CIRCULAR

ON GUIDING THE REGIME FOR MANAGING AND CALCULATING DEPRECIATION OF FIXED ASSETS OF AGENCIES, ORGANIZATIONS OR UNITS AND FIXED ASSETS HANDED TO ENTERPRISES BY THE STATE WITHOUT CACULATION OF THE STATE CAPITAL PORTION OF SUCH ENTERPRISES

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

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

Pursuant to the Government’s Decree No. 151/2017/ND-CP dated December 26, 2017 on guidelines for certain Articles of the Law on Management and Use of Public Property;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 on defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the General Director of Department of Public Asset Management.

The Minister of Finance promulgates the Circular on guiding the regime for managing and calculating the depreciation of fixed assets of agencies, organizations or units and fixed assets handed to enterprises by the State without calculation of the state capital portion of such enterprises.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

1. This Circular guides the regime for managing and calculating the depreciation of fixed assets of regulatory agencies, public sector entities, units of people’s armed force, agencies of Communist Party of Vietnam and organizations funded by the State (hereinafter referred to as “agencies, organizations, units”) and of fixed assets handed to enterprises by the State without calculation of the state capital portion of such enterprises.

2. Regulations of the Minister of National Defense and the Minister of Public Security shall apply to depreciation of special and specialized fixed assets of the units of people's armed force specified in clause 1, clause 2, Article 64 of the Law on Management and Use of Public Property,

3. Regulations of the Minister of National Defense and the Minister of Public Security shall apply to depreciation of infrastructure assets which serve national and public interests and are specified in clause 2, Article 4 of the Law on Management and Use of Public Property.

Article 2. Regulated entities

1. The regime for managing and calculating the depreciation of fixed assets specified in this Circular shall apply to:

a. Fixed assets of regulatory agencies, public sector entities, units of people's armed force, agencies of Communist Party of Vietnam and social-political organizations.

b. Fixed assets which are office buildings, public service facilities of social-political and professional organizations, social organizations, social-professional organizations and other organizations which are established in accordance with the regulations in clause 1, Article 69, clause 2, Article 70 of the Law on Management and Use of Public Property.

c. Fixed assets handed to the enterprises by the State without calculation of the state capital portion of such enterprises.

2. Social-political organizations, social organizations, social-professional organizations and other organizations, which are established according to the law shall be encouraged to apply the regulations specified in this Circular, with the aim to manage and calculate the depreciation of fixed assets which are not specified in clause 1, Article 69, clause 2, Article 70 of the Law on Management and Use of Public Property.

Chapter II

REGULATIONS ON MANAGEMENT OF FIXED ASSETS

Article 3. Identification of fixed assets

1. Identification of tangible fixed assets

 A tangible fixed asset is an asset that has a physical form, independent structure, or is a system composed of multiple separate parts connected together to perform one or certain functions, and satisfy both requirements below:

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

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

2. Identification of intangible fixed assets

An intangible fixed asset is an asset that does not have a physical form and its formation is invested by an agency, organization, unit or enterprise or through an operation process. Also, it must satisfy both requirements specified in point a and b, clause 1 of this Article.

3. Based on the properties of the assets of sectors, fields or localities which are practically used and on the management requirements, the Ministers and Heads of ministerial agencies, governmental agencies and other central agencies (hereinafter referred to as “Ministers and Heads of central agencies), People's Committees of provinces and central-affiliated cities (hereinafter referred to as “Provincial People’s Committees) may promulgate the list of assets, which do not satisfy the requirements specified in clause 1, clause 2 of this Article, as fixed assets. They are under the management of the Ministries, central agencies and localities (using form No. 2 in Appendix 02 hereto). Such assets must satisfy 01 of 02 following requirements:

a. The asset (except buildings, constructions and architectural structures) must have a cost from 5.000.000 VND (5 million VND) to under 10.000.000 VND (ten million VND) and has a useful life of 01 year or more.

b. The asset is a fragile asset and has a cost of 10.000.000 VND (ten million VND) or more.

4. Identification of the fixed assets specified in clause 1, Article 16 hereof shall be carried out in accordance with the regulations applied to enterprises.

