THE MINISTRY OF          SOCIALIST REPUBLIC OF VIETNAM

FINANCE              Independence - Freedom - Happiness

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No:  10/2019/TT-BTCHanoi, February 18, 2019

CIRCULAR

GUIDING THE VALUATION OF ASSETS FORMED BY SCIENCE AND TECHNOLOGY TASKS USING CENTRAL CAPITAL

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

Pursuant to the Law on Science and Technology dated June 18, 2013;

Pursuant to the Law on Technology Transfer dated June 21, 2017;

Pursuant to the Law on Prices dated June 20, 2012;

Pursuant to the Government’s Decree No. 70/2018/ND-CP dated  May 15, 2018 regulating the management and use of assets formed through the implementation of scientific and technological tasks used state capital; Pursuant to the Government s Decree No. 87/2017/ND-CP dated  July 26, 2017 stipulating the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Director of Department of Price Management;

Minister of Finance issues the Circular guiding the valuation of assets-generated by scientific and technological tasks using central capital.

Chapter I.

GENERAL PROVISIONS

Article1. Scope of regulation

This Circular guides the valuation of assets formed by scientific and technological tasks using central capital (fully or partly funded by state budget) for the purposes of transferring the ownership and use right regarding those assets.

Article 2. Subjects of implementation

This Circular shall apply to the objective as followings:

1.           Agencies which manage scientific and technological tasks using state capital.

2.           Agencies, organizations and individuals that are entitled with ownership and use rights of those assets formed by scientific and technological tasks using state capital (hereinafter referred to as entitled agencies, organizations and individuals).

3.           Valuation enterprises; competent and experienced service providers with the function of providing price consultancy being hired to valuate and consult the value of assets formed by scientific and technological tasks.

4.           Other organizations and individuals related to valuation of assets generated by scientific and technological tasks.

Chapter II

VALUATION OF ASSETS FORMED BY SCIENTIFIC AND

TECHNOLOGICAL TASKS

Article 3. Competence and method of asset valuation

1.           Agencies in charge of managing scientific and technological tasks having competence to valuate the assets formed by scientific and technological tasks shall submit plan for settlement and decision of considered assets to the authorized authorities or individuals.

Agencies in charge of managing scientific and technological tasks are authorized to hire valuation enterprises or competent and experienced organizations with the function of providing price consultancy to conduct valuation and providing valuation services or consultancy on valuation of assets formed by scientific and technological tasks.

2.           Methods for asset valuation are methods prescribed under Article 7, Article 8, Article 9 and Article 10 of this Circular. In case of two or more methods applied, it is recommended to assess and specify which method is the main method, which method is used to check and compare the results, thereby analyzing and calculating to come up with the final conclusion about asset value.

Article 4. Steps of asset valuation

The valuation of assets generated by scientific and technological tasks is carried out in the following steps:

1. Valuation of assets formed by scientific and technological tasks:

a)  Identifying characteristics of assets formed by scientific and technological tasks (legal, economic, technical and other characteristics);

b)  Determining such valuation result purposes and objects, time of valuation and valuation basis of process for asset valuation;

c)   Selecting methods of asset valuation stipulated under Article 7, Article

8, Article 9 and Article 10 of this Circular;

d)  Conducting surveys, investigating, collecting relevant information and data (for example, investment expenditure for such tasks, market prices, costs incurred and income generated from commercialization of results of scientific and technological tasks, etc.);

d) Analyzing and processing information and data;

e)  Valuating the results of scientific and technological tasks based on selected method.

2. Preparation of reports on the valuation results or reports on the results of asset valuation of assets as stipulated under Article 11 of this Circular, followed by submission of such reports to the authorized authorities for consideration and decision of value of assets formed by scientific and technological tasks.

Article 5. Basis for valuation of assets formed by scientific and technological tasks

1.           Scope of entitlement: assignment of ownership or assignment of asset use rights formed by scientific and technological tasks.

