VietnameseOfficial Dispatch No. 3708/TCT-CS dated October 2, 2008 of the General Department of Taxation on Depreciation of fixed assets bought with illegal invoices
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Official Dispatch No. 3708/TCT-CS dated October 2, 2008 of the General Department of Taxation on Depreciation of fixed assets bought with illegal invoices
| Issuing body: | General Department of Taxation | Effective date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Official number: | 3708/TCT-CS | Signer: | Pham Duy Khuong |
| Type: | Official Dispatch | Expiry date: | Updating |
| Issuing date: | 02/10/2008 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Tax - Fee - Charge |
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Effect status: Known
MINISTRY OF FINANCE GENERAL DEPARTMENT OF TAXATION ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom – Happiness --------- |
No. 3708/TCT-CS Re: Depreciation of fixed assets bought with illegal invoices | Hanoi, October 2, 2008 |
To: Binh Duong Provincial Tax Office
In response to the Official Letter No. 6654/CT-THNVDT dated September 1, 2008 of Binh Duong Provincial Tax Office regarding depreciation of fixed assets bought with illegal invoices, the General Department of Taxation gives the following opinions:
Point 1, Section III, Part B of the Ministry of Finance’s Circular No. 128/2003/TT-BTC of December 22, 2003, prescribes the conditions for determination of fixed assets to be depreciated into reasonable expenses:
“1.1. Fixed assets which are allowed to be depreciated into reasonable expenses must meet the following conditions:
a/ They are used in production and business.
b/ They are accompanied with enough invoices, vouchers and other lawful papers evidencing that they are owned by business establishments.
c/ They must be managed, monitored and accounted in accounting books of business establishments under the current management, book-keeping and cost accounting regime.”
Clause 1, Article 5 of Decree No. 164/2003/ND-CP of December 22, 2003, and Clause 1, Article 5 of the Government's Decree No. 24/2007/ND-CP of February 14, 2007, detailing the implementation of the Law on Enterprise Income Tax stipulates that Reasonable expenses to be deducted for calculation of taxable income include depreciations of fixed assets used for goods production and trading or service provision activities. The depreciation level shall be determined based on the value of fixed assets and the depreciation duration.
Point 4, Article 4 of the Regulation on management, use and depreciation of fixed assets issued together with the Minister of Finance’s Decision No. 206/2003/QD-BTC of December 12, 2003, stipulates: “When the value of a fixed asset determined by an enterprise itself is higher than the actual market price of a fixed asset of the same or similar type, the enterprise shall re-determine the reasonable value of the fixed asset to provide a basis for calculation of business income tax; if the value of the fixed asset still does not match the actual market price, tax authorities may request the enterprise to have the fixed asset re-valued through a local valuation council or a competent price appraisal organization under law.”
The Ministry of Finance has issued Official Letter No. 7333/BTC-TCT dated June 24, 2008 guiding the handling of business establishments using illegal invoices.
Under the above regulations, when a business establishment buys a fixed asset and such purchase is fully reflected in accounting books and is made under a contract with a payment document and the business establishment actually uses the fixed asset for its business activities to generate incomes, the Provincial Tax Office shall coordinate with functional authorities in appraising the asset price to provide a basis for its depreciation to be accounted as expenses. The minutes on appraisal of the vehicle price is regarded as the asset valuation document.
The General Department of Taxation replies the Tax Office for information.
FOR THE DIRECTOR GENERAL OF TAXATION DEPUTY DIRECTOR GENERAL Pham Duy Khuong |
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