Article 4. Classification of fixed assets

1. Classification based on physical properties:

a. Tangible fixed assets

- Type 1: Buildings and constructions: offices, warehouses, auditoriums, clubs, cultural buildings, sport stadiums, museums, kindergartens, workshops, classes, lecture halls, dormitories, hospitals, convalescent homes, guest houses, houses, public houses, other buildings and constructions.

- Type 2: Architectural structures: warehouses, storage tanks, parking lots, drying grounds, sports grounds, swimming pools, bore wells, dug wells, fences and other architectural structures.

- Type 3: Cars, including: official state cars, cars serving general work, specialized cars, cars serving state reception and other cars.

- Type 4: Other vehicles (except cars): road transport vehicles, rail transport vehicles, water transport vehicles, air transport vehicles and other transport vehicles.

- Type 5: Machinery and equipment: Popular official machinery and equipment, equipment serving general activities; specialized machinery and equipment and other machinery and equipment.

- Type 6: Perennial plants, draught animals and/or animals serving production.

- Type 7: Other tangible fixed assets

b. Intangible fixed assets

- Type 1: Land use rights

- Type 2: Patents and copyrights.

- Type 3: Industrial proprietorship

- Type 4: Rights to plant varieties

- Type 5: Software

- Type 6: Brands of the public sector entities (including the following elements: potential, quality, reputation, long history and other elements that can create economical rights and benefits for such public sector entities).

- Type 7: Other intangible fixed assets

2. Classification based on the origins of assets, including:

a. Fixed assets form from procurement

b. Fixed assets form from investment in construction

c. Fixed assets provided or transferred

d. Fixed assets given or promoted

dd. Fixed assets not listed in the account book.

e. Fixed assets form from other sources

Article 5. Special assets

1. Fixed assets of which costs of forming or real values are not determined, however, they require to be managed strictly, (such as: antiques, exhibits in museums, monuments, ranked historical relics), fixed assets which are brands of public sector entities and have undetermined costs of forming and are defined as special assets.

2. Based on the actual conditions and management requirements for the assets specified in clause 1 of this Article, Ministers and Heads of central agencies and People’s Committees of provinces shall promulgate the list of special assets under the management of ministries and central or local agencies (using form No. 03 in Appendix 02 hereto) in order to exercise unified management.

3. The cost of a special asset recorded in the accounting book and declared while logging information into National Asset Database shall be determined according to the conventional price. The conventional price of one special asset is 10.000.000 VND (ten million VND).

Article 6. Fixed assets recorded in the accounting book

1. An independent asset is a fixed asset to be recorded in the accounting book

2. 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, then such system is determined as a fixed asset to be recorded in the accounting book.

3. 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, then such system is determined as a fixed asset to be recorded in the accounting book.

4. If each drought animal and/or each producing animal has a value of 10.000.000 VND (ten million VND) or more, it shall be determined as a fixed asset to be recorded in the accounting book.

5. If each independent garden costs 10.000.000 VND (ten million VND) or more (without the value of land use rights) or each perennial plant costs 10.000.000 VND (ten million VND) or more, it shall be determined as a fixed asset to be recorded in the accounting book.

Article 7. Determination of costs of tangible fixed assets

The costs of tangible fixed assets specified in point a, clause 1, Article 4 hereof (except special assets mentioned in Article 5 hereof) are determined as follows:

1. The cost of a fixed asset formed from procurement is determined according to the following formula:

Where:

a. Discounts or reductions or charges imposed on sellers (if any) are the amounts deducted to the value on the invoice. Such deduction shall be made if the value on invoice includes the above discounts or reductions or charges.

b. Other costs (if any) are the reasonable costs related to the procurement of fixed assets. They are paid by the agencies, organizations, units or enterprises before these fixed assets are put into use. If a general cost involves multiple fixed assets, it must be distributed among the assets according to appropriate criteria (quantity and value on their invoices)

2. The cost of a fixed asset formed from the investment in construction is the recorded value approved by a competent authority or a competent person in accordance with the regulation on investment and construction.