2.           Technical characteristics of assets generated by scientific and technological tasks, for example, uses, purposes of usage, functions and expected technical effectiveness.

3.           Legal characteristics of assets formed by scientific and technological tasks, for example: the necessity and ability to be protected; status and scope of protection.

4.           Economic characteristics of assets formed by scientific and technological tasks, for example:

a)           The expected profit from the use or commercialization of the results of scientific and technological tasks;

b)           Results of alternative scientific and technological tasks which can be substituted in the market;

c)            The novelty and usefulness of assets formed by scientific and technological tasks compared to the results of other scientific and technological tasks of the same function.

5.           Market prices of some assets formed by similar scientific and technological tasks likely to compare domestically and internationally as well as the value of transactions conducted in relation to the results of scientific and technological tasks under valuation (if any).

6.           Investment expenditure to achieve the results of scientific and technological tasks.

7.           Policies and ability to commercialize the results of scientific and technological tasks related to the development of science and technology markets, science and technology enterprises and other preferential policies stipulated under the Law on Science and Technology, the Law on Technology Transfer, the Law on Intellectual Asset as well as the relevant guiding documents.

Article 6. Investment expenditure for generation of assets from scientific and technological tasks

Investment expenditure to create assets from scientific and technological tasks prescribed under Clause 6, Article 5 of this Circular, including:

1.           Direct labor remuneration, including: salaries for title holders performing scientific and technological tasks in pursuance to relevant regulations; salary for domestic and foreign experts in cooperation in the process of research and implementation of scientific and technological tasks.

2.           Expenses for procurement of supplies, raw materials, fuels and other materials, including raw materials, fuels, materials, tools, spare parts, cheap and perishable stuffs, energy, documents, papers, data, books, newspapers, reference magazines, the right to use inventions, designs, software, technological know-how for research activities.

3.           Expenses for repair, preservation, maintenance and procurement of fixed assets:

a)           Expenses for procurement of essential assets, directly serving scientific research and technological development activities included in scientific and technological tasks;

b)           Rental expenses of assets directly involved in technology research and development included in scientific and technological tasks;

c)            Depreciation expenses of fixed assets (if any) in the period of direct involvement in scientific and technological tasks at the prescribed depreciation rates applicable to the organizations assets;

d)           Expenses for repair, preservation and maintenance of equipment and facilities directly serving the research activities included in the scientific and technological tasks (if any).

4. Expenses for organization of scientific seminars and allowances for domestic and abroad business trips for research activities.

5. Expenses for outsourcing services for purposes of research activities.

6. Expenses for data collection and survey implementation.

7. Expenses for purchase of stationery, communication and printing supplies for research activities.

8. Expenses for meetings of evaluation council to evaluate results of implementation of scientific and technological tasks (if any).

9. Expenses for general management of scientific and technological tasks in order to ensure management requirements in implementing scientific and technological tasks.

10.      Other costs directly related to the implementation of scientific and technological tasks.

Article 7. Methods for asset valuation according to investment expenditure for scientific and technological tasks

The valuation of assets based on investment expenditure for scientific and technological tasks shall be calculated by the following formula:

Value of assets = investment expenditure for the task + expected profit (if any) + special consumption tax (if any) + value-added tax and other taxes (if any)

In which:

a)           Investment expenditure for scientific and technological tasks are determined in accordance with provisions under Article 6 of this Circular. In case where the scientific and technological tasks are carried out in long period, it is necessary to adjust the value of investment expenditure to the time of valuation;

b)           Special consumption tax, value-added tax and other taxes (if any) are determined in accordance with provisions under the prevailing tax laws;

c)            Expected profit are determined in accordance with the prevailing laws and the collected information on assets formed by similar scientific and technological tasks of which ownership and use rights in the market have been entitled at time of valuation.

Article 8. Methods for asset valuation according to cost-based approach

1.           Methods for valuation of assets according to cost-based approach shall comply with the provisions under the Standard for Valuation of Intangible Assets issued by the Ministry of Finance and under the specific guidance included in this Article.

