be separated for determination, the enterprise may not record total value of asset (area) as fixed asset and make depreciation as prescribed.

With regard to shared assets of the mixed-use building namely playgrounds, paths, car park, each asset’s value shall be determined and the costs of asset shall be allocated to periods according to the equivalent criteria applied to the mixed-use building.

Source: Viet Nam Moi

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