a. If an asset is brought into use (after the completion of investment in construction) without a recorded value or an approval from a competent agency or a competent person, it shall be recorded as a fixed asset into the accounting book by the agencies, organizations, units or enterprises from the date on which the Acceptance Record is received. The cost recorded in the accounting book is a temporary cost. The temporary cost in this case is selected according to the following priority order:

- Recorded value

- Value determined according to the Acceptance Record A-B

- Estimated value of the approved project

b. If the recorded value is approved by a competent agency or a competent person, the agencies, organizations, units or enterprises shall modify the temporary cost specified in the accounting book based on the recorded value which is approved; also, they shall determine the residual value and the accrued depreciation of the fixed asset in order to modify the accounting book and apply accounting.

c. If the project includes multiple different items or assets (entities to be recorded as fixed assets in the accounting book) which are not estimated and recorded respectively, the value estimated and recorded by a competent agency or a competent person must be allocated for each item or asset in order that such value will be recorded in the accounting book based on an appropriate standard (area, quantity and specific estimated value of each asset or item).

3. The cost of a fixed asset, which is provided or transferred, shall be determined as follows:

Where:

a. Value in the record on transfer and receipt of assets is the cost of a fixed asset. Such value is recorded in the accounting book or is the residual value of the fixed asset which is provided and transferred according to the re-evaluation report submitted to a competent agency or a competent person who approves such provision and transfer (for the assets which are not recorded in the accounting book).

Agencies, organizations, units or enterprises that own the transferred assets or are assigned with the task for making plans to handle them shall revaluate such assets (for the assets which are not recorded in the accounting book) before reporting their values to a competent agency or a competent person who can make the decision to provide and transfer such assets. The revaluation of the assets shall be carried out based on the remaining useful life of such assets and the actual unit price of such assets being newly purchased at the time of transfer.

Where:

- The ratio % of the remaining useful life of the asset is determined according to the current state of such asset, the depreciation time of the similar asset and the actual period during which the asset is used.

- The purchase price of the asset is the price of the similar and brand-new asset which is sold in the market at the time of transfer.

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

b. Other costs (if any) are the reasonable costs related to the receipt of fixed assets which is provided or transferred. They are paid by the receiving agencies, organizations, units or enterprises before the fixed assets are put into use. If a general cost involves multiple fixed assets, it must be distributed among the assets according to appropriate criteria (quantity and value on their invoices)

(Example 1 in Appendix 03 hereto).

4. The cost of a fixed asset, which is given or promoted, is determined as follows:

Where:

a. Value of a given asset is determined according to the regulation on assets under ownership of the public and handling of such assets.

b. Value of a promoted asset is determined by the agencies, organizations, units or enterprises that receive such asset, based on the market price of the similar asset or the asset which has similar technical standards or similar origin.

c. Other costs (if any) are reasonable costs related to the receipt of fixed assets which are given or promoted. Such costs are paid by the receiving agency, organization, unit or enterprise before the fixed assets are put into use. If a general cost involves multiple fixed assets, it must be distributed among the assets according to appropriate criteria (quantity and value on their invoices)

5. The cost of a fixed asset, which is detected as an extra asset and is not listed in the accounting book, shall be determined as follows:

Where:

a. The value specified in the Stocktaking Record is the residual value of the extra fixed asset which is detected on such record based on the revaluation at the time of stocktaking.

The agencies, organizations, units or enterprises that detect the extra fixed asset during stocktaking shall revaluate such asset in order to record it into the Stocktaking Record and to determine its cost and record such cost into the accounting book. The revaluation of the asset must be based on the remaining useful life of such asset and the actual unit price of such asset being newly purchased at the time of stocktaking

Where:

- The ratio % of the remaining useful life of the asset is determined according to the current state of asset, the depreciation time of the similar asset and the actual period during which the asset is used.

- The purchase price of the asset is the price of the similar and brand-new asset which is sold in the market at the time of stocktaking.

