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Ministry of finance     THE SOCIALIST REPUBLIC Of VIETNAM
   No 31-TC/TCDN         Independence-freedom-Happiness
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                                    Hanoi,18th July 1992.

CIRCULAR PRESCRIBING fiXED ASSETS DEPRECIATION POLICY APPLIED TO ENTERPRISES WITH fOREIGN INVESTED CAPITAL AND TO fOREIGN PARTNERS ENGAGED IN CONTRACTUAL BUSINESS AND CO-OPERATION

In accordance with Decision No.507 TC\DTXD dated 22.7.1986 by the Ministry of finance promulgating fixed assets depreciation control policy

With reference to international regulations regarding fixed assets depreciation

After having agreed with the responsible organizations' the Ministry of finance hereby outlines the fixed assets depreciation policy applied to enterprises with foreign invested capital and to foreign partners engaged in accordance with the laws on foreig n investment in Vietnam as follows: Co-operative business contracts

I. General Provisions

1. All enterprises with foreign invested capital and foreign partners engaged in co-operative business contracts "foreign Partners" operating in accordance with the laws on foreign investment in Vietnam shall apply the fixed assets depreciation policy sti pulated in this circular

2. Depreciated covers all kinds of fixed assets including intangible assets such as compensation and liquidation and establishment expenses value of land ownership patents technical know-how of enterprises with foreign invested capital contributed by the foreign partners-shall be calculated and included in the price of products or in circulation fees to provide funds to meet the need of renewal and replacement of the fixed assets

3. The value of fixed assets on which the basis for depreciation shall be calculated is defined as follows

The value of faxed assets contributed by joint-venture partners or by foreign partners (in the form of capital) surveyed and found in compliance with stipulations specified in official letter No .379 HTDT/VP dated 11.7.1990 by SCCI, shall be assessed acco rding to the international market price (for imports) or to the local market price ( for articles purchased in Vietnam)

4. In case of acquisition of fixed assets amortization(depreciation) shall be incurred in the month following acquisition

5. fixed assets are not able to be appreciated if :

- The assets are not yet in use or has ceased to be in use.

- The depreciable value of the asset (as referred to in paragraph I 3) Has already fully depreciated or the asset is no longer usable.

II. Amortization percentage & utilization of fixed assets depreciated funds.

1. Enterprises with foreign inverted capital and foreign partners (of joint - venture) are authorized to determine the amortization percentage by themselves but not exceeding the maximum percentage frame prescribed in annex No.1 attached to this circular.

2. Depreciation funds when not usable for renewal or replacement of fixed assets can be utilized for commercial purposes according to decisions of the board of management but not in breach of provisions Investment Law and decree N0.28 HDBT dated 6.2.1991 by the Minister Council

III. Implementation Provisions

1. Enterprises with foreign invested capital and foreign partners (of joint - ventures) in case of objective reasons needing to apply amortization percentage exceeding the maximum frame shall have to report the case to the Ministry of finance for approval (see annex No.2).

2. In case enterprises with foreign invested capital and foreign partners (of joint - ventures) are in breach of the provisions on amortization percentage stipulated in this circular, when balancing up the income tax duty of the organizations, the customs shall only accept the depreciation funds amortized not in excess of the maximum percentage frame prescribed in annex No. 1 to the circular.

This circular is effective since the signing date and operative to all enterprises with foreign investment capital and joint - venture contractors having obtained license which are currently in force.

In the process of implementation, proposes, if any are to be reported to the ministry of finance for consideration.

for the Ministry of finance
Vice Minister

PHAM VAN TRONG (Signed)

Annex No.1

1. Establishment, Liquidation compensation expenses. other pre-manufacturing expenses, intangible fixed assets Such as technical know-how patents 30%

2. factory buildings & architectural object :

2.1. Hotel, dealing building, commercial center building 5%

2.2. factor buildings, architectural objects newly build 7%

2.3. Used factory building & architectural objects 15%

3. Machinery/ equipment's

3.1. Dynamic machinery/equipment

3.1.1. Dynamic producing machinery 10%

3.1.2. Generators 15%

3.1.3. Transformers & power source equipment 15%

3.2. Operation machinery / equipment's

3.2.1. Instrumental machinery 12%

3.2.2. Construction machinery 20%

3.2.3. Contractors 15%

3.2.4. Machinery for agriculture & forestry 18%

3.2.5. Oil * water pump 15%

3.2.6. Machinery for metallurgy, polishing machinery against rust on metal surfaces 15%

3.2.7. Machinery/equipment for chemical manufacturing 15%

3.2.8. Machinery/equipment for construction material ceramics/crystal wares manufacturing 20%

3.2.9. Scone sawing/ policing machines 25% Machinery / equipment for electronic components, optics and mechanic wares manufacturing 12%

3.2.10. Textile leather printing paper, stationary machinery 15%

Printing machines 18%

3.2.11. food manufacturing machinery 15%

3.2.12. Communication cinematography, medical instruments 15%

3.2.13. Other manufacturing machinery/equipment 12%

4. Measurement & experiment instruments 15%

5. Transportation machinery/equipment

5.1. Land transport facilities 18%

5.2. Rail transport facilities 12%

Rail engines rail coach 10%

Rail carriage for acid/petroleum 18%

5.3. Sea-freight facilities 18%

Vessels / containers 10%

fishing /freezing Vessel 15%

5.4. Oil pipes, air pipes 10%

Sea oil pipes 15%

6. Office Machinery 20%

Air - conditioners 25%

7. Industrial plants many years fruit trees 15%

Rubber tea coffee plant 12%

Rubber trees 12%

8. Other fixed asses 10-15%

Annex No.2

Company's name
Ref. No.
                        The Socialist Republic of Vietnam 
                          Independence-freedom-Happiness
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Re.Consideration of depreciation  
Percentage of fixed assets     

To : The Ministry of finance

In accordance with circular No. 31 TC/TCDN dated 18.7.1992 by the Ministry of finance fixed assets depreciation policy.

On the basis of the company's contract and regulations

Company's name & address


Investment license No...                 Date...

Kindly consider and approve the depreciation level details as follows :

1. Liquidation compensation & establishment expenses and pre manufacturing expenses 
2. factory building , architectural objects....
3. Manufacturing machinery/equipment...
4. Transport facilities ...
5. Office machinery ....

                                                       Director