THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No. 203/2009/TT-BTC
Hanoi, October 20, 2009
 
CIRCULAR
GUIDING THE REGIME OF MANAGEMENT, USE AND DEPRECIATION OF FIXED ASSETS
THE MINISTRY OF FINANCE
Pursuant to the 2008 Law on Enterprise Income Tax;
Pursuant to the Government's Decree No. 124/2008/ND-CP of December 11, 2009, detailing and guiding the implementation of a number of articles of the Law on Enterprise Income Tax;
Pursuant to the Government's Decree No. 118/2008/ND- CP of November 27, 2008, defining the functions, duties, powers and organizational structure of the Ministry of Finance;
The Ministry of Finance guides the regime of management, use and depreciation of fixed assets of enterprises as follows:
Part A
GENERAL PROVISIONS
Article 1. Subjects and scope of application:
1. This Circular applies to enterprises established and operating in Vietnam in accordance with law.
Depreciation costs of fixed assets calculated under this Circular may be used for determining deductible expenses for calculation of enterprise income tax.
2. The depreciation and calculation of depreciation costs stipulated in this Circular shall be applied to each fixed asset of enterprises
Article 2. Terms used in this Circular are interpreted as follows:
1. Tangible fixed assets means of production mainly in material forms which meet the standards of tangible fixed assets and which, while engaged in many business cycles, still maintain their initial material form such as buildings, architectural structures, machinery, equipment, means of transport, etc.
2. Intangible fixed assets means assets without material form which represent an invested amount of value and meet the standards of intangible fixed assets and are engaged in many business cycles such as certain expenses directly related to land use. issuance right, patent, copyright, etc.
3. Financial leasing fixed assets means fixed assets that an enterprise leases from a financial leasing company. Upon termination of the leasing term, the lessee may choose to purchase the leased assets or continue to lease the assets under the conditions agreed in the financial leasing contract. The total rent paid for an asset stated in the financial leasing contract must be at least equivalent to the value of such asset at the time the contract is signed.
All leased fixed assets which fail to meet the above regulations shall be considered operation leasing fixed assets.
4. Similar fixed assets means fixed assets with a similar utility in the same business line and of an equivalent value.
5. Historical cost of fixed asset:
- Historical cost of a tangible fixed asset means the total expenses that an enterprise has to incur to acquire such asset, calculated up to the time when the tangible fixed asset is made ready for use.
- Historical cost of an intangible fixed asset means the total expenses that an enterprise has to incur to acquire such asset, calculated up to the time when the intangible fixed asset is put into use as expected.
6. Reasonable value of fixed asset means the value of an asset which can be exchanged between parties with full knowledge in an equal value exchange.
7. Useful life of fixed asset means the duration for which an enterprise expects to use a fixed asset in business and production activities, or the duration which, according to current regulations, is determined on the basis of the quantity or volume of products expected to be produced from the use of such fixed asset in normal conditions in line with economic-technical parameters of the fixed asset and with other factors related to the operation of the fixed asset.
8. Wear and tear of fixed asset means the gradual devaluation of a fixed asset due to its involvement in business and production activities, natural corrosion, technical advancement, etc., in the course of operation of the fixed asset.
9. Value of accumulated wear and tear of fixed asset means the total value of wear and tear of a fixed asset up to the time of reporting.
10. Depreciation of fixed asset means the calculation and systematic allocation of the historical cost of a fixed asset to business and production expenses during the period of using such fixed asset.
11. Accumulated depreciation of fixed asset means the total amount of depreciation costs of a fixed asset which have been included in production and business expenses over the business period of the fixed asset, calculated up to the time of reporting.
12. Residual value of fixed asset means the difference between the historical cost of a fixed asset and the accumulated depreciation cost (or the value of accumulated wear and tear) of the fixed asset, calculated up to the time of reporting.
13. Repair of fixed asset means the renovation, maintenance and repair of a fixed asset when it is broken down in the course of operation in order to recover its operation capacity back to the initial standard operation conditions of fixed assets.
14. Upgrading of fixed asset means the reformation, construction and installation of, and provision of additional equipment to. a fixed asset in order to improve its capacity, the quality of its products, utility and performance as against its initial capacity, or to extend the useful life of the fixed asset; or the application of new technological processes which decrease operation expenses of the fixed asset compared with previous expenses.