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

b. Other costs (if any) are the reasonable costs paid by the agencies, organizations, units or enterprises before the fixed assets are put into use. If a general cost involves multiple fixed assets, it must be distributed among the assets according to appropriate criteria (quantity and value on their invoices)

Article 8. Determination of costs of intangible fixed assets

The costs of the intangible fixed assets specified in point b, clause 1, Article 4 hereof (except special assets specified in Article 5 hereof) shall be determined as follows:

1. The cost of an intangible fixed asset is the land use right. In certain cases, the value of such right must be determined to include in the value of asset as specified in Article 100 of the Government's Decree No. 151/2017/ND-CP dated December 26, 2017 (hereinafter referred to as “Decree No. 151/2017/ND-CP”). The value of the land use right is determined according to clause 1, 2 and 3 of Article 102 of the Decree No. 151/2017/ND-CP plus (+) taxes (exclusive of tax refunds) and other fees and charges specified in the law on fees and charges.

2. The cost of an intangible fixed asset is the right to use the land from the State. The lump sum land rent for the entire lease term is paid according to the law on land. The payment for such rent shall not be derived from state budget. The right to use the land is transferred to the agencies, organizations, units or enterprises. The sum of money received from the transfer of such right shall not be derived from state budget; it is the lump sum land payment for the entire lease term. The formula is: such sum of money plus (+) compensation cost or land clearance. This formula is applicable to the cases where the investor leases a land from the state and pays for the lump sum land rent for the entire lease term (if any, and for the cases where the compensation cost and land clearance cost are not included in the project investment cost and business production cost or are not approved to be deducted from the land rent by a competent agency or a competent person).

3. The costs of the intangible fixed assets specified in point b, clause 1, Article 4 hereof (except the land use right specified in clause 1, clause 2 of this Article) are the costs fully paid by the agencies, organizations, units or enterprises in order to own such assets (if these costs are not included in the project investment and business production cost or are not approved to be deducted from financial obligations according to the laws).

Article 9. Use of costs of fixed assets

1. The costs of the fixed assets which are determined according to the regulations in clause 3, Article 5, Article 7 and Article 8 hereof shall be recorded in the accounting book and declared while logging information into the Public Property National Database.

2. The costs of the fixed assets which are determined according to the regulations in clause 3, Article 5, Article 7 and Article 8 hereof shall not be used in cases where the assets are sold, the land use right is transferred and their values are determined to make capital contribution in joint venture and association and to use fixed assets to pay for the investors while carrying out the construction investment project in the form of build-transfer contract, to use fixed assets to participate in investment projects in the form of public-private partnerships. The determination of the values of such fixed assets shall be carried out in accordance with the Law on Management and Use of Public Property, Decree No. 151/2017/ND-CP and other related laws.

Article 10. Changes of costs of fixed assets

1. The cost of a fixed asset must be changed in the following cases:

a. The value of fixed asset is revaluated according to the decision of the competent regulatory agency.

b. The fixed asset is upgraded, expanded and repaired according to the project approved by a competent agency or a competent person.

c. One or certain parts of the fixed asset are dismantled or installed more.

d. The value of land use right is adjusted in the cases specified in clause 1, Article 8 hereof and according to the regulations in clause 1, Article 103 of the Decree No. 151/2017/ND-CP.

2. If there are changes made to cost of a fixed asset (unless the fixed asset is the land use right specified in point d, clause 1 of this Article), the agencies, organizations, units or enterprises shall make a report providing clear explanations about such changes; also, they shall re-establish the standards for the cost and the residual value of such asset in order to modify the accounting book and apply accounting.

(Example 2 in Appendix 03 hereto).

If the project on upgrading, expanding and repairing fixed assets includes multiple different items or assets (entities to be recorded as fixed assets in the accounting book) which are recorded respectively, the recorded value approved by a competent agency or a competent person must be allocated for each item or asset in order that it can be recorded in the accounting book based on appropriate standards (area, quantity and specific estimated value of the upgrade, expansion and repair of each asset or item).

3. If there are changes made to the cost of a fixed asset which is a land use right, the agencies, organizations, units or enterprises shall make a report providing clear explanations about such changes; also, they shall revaluate the land use right in order to adjust the accounting book and apply accounting.

The cost of an intangible fixed asset is the land use right regarding the cases specified in clause 1, Article 8 hereof. They are revaluated according to the formula: revaluated value of land use right plus (+) taxes (exclusive of the tax refunds) and other fees and charges according to the law on fees and charges.