2.           Renewable expenses and replacement costs of assets generated by scientific and technological tasks determined according to investment expenditure for this task prescribed in Article 6 of this Circular.

3.           Determination of depreciation value of scientific and technological research results, including:

a)           Depreciation due to functional and technological obsolescence: where obsolescence in function and technology can be solved, depreciation value due to obsolescence in function and technology is determined on the basis of expenses charges to solve the obsolete function and technology of scientific and technological tasks such as expenses for innovating inventions or changing industrial designs; where obsolescence in function and technology cannot be solved, depreciation value due to obsolescence in function and technology is determined on the basis of losses of asset value due to obsolete function and technology;

b)           Depreciation due to economic obsolescence is determined on the basis of the asset value reduction due to the direct impact exerted by the external environment, the market situation in comparison with that at the time of asset creation such as the increase in inflation rate leading to the decrease of the actual value of scientific and technological research results; or the Government’s regulations that restrict the use of a similar product to asset formed by scientific and technological research, leading to a drop in product supplies, followed by the devaluation of the results of scientific and technological research; or deterioration in the society’s solvency resulting in decline in demand for similar products to assets formed by scientific and technological research, leading to a devaluation of the results of scientific and technological research.

Article 9. Methods for asset valuation according to market-based approach

1. Methods for asset valuation according to market-based approach shall comply with the provisions under the Standard for Valuation of Intangible Assets issued by the Ministry of Finance and under the specific guidance in this Article.

2. Market prices of comparable assets can be among the following prices:

a)  The transfer value in the contract on transfer of ownership and the use right of results of scientific and technological research shall be kept at the state management bodies or published in the market;

b) Offering prices for sales and purchases in the market;

c)  Listed price on the trading floor;

d) Bidding and auction prices;

d) Capital contribution for joint venture or affiliation and mortgage prices;

e)  Actual purchase price in the market;

g) Value of comparable assets in other trading forms in the market.

Article 10. Methods for asset valuation according to income-based approach

1. Methods for asset valuation according to income-based approach shall comply with the provisions under the Standard for Valuation of Intangible assets issued by the Ministry of Finance and under the specific guidance in this Article.

2. Usage fee method

a)           Usage fees regarding the results of scientific and technological tasks is determined by the actual amount stated in the contract on the transfer of the use right of the comparable assets;

b)           Usage fees include: prepaid usage fees, periodic usage fees (can be determined on the basis of use rate by revenue, profit, product unit); taxes incurred by the transferees regarding the contract on transfer of use rights; expenses for advertising and offering and other costs incurred by the transferee.

3. Outstanding profit method

Outstanding profits are determined on the basis of profit differences between use and non-use of assets formed by scientific and technological tasks.

4. Additional income method

The additional income is determined on the basis of the difference between the expected total profit of the enterprise and the total profit gained from the use of tangible assets, intangible assets and other financial assets which are not assets under valuation.

Article 11. Report on valuation results and Report on the result of asset valuation

1.           Valuation enterprises are responsible for providing the Valuation certificate and Report on valuation results according to the regulations of Vietnam s Valuation Standard System.

2.           Organizations with function of price consultancy are responsible for preparing Report on the result of asset valuation according to the Form in the Appendix enclosed with this Circular.

3.           Report on valuation results and Report on the result of asset valuation shall truthfully and objectively reflect the process and results of asset valuation and act as an important basis for agencies in charge of managing scientific and technological tasks to submit to competent authorities for consideration and approval of the value of assets generated by scientific and technological tasks.

Article 12. Expenses for asset valuation; payment of expenses for asset valuation

1. Expenses for asset valuation include rental fees of valuation organization; expenses for service providers providing consultancy on prices to valuate considered assets; expenses for stationery and other expenses directly related to the valuation of assets.

