Instructions for changing the time for depreciation of fixed assets regulations

What types of assets do not have to be depreciated? Instructions on how to change the depreciation time of fixed assets according to current regulations?

1. What types of assets do not have to be depreciated?

Depreciation of fixed assets is understood as the systematic calculation and allocation of the original price of fixed assets to production and business costs during the depreciation period of the fixed assets.

Pursuant to Clause 1, Article 9 of Circular 45/2013/TT-BTC supplemented by Clause 1, Article 9 of Circular 45/2013/TT-BTC. 4 Article 1 of Circular 147/2016/TT-BTC, fixed assets that are not subject to depreciation include:

– Fixed assets that have been fully depreciated but are still being used in production and business activities.

– Fixed assets that have not yet been fully depreciated are lost.

– Other fixed assets of the business managed by an enterprise that is not owned by the enterprise (except for fixed assets under financial lease).

– Fixed assets that are not managed, monitored, or accounted for in the enterprise’s accounting books.

– Fixed assets used in welfare activities to serve the enterprise’s employees (except for fixed assets that serve employees working at the enterprise such as: mid-shift motels, mid-shift cafeteria, changing room, toilet, clean water tank, garage, medical room or station for medical examination and treatment, shuttle bus for workers, training and vocational training facilities, housing for workers invested in by the enterprise).

– Fixed assets from non-refundable aid after being handed over to the enterprise by the competent authority to serve scientific research. study.

– Intangible fixed assets are long-term land use rights with land use fees collected or receiving transfer of legal long-term land use rights.

– Type 6 fixed assets do not have to be depreciated, only open a detailed book to monitor the annual depreciation value of each asset and must not record a decrease in the capital source of the asset.

2. How to change the depreciation time of fixed assets according to current regulations?

In Clause 3, Article 10 of Circular 45/2013/TT-BTC, there are instructions to change the depreciation time of fixed assets as follows:

(1) In case the enterprise wants to determine the depreciation time of new and used fixed assets different from Depreciation time frame is specified in Appendix 1 issued with Circular 45/2013/TT-BTC, enterprises must make a plan to change the depreciation time of fixed assets on the basis of clearly explaining the following contents:

– Technical life of fixed assets according to design;

– Current status of fixed assets (time the fixed assets have been in use). usage, generation of assets, actual condition of assets);

– Effects of increasing and decreasing depreciation of fixed assets on production and business results and capital to repay debts of credit institutions.

– For assets formed from investment projects in the form of B.O.T, B.C.C, the enterprise must supplement the contract signed with the investor. private.

(2) Authority to approve the plan to change the depreciation time of fixed assets:

– Approval by the Ministry of Finance for:

+ Parent companies of economic groups, corporations, and companies with 51% or more charter capital held by the state as decided by ministries and the Prime Minister. established.

+ Subsidiaries in which 51% or more of the charter capital is held by the parent company of Economic Groups and Corporations.

– Department of Finance of provinces and centrally run cities approves Corporations and independent companies established by the People’s Committee of provinces and centrally run cities, and enterprises of other economic sectors with headquarters in the locality. table.

Based on the Plan to change the fixed asset depreciation time approved by the competent authority, within 20 days from the date of approval of the Plan, the enterprise must notify the tax authority directly managing it for monitoring and management.

(3) Enterprises are only allowed to change the depreciation time of fixed assets once for an asset. Extending the depreciation period of fixed assets ensures that the technical life of the fixed assets is not exceeded and does not change the business results of the enterprise from profit to loss or vice versa in the year in which the change is decided. In case an enterprise changes the depreciation time of fixed assets not in accordance with regulations, the Ministry of Finance and the tax authority directly managing it will request the enterprise to re-determine it in accordance with regulations.

3. How is illegal depreciation of fixed assets determined in taxable income?

Pursuant to the provisions of Clause 2, Article 9 of the Law on Corporate Income Tax 2008, amended and supplemented by Clause 5, Article 1 of the Law on Corporate Income Tax, amended in 2013, depreciation of fixed assets not in accordance with the law is determined to be a non-deductible expense when determining taxable income.