The revaluation of land use right shall be carried out according to the formula specified in clause 1, clause 2, Article 102 of the Decree No. 151/2017/ND-CP, with the land area standards, land use purpose, land price and adjustment factor of land price at the time of revaluation of land use right.

Article 11. Management over fixed assets

1. All current fixed assets of agencies, organizations, units or enterprises shall be managed strictly regarding their physical states and values. Such management must comply with the law on management and use of public property and other related laws.

2. Agencies, organizations, units and enterprises shall tag their existing fixed assets in accordance with applicable accounting regulations; carry out annual stocktaking of fixed assets; submit reports to supervisory finance authorities for comparison between the stocktaking result and book values; submit reports on management and use of fixed assets in accordance with regulations of law on management and use of public assets.

3. The fixed asset of which the depreciation has been calculated and is still useful shall continue to be managed by the agencies, organizations, units or enterprises according to the law.

Chapter III

REGULATION ON DEPRECIATION OF FIXED ASSETS

Article 12. Scope of depreciation calculation of fixed assets

1. The current fixed assets of agencies, organizations and units and the fixed assets provided to the enterprises by the state without calculation of the state capital portion shall be calculated for their depreciation, except the cases specified in clause 2, clause 3 of this Article.

2. The fixed assets of public sector entities must be depreciated according to Article 16 hereof, including:

a. The fixed assets of public sector entities that pay for the regular expenses and investment expenses themselves.

b. The fixed assets of public sector entities which require its depreciation to be included in the service price according to the law.

c. The fixed assets of public sector entities which are not specified in point a and b of this clause shall be used in business activities, leasing activities, joint venture and association activities without establishing new legal entity.

3. The following fixed assets shall not be calculated for their depreciation:

a. The fixed assets are the land use rights which must be determined to be included in the value of such assets as specified in Article 100 of the Decree No. 151/2017/ND-CP

b. The special fixed assets specified in Article 5 hereof, except the fixed assets which are brands of public sector entities and are used in joint venture and association activities without establishing new legal entity according to point c, clause 2 of this Article.

c. Rented fixed assets.

d. Fixed assets being kept on behalf of the State.

dd. Fixed assets that are still usable after their depreciation is being fully calculated or their costs are being completely depreciated.

dd. Fixed assets that are not usable though their depreciation is not fully calculated and their costs are not completely depreciated.

Article 13. Rules for calculating depreciation of fixed assets and depreciate them

1. Rules for calculating depreciation of fixed assets

a. The depreciation of fixed assets shall be calculated once every year in December before the accounting book is closed. The scope of fixed assets being calculated for their depreciation is for all current fixed assets specified in clause 1, Article 12 hereof, by December 31 of the calculating year.

b. The depreciation of the fixed assets specified in point c, clause 2, Article 12 hereof shall be calculated and such assets shall also be depreciated according to the regulations in Article 16 hereof.

c. If the agencies, organizations, units or enterprises are transferred, split, merged or dissolved, the depreciation of their fixed assets during the financial year, in which the competent agency or the competent person decides such transfer, separation, merging and dissolution, shall be calculated at the receiving agencies, organizations, units or enterprises.

d. If the fixed assets are counted and evaluated according to the decision of the competent agency or the competent person, the depreciation of such assets shall be determined on the basis of revaluation after stocktaking in the financial year in which the competent agency or competent person determines the revaluated value.

2. Rules for depreciating fixed assets

a. The rules for depreciating the fixed assets specified in point a and b, clause 2 and Article 12 hereof shall be applied in accordance with the regulations for enterprises.

b. As for the fixed assets specified in point c, clause 2, Article 12 hereof, the depreciation shall be carried out from the date on which such assets are put into use in the following activities: business, leasing, joint venture and association. The depreciation of such assets shall be stopped after the date on which such assets stop being used for the above activities.

c. The depreciation cost shall be allocated for each professional activity, business activity, leasing activity, joint venture activity and association activity in order to record the cost of each corresponding activity.

Article 14. Determination of the useful life and depreciation rate of fixed assets

1. The useful life and depreciation rate of tangible fixed assets shall be determined according to the regulations in Appendix 01 hereto.