Part B
PROVISIONS ON MANAGEMENT OF FIXED ASSETS
Article 3. Standards and identification of fixed assets:
1. Means of production which are tangible assets with an independent structure or a system of separate asset parts which are linked together to perform one or a number of particular functions and which could not operate properly if any part of the system is missing, shall be considered fixed assets if they concurrently satisfy three standards below:
a/ Future economic interests shall certainly be obtained from the use of such assets:
b/ Their useful life exceeds one year;
c/ Their historical cost must be determined reliably and equal to VND 10,000,000 (ten million) or more.
In case a system consisting of many separate asset parts linked together in which each part has a different useful life and the system could still perform its main operating function in case of absence of a certain part and that each part of the asset is required to be managed separately due to the requirement for management and use of it. the part of the asset shall be considered an independent tangible fixed asset if it concurrently satisfies three standards of fixed assets.
For animals working and/or generating products, each animal shall be considered a tangible fixed asset if it concurrently satisfies three standards of fixed assets.
For gardens of perennial trees, each garden or each tree shall be considered a tangible fixed asset if it concurrently satisfies three standards of fixed assets.
2. Standards and identification of intangible fixed assets:
Any actual cost incurred by an enterprise which satisfies concurrently three standards specified at Point 1 of this Article and does not form a tangible fixed asset shall be considered an intangible fixed asset.
Expenses which do not concurrently satisfy three standards specified at Point I, Article 3 of this Circular shall be directly included in or gradually allocated to business expenses of the enterprise.
In particular, costs incurred in the development stage shall be recognized as intangible fixed assets generated from internal activities of enterprises if they concurrently satisfy the following seven conditions:
a/ The enterprise has a technical feasibility study ensuring the completion of intangible fixed assets for putting them into use as expected, or for sale;
b/ The enterprise intends to complete the intangible fixed assets for use or for sale;
c/ The enterprise has an ability to use or sell such intangible fixed assets:
d/ The intangible fixed assets must generate future economic interests;
e/ The enterprise has sufficient technical and financial resources and other resources to complete the stages of development, sale or use of such intangible fixed assets:
f/ The enterprise has an ability to determine certainly the total costs in the development stage to generate such intangible fixed assets;
g/ The enterprise estimates that the intangible fixed assets meet full standards on useful life and value as prescribed.
Expenses for establishment of an enterprise, training of employees or advertisement incurred before the establishment of the enterprise, expenses in the research stage, expenses for relocation to another place and commercial goodwill are not intangible fixed assets and shall be gradually allocated to business expenses over a maximum period of 3 years from the time when the enterprise commences operation.
Article 4. Determination of historical costs of fixed assets:
1. Determination of historical costs of tangible fixed assets:
a/ Tangible fixed assets purchased:
The historical cost of a purchased tangible fixed asset (brand-new or used) consists of the actual purchase price payable plus (+) taxes (excluding taxes to be refunded) and relevant expenses calculated up to the time when such fixed asset is made ready for use such as interest on loans invested in the fixed asset; freight and stevedoring expenses; expenses for upgrading the fixed asset: expenses for installation and trial operation of the fixed asset; registration fee and other directly related expenses.
In case a tangible fixed asset is purchased on the basis of deferred payment or installments.
the historical cost of the purchased fixed asset includes the purchase price paid on the prompt payment basis at the time of purchase plus (+) taxes (excluding taxes to be refunded) and relevant expenses calculated up to the time when such fixed asset is made ready for use such as freight and stevedoring expenses; expenses for upgrading the fixed asset; expenses for installation and trial operation of the fixed asset; and registration fee (if any).
In case of purchasing tangible fixed assets being houses and architectural structures attached with land use rights, the value of land use rights shall be separately determined and recognized as intangible fixed asset, while the historical costs of tangible fixed assets being houses and architectural structures are the actually paid purchase price plus (+) expenses directly related to the putting of the tangible fixed assets into use.
If after purchasing tangible fixed assets being houses and architectural structures attached with land use rights, an enterprise dismantles or destroys them for constructing new ones, the value of land use rights shall be separately determined and recognized as intangible fixed asset; the historical costs of newly constructed fixed assets are the finalized prices of the constructed works in accordance to the current Regulation on management of investment and construction. Dismantled or destroyed assets shall be handled and accounted in accordance with the current regulations on liquidation of fixed assets.
b/ Tangible fixed assets purchased in the form of an exchange:
The historical cost of a tangible fixed asset purchased in the form of an exchange for a non-similar tangible fixed asset or a different asset is the reasonable value of the tangible fixed asset received or exchanged (after adding the amounts additionally payable or deducting the amounts receivable) plus (+) taxes (excluding taxes to be refunded) and directly related expenses calculated up to the time when such fixed asset is made ready for use such as freight and stevedoring expenses; expenses for upgrading the fixed asset; expenses for installation or trial operation; and registration fee (if any).
