Depreciation period and rate of fixed assets of State agencies in Vietnam

Standards of fixed assets of State agencies in Vietnam

The standards of fixed assets of State agencies in Vietnam are specified in Article 3 of Circular 23/2023/TT-BTC (effective from June 10, 2023 and applied from the fiscal year 2023), specifically as follows: after:

(1) Identification of fixed assets of State agencies in Vietnam

- An independent asset is an asset.

- If a system composed of multiple separate parts which are connected to perform one or certain functions, lacks any of these parts making it unable to operate, such system is identified as an asset.

- If a system composed of multiple separate parts linked together of which the useful life cycle is different remains able to perform its main functions in case of lack of any of such part, but it and its parts need to be separately managed, each part is identified as an asset.

- Each drought animal and/or each producing animal is identified as an asset.

- Each independent and perennial garden or each perennial plant is identified as an asset.

- Land use right for each land plot or the area assigned to an agency, organization or unit in each land plot is identified as an asset.

- Intellectual property right registered and established according to each copyright registration certificate, copyright-related right registration certificate, protection title for industrial property, or plant varieties patent is identified as an asset.

- Each software is an asset.

-  Brand of each public service provider is an asset.

(2) Assets specified in (1) (except for assets specified in (3)) shall be identified as fixed assets if they meet 02 standards below:

- The useful life is 01 (one) year or more.

- The historical cost is 10.000.000 VND (ten million VND) or higher.

(2) Assets specified in (1) of public service providers that have guaranteed recurrent expenditure and investment expenses, assets of public service providers which require its depreciation to be included in the service price according to the law and assets of public service providers used in business, lease, joint venture and association without establishment of new legal entity according to the law shall be identified as fixed assets when they meet 02 standards below:

- The useful life is 01 (one) year or more.

- They meet standards of historical costs of fixed assets according to regulations applicable to enterprises.

Depreciation period and rate of fixed assets of State agencies in Vietnam (Internet image)

Depreciation period and rate of fixed assets of State agencies in Vietnam

Depreciation period and rate of fixed assets of State agencies in Vietnam are specified in Article 13 of Circular 23/2023/TT-BTC, specifically as follows:

(i) The depreciation period and rate of tangible fixed assets shall be determined according to the regulations in Appendix 01 to Circular 23/2023/TT-BTC, except for the following cases:

- If the tangible fixed assets are used in the area where the weather and environmental conditions can affect their depreciation, in necessary cases, the depreciation period and rate of such assets shall be stipulated differently from the regulations in Appendix 01 to Circular 23/2023/TT-BTC.

Ministers, Heads of central agencies and the People's Committees of provinces shall provide specific regulations on such depreciation period and rate.  The depreciation rate shall not be adjusted for more than or less than 20% of the depreciation rate specified in Appendix 01 to Circular 23/2023/TT-BTC.

- In case of a fixed asset whose historical cost is changed and which is upgraded and expanded according to the project approved by a competent agency or person specified at Point b, Clause 1, Article 9 of Circular 23/2023/TT-BTC, the depreciation period of the fixed asset equals (=) the actual period which the asset is used before change (+) the remaining depreciation period of the fixed asset after upgradation and expansion.

The remaining depreciation period of the fixed asset after upgradation and expansion shall be determined according to the following formula:

Remaining depreciation period of the fixed asset after upgradation and expansion equals (=) (the historical cost of the fixed asset after change minus (-) the accumulated depreciation, the depreciation deducted of the fixed asset calculated as at December 31 of the year in which the historical cost is changed) divided by (:) the annual depreciation expense of the fixed asset from the year in which the historical cost is changed, which is determined according to regulations in Point a, Clause 6 Article 14 of Circular 23/2023/TT-BTC.

- In case of a fixed asset whose historical cost is changed and which is partially lost or seriously damaged due to natural disasters, force majeure events or other unexpected impacts specified at Point dd, Clause 1, Article 9 of Circular 23/2023/TT-BTC, the depreciation period of the fixed asset equals (=) the actual period which the asset is used before change (+) the remaining depreciation period of the fixed asset according to revaluation.

- Regarding a fixed asset whose historical cost is adjusted or changed according to regulations in Points a and d Clause 2 Article 6 and Points c and d Clause 1 Article 9 of Circular 23/2023/TT-BTC:

= If the historical cost of the fixed asset is adjusted or changed before it is fully depreciated, this fixed asset shall be depreciated until the year in which its residual value by December 31 of the preceding year is smaller than or equal to the annual depreciation expense.

= If the historical cost of the fixed asset is adjusted or changed after the asset has been fully depreciated, 01 year (the year in which the historical cost of the fixed asset is adjusted or changed) shall be added to the depreciation period in order to settle any increase or decrease in asset's value due to change or adjustment of the historical cost.

(2) Ministers, heads of central agencies and the People's Committees of provinces shall elaborate the list, the depreciation period and rate of intangible fixed assets (except for brands of public service providers) under management by ministries, central agencies and localities (according to Form No. 01 specified in Appendix 02 issued with Circular 23/2023/TT-BTC).

The depreciation period of an intangible fixed asset shall not be less than 04 years and more than 50 years.

In necessary cases where the depreciation period of an intangible fixed asset shall be specified as less than 04 years, Ministers, Heads of central agencies and the People's Committee of province shall provide specific regulations after receiving the agreement from the related Administrative Ministry.

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