If the tangible fixed assets are used in the area where the weather and environmental conditions can affect their depreciation, in necessary cases, the useful life of such assets shall be stipulated differently from the regulations in Appendix 01 hereto. The Ministers and Heads of central agencies shall provide the specific regulation on such useful life after receiving the agreement from the Ministry of Finance; the People’s Committee of the province shall provide the specific regulation on such useful life after receiving the agreement from the Standing Committee of People's Council. The depreciation rate shall not be adjusted for more than 20% of the depreciation rate specified in Appendix 01 hereto.

If the fixed assets are provided and transferred without recording in the accounting book, the agencies, organizations, units or enterprises which own such assets or is assigned with the task of handling such assets shall re-examine their useful life and depreciation rate, in order for the agencies, organizations, units or enterprises assigned to transfer such assets to use the re-examined result as the basis for accounting such assets.

 The useful life and depreciation rate of the extra fixed assets detected by agencies, organizations, units or enterprises shall be re-examined by them and used as the basis for accounting fixed assets.

2. The Ministers and Heads of central agencies and the People’s Committee of province shall promulgate the regulation on the list of intangible fixed assets under the management of Ministries and central or local agencies. Such regulation must specify the assets’ useful life and depreciation rate (using form No. 01 in Appendix 02 hereto).

The useful life of an intangible fixed asset shall not be lower than 04 (four) years and shall not exceed 50 (fifty) years.

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

Article 15. Methods for calculating the depreciation of fixed assets

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

 Annually, based on the depreciation that increases and decreases in the year, the agencies, organizations, units or enterprises shall calculate the total depreciation of all of their fixed assets as follows:

2. As for the fixed assets of which the prices are changed, the agency, organization, unit or enterprise shall rely on the price standards and residual value of such assets after re-determination according to Article 10 hereof, and the depreciation rate of such assets according to Article 14 hereof to continue calculate the depreciation of the fixed assets of the remaining years.

3. As for the fixed assets received from the transfer, separation, merging and dissolution of an agency, organization, unit or enterprise, the annual depreciation of the fixed assets recorded in the accounting book at the agency, organization, unit or enterprise receiving such assets shall be calculated according to the formula specified in clause 1 of this Article, where the value of fixed assets are determined according to the regulations in clause 3, Article 7 hereof, the depreciation rate of fixed assets are determined according to the regulations in clause 1, Article 14 hereof.

4. The depreciation expense in the last year of the useful life of a fixed asset is the difference between its cost and the accrued depreciation of the fixed asset.

Article 16. Regulations on depreciation of fixed assets

1. The fixed assets specified in point a and b, clause 2, Article 12 hereof and those specified in point c, clause 2, Article 12 hereof shall be used the whole time for the following activities: business, leasing, joint venture and association. The unit shall carry out management and apply depreciation method according to the regulations for enterprises.

The unit shall make a report about the annual depreciation rates and annual depreciation costs and send such report to the tax administration agency (using form No. 04 in Appendix 02 hereto) for supervision and management; the time limit for sending such report must be before January 01 every year.

2. The depreciation rates of the fixed assets specified in clause 1 of this Article shall be adjusted as follows:

a. As for the fixed assets specified in point a, clause 2, Article 12 hereof, if the depreciation specified in clause 1 of this Article affects the operation of the public sector entities, such entities shall make a report about this case and send it to the higher management agency (if any), in order for this agency to forward such report to the Ministers and Heads of central agencies and the People’s Committee of province for decision on adjustment of depreciation rate of fixed assets. The aim of such adjustment is to satisfy the requirements for prices for public services provided by the public sector entities.

b. As for the fixed assets specified in point b, clause 2, Article 12 hereof, if the depreciation carried out in accordance with clause 1 of this article affects the operation of public sector entities, such entities shall send a report about such case to the higher management agency (if any) in order for this agency to forward it to the Ministers and Heads of central agencies and People’s Committee of province for decision on adjustment of depreciation rates of fixed assets. Such adjustment aims to comply with the road map for calculating the public service prices promulgated by a competent agency or competent person according to the regulations. Also, these depreciation rates shall not be lower than the equivalent depreciation rates hereof.

c. As for the fixed assets specified in point c, clause 2, Article 12 hereof, which are used the whole time for the following activities: business, leasing, joint venture and association, if the depreciation of these assets is required to be carried out based on the depreciation rates of the equivalent fixed assets specified in this Decree, the units using these assets must send a report about this case to the higher management agency (if any) in order for this agency to forward this report to the competent agency or the competent person, who approves the scheme for using these assets in the following purposes: business, leasing, joint venture and association. This agency or person shall consider deciding the adjustment of depreciation rates of these fixed assets.