The historical cost of a tangible fixed asset which is purchased in the form of an exchange for a similar tangible fixed asset, or which is sold in exchange for the ownership of a similar tangible fixed asset is the residual value of the exchanged tangible fixed asset.
c/ Tangible fixed assets constructed or produced by an enterprise itself:
The historical cost of a tangible fixed asset which is constructed by an enterprise itself is the finalized price of the construction work when it is put into use. If the fixed asset has been put into use but its price has not yet been finalized, the enterprise shall account the asset's historical cost using the temporarily calculated price and adjust this price after the price of the construction work is finalized.
The historical cost of a tangible fixed asset is the actual production cost of the fixed asset plus (+) expenses for installation and trial operation and other directly related expenses calculated up to the time when such fixed asset is put into a ready-for-use state (except for internal profits. the value of recovered products in the process of trial operation, unreasonable expenses such as wasted materials, labor costs or other expenses in excess of the prescribed norms of expenses regulated for the construction or production).
d/ Historical cost of a tangible fixed asset formed from construction investment:
The historical cost of a tangible fixed asset formed from capital construction under the mode of tendering is the finalized price of the construction work in accordance with the current Regulation on management of investment and construction plus (+) registration fee and other directly related expenses. If the fixed asset formed from construction investment has been put into use but its price has not yet been finalized, the enterprise shall account the asset's historical cost using the temporarily calculated price and adjust it after the price of the construction work is finalized.
For fixed assets which are animals working and/or generating products, or gardens of perennial trees, the historical cost includes all actual expenses paid for the animals or gardens of perennial trees from the time when they are formed to the time when they are put into use.
e/ Tangible fixed assets donated, presented as gifts or discovered as excessive payment:
The historical cost of a tangible fixed asset which is granted, donated, presented as gift or discovered as excessive payment is the value according to the actual assessment of the fixed asset delivery and receipt council or a professional valuation organization.
f/ Tangible fixed assets allocated or transferred from elsewhere:
The historical cost of a tangible fixed asset which is allocated or transferred from elsewhere includes the residual value of such fixed asset stated in the accounting books of the allocating or transferring unit, or the value according to the actual assessment of a professional valuation organization in accordance with law plus (+) directly related expenses incurred by the recipient of the asset, calculated up to the time when such fixed asset is put into a ready-for-use state such as expenses for hiring the valuation organization, expenses for fixed asset upgrading, installation and trial operation, etc.
g/ Tangible fixed assets received as capital contribution or returned from contributed capital:
The historical cost of a tangible fixed asset which is received as capital contribution or returned from contributed capital is the value unanimously approved by founding members and shareholders; or agreed upon by the enterprise and capital contributor; or determined by a professional valuation organization in accordance with law and approved by founding members and shareholders.
2. Determination of historical cost of intangible fixed assets:
a/ Intangible fixed assets purchased:
The historical cost of a purchased intangible fixed asset is the actual purchase price payable plus (+) taxes (excluding taxes to be refunded) and directly related expenses calculated up to the time when such intangible fixed asset is put into use.
In case an intangible fixed asset is purchased on the basis of deferred payment or installments, the historical cost of the intangible fixed asset is the purchase price paid on the basis of a prompt payment at the time of purchase (excluding interests on deferred payments).
b/ Intangible fixed assets purchased in the form of an exchange:
The historical cost of an intangible fixed asset purchased in the form of an exchange for a non-similar intangible fixed asset or a different asset includes the reasonable value of the intangible fixed asset received or exchanged (after adding the amounts additionally payable or deducting the amounts receivable) plus (+) taxes (excluding taxes to be refunded) and directly related expenses calculated up to the time when such intangible fixed asset is put into use as expected.