The threshold for above expenses shall comply with the regulations under

Article 33 of Government’s Decree No. 70/2018/ND-CP dated May 15, 2018 stipulating the management and use of assets formed by the implementation of the science and technology tasks using state capital.

2. Payment of asset valuation expenses:

a) For assets associated with decisions on ownership transfer: expenditure for payment of asset valuation expenses shall be disbursed from revenues from the transfer of asset ownership. In cases where the settlement of assets does not generate revenue or the revenue is not enough to offset the expenses, the deficit part shall be finalized and paid by the funding source of the agencies in charge of managing scientific and technological tasks. b) For assets associated with decisions on the right to use:

-                The agencies in charge of managing scientific and technological tasks shall pay asset valuation expenses by the state budget reserved for scientific and technological cause; and, at the same time, send a dossier requesting agencies, organizations and individuals to receive the right to use those assets to reimburse the asset valuation expenses;

-                Within 60 days from the date of receipt of the dossier requesting the reimbursement of the asset valuation expenses, the entitled agencies, organizations or individuals shall reimburse the asset valuation expenses to the management agencies of science and technology tasks.

Chapter III

IMPLEMENTATION PROVISIONS

Article13. Effects

This Circular takes effect on April 06, 2019.

Article 14. Implementation organization

1.           The Department of Price Management under the Ministry of Finance shall coordinate with National Agency for Technology Entrepreneurship and Commercialization Development (NATEC) under the Ministry of Science and Technology to guide and inspect the implementation of the regulations of this Circular in valuation of assets generated by scientific and technological tasks using state capital.

2.           Any difficulties and problems arising in the course of implementation, organizations and localities are requested to report to the Ministry of Finance for timely study and appropriate amendments./.

For the Minister

The Deputy Minister

Tran Van Hieu

APPENDIX

FORM OF RESULTS OF DETERMINING THE VALUE OF

ASSETS IS THE RESULTS OF SCIENCE AND TECHNOLOGY

TASKS

(Issued with Circular No. 10/2019/TT-BTC dated February 20, 2019 of the Minister of Finance)

REPORTING                  SOCIALIST REPUBLIC OF VIETNAM

ORGANIZATION              Independence - Freedom - Happiness

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No.: ………….……, (dd mm yyyy)

REPORT

on the results of valuation assets formed by scientific and technological tasks

(name of assets and name of scientific and technological tasks)

To: ……………………………….¹

At the request of………………²stated in Document No. …. dated ….. on valuation of assets formed by scientific and technological tasks using state capital.

I. REPORTING ORGANIZATION

1. Organization name and legal representative name:  ..............................................  2. Address:   ........................................................................................................

3. Telephone No.: .............................................  Fax:  ...............................................

4. Email:

II.  PURPOSE OF ASSETS VALUATION

Valuation of …………………..³for the purposes of ……………..⁴

III.  VALUED ASSETS

1. Name of Assets:  .................................................................................................... 2. Legal status:  .......................................................................................................... 3. Technical status:  ...................................................................................................

IV. PRICE RECOMMENDATION

1. Legal bases for valuation:  ..................................................................................... 2. Time of valuation:  ................................................................................................. 3. Value basis:  ...........................................................................................................

4. Investigating, surveying, collecting relevant information and data:  ....................

5. Asset valuation method:  .......................................................................................

5.1.Selected method:  .............................................................................................⁵

5.2.Steps for valuation of assets formed by scientific and technological

tasks using state capital:  ............................................................................................  ....................................................................................................................................

6. Result of asset valuation: .......................................................................................

....................................................................................................................................

7. Limitations and conditions of asset valuation (if any): .........................................

....................................................................................................................................

HEAD OF THE ORGANIZATION

(sign and seal with full name)

¹Write name of the organization or individual which is the customer

²Write name of the organization or individual which is the customer

³List the assets formed by scientific and technological tasks

⁴    Choose one among the following purposes: designating ownership, designating use right.

⁵               Indicate reasons for choosing the method of assets valuation