3. As for the fixed assets specified in point c, clause 2, Article 12 hereof (except the fixed assets which are brands of public sector entities) which are recently used in the following activities: business, leasing, joint venture and association based on the functions and tasks of the public sector entities:

a. The unit shall calculate and determine the annual total depreciation value of fixed assets based on their depreciation rates hereof.

b. Based on the useful life, use frequency or amount of finished works, the unit shall calculate and allocate the depreciation costs and the total depreciation cost which are determined in point a of this clause; make an annual report about the depreciation costs of such assets and send this report to the tax administration agency in person (using form No. 04 in Appendix 02 hereto) for supervision and management; the time limit for sending such report must be before January 01 every year.

c. The unit shall allocate the registered depreciation costs in order to aggregate them into the expenses on public professional service provision, business, leasing, joint venture and association; record the depreciation costs of fixed assets.

(Example 3 in Appendix 03 hereto).

4. As for the fixed assets which are brands of the public sector entities and are used in joint venture and association activities specified in point c, clause 2, Article 12 hereof:

a. The value of the brands of public sector entities shall be determined according to the guidelines of Vietnamese Valuation Standard System, the law on intellectual property and other related laws, in order to be used as the basis for the competent agency or the competent person to approve the value of the brands of such unit.

b. The value of the brands of public sector entities used as capital contribution in joint venture and association activities, which are approved by the competent agency or competent person, shall be allocated according to duration of the joint venture or association and the scheme for using assets in joint venture or association purposes in order to aggregate them into the expenses on service provision of the duration of joint venture.

5. Management and use of the amount from depreciation:

The amount from depreciation regarding the fixed assets specified in clause 1, 2, 3 and 4 hereof shall be added into to the Fund for Developing Professional Activities of the unit.

For the fixed assets which are invested and procured by using the lending and mobilizing sources, the amount from depreciation of these assets shall be used for making repayment both interest and principal; the residual amount (if any) shall be added into the Fund for Developing Professional Activities of the unit.

Chapter IV

IMPLEMENTATION

Article 17. Transitional provisions

1. As for the fixed assets of which the depreciation rates are changed in this Circular compared to the depreciation rates specified in Circular No. 162/2014/TT-BTC dated November 06, 2014 of the Ministry of Finance, from the financial year 2018, their annual depreciation costs shall be determined according the costs and the depreciation rates hereof in order to record them into the accounting book.

(Example 4 in Appendix 03 hereto).

2. As for the fixed assets which receive the decision to be provided and transferred before this Circular comes into force and are not recorded into the accounting book before such provision or transfer or are not revaluated during the provision or transfer process, then the receiving agencies, organizations, units or enterprises shall revaluate such assets according to the regulations in point a, clause 3, Article 7 hereof, in order to record them into the accounting book. They shall also determine the useful life and the depreciation rate of such assets according to the regulations in clause 1, Article 14, hereof, in order that such results are used as the basis for accounting such assets.

Article 18. Entry into force

1. This Circular shall come into force from July 02, 2018 and shall be apply from the financial year of 2018.

2. This Circular shall replace Circular No. 162/2014/TT-BTC dated November 06, 2014 of the Ministry of Finance on guiding the regime for managing and calculating depreciation of fixed assets of regulatory agencies, public sector entities and organizations funded by state budget.

3. If there is any difficulty arisen during the implementation process, the agencies, organizations, units or enterprises shall send timely feedback to the Ministry of Finance for cooperation in handling such difficulty.

APPENDIX NO. 01

(Enclosed with the Circular No. 45/2018/TT-BTC dated May 07, 2018 of the Minister of Finance)

USEFUL LIFE AND DEPRECIATION RATE OF TANGIBLE FIXED ASSETS