The historical cost of an intangible fixed asset which is purchased in the form of an exchange for a similar intangible fixed asset, or which is sold in exchange for the ownership of a similar intangible fixed asset is the residual value of the exchanged intangible fixed asset.
c/ Intangible fixed assets granted, donated or presented as gifts or transferred from elsewhere:
The historical cost of an intangible fixed asset which is granted, donated or presented as gift or transferred from elsewhere is the initial reasonable value plus (+) directly related expenses calculated up to the time when the asset is put into use.
The historical cost of an intangible fixed asset which is transferred from elsewhere is the historical cost recorded in the accounting books of the transferring enterprise. The receiving enterprise shall account the historical cost, value of wear and tear and residual value of the asset according to regulations.
d/ Intangible fixed assets generated from internal activities of enterprises:
The historical cost of an intangible fixed asset generated from internal activities of an enterprise is expenses directly related to the construction and trial production incurred by the enterprise, calculated to the time when such intangible fixed asset is put into use as expected.
In particular, expenses arising from internal activities of an enterprise so that the enterprise has trademarks, issuance right, list of customers; expenses arising in the research stage and similar items which fail to satisfy the standards of intangible fixed assets and are not so recognized shall be accounted as business expenses in the period.
e/ Intangible fixed assets being land use rights:
- For an enterprise that is allocated land with land use levy payment: The historical cost of a fixed asset which is the assigned land use rights is the whole payment made to obtain the lawful land use rights plus (+) compensated amounts for ground clearance, expenses for leveling the ground, registration fee (excluding expenses paid for the construction of works on the land); or the value of land use rights contributed as capital.
- For an enterprise that leases land, the land rent shall be gradually allocated to its business expenses and shall not be recognized as intangible fixed asset, specifically:
+ If the enterprise leases land and pays the land rent in lump sum for the whole lease term, the land rent shall be gradually allocated to its business expenses according to the number of years of the lease.
+ If the enterprise leases land and pays the land rent on an annual basis, the land rent amount paid annually shall be accounted as business expenses in the period.
f/ Historical cost of intangible fixed assets being copyright, industrial property rights or rights to plant varieties as prescribed in the Law on Intellectual Property is the total of actual expenses incurred by the enterprise to obtain such copyright, industrial property rights or rights to plant varieties under the law on intellectual property.
g/ Historical of fixed assets being computer software:
The historical cost of a fixed asset being computer software is the total of expenses incurred by the enterprise to obtain the computer software in case the software is a component which can be separated from the relevant hardware or the layout design of semiconductor integrated circuits under the law on intellectual property.
3. Financial leasing fixed assets:
The historical cost of a financial leasing fixed asset recorded at the lessee is the value of the leased asset at the time when the lease of such asset commences or the current value of the minimum rent payment (if the value of the leased asset is higher than the current value of the minimum rent payment) plus (+) initial expenses arising in direct relation to the financial leasing.
4. The historical costs of fixed assets of enterprises may only be changed in the following cases:
a/ Revaluation of fixed assets in the following cases:
- Under decision of a competent state agency.
- Reorganization of the enterprise, change of ownership of the enterprise, transformation of the enterprise: separation, splitting, merger, consolidation, equitization, sale, contracting, lease, transformation of limited liability company into joint-stock company and vice versa.
- Use of assets for outward investment.
b/ Upgrading of fixed assets.
c/ Removal of one or a number of parts of the fixed asset which is/are managed according to the standards of a tangible fixed asset;
Upon change of the historical cost of a fixed asset, the enterprise shall make a minutes clearly stating the bases for such change and re-determine the items on historical cost, residual book value, accumulated depreciation of the fixed asset and the useful life of the fixed asset, and practice the accounting in accordance with current regulations.
Article 5. Principles on management of fixed assets:
1. Each fixed asset of an enterprise must have a separate set of file (including a written record of handover and receipt of the fixed asset, contract, invoice for purchase of the fixed asset and other relevant documents). Each fixed asset must be classified, numbered and given a separate card, and be monitored in detail according to its category, and shown in the log­book of fixed assets.
2. Each fixed asset must be managed in terms of its historical cost, accumulated depreciation cost and residual book value:
Residual book value of fixed asset = Historical cost of fixed asset - Accumulated depreciation of fixed asset
3. For fixed assets which are no longer needed, awaiting liquidation but not yet fully depreciated, an enterprise shall mange, monitor and preserve them according to current regulations and depreciate them under this Circular.
4. An enterprise shall manage fixed assets which have been fully depreciated but are still engaged in business activities in the same manner as normal fixed assets.

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