There are many methods of depreciation of fixed assets and businesses have the right to choose the depreciation method for each type of asset before implementation.

This article was consulted by Lawyer Nguyen Quang Trung

Legal grounds:

• Circular No. 96/2015/TT-BTC;
• Circular No. 45/2013/TT-BTC.

We receive the following question:

TLT Legal let me ask in this situation, if my company has just been established, do I have to register to choose the fixed asset depreciation method right away or can I wait until I buy the fixed assets?

According to current regulations, there are 3 methods of depreciation of fixed assets and businesses can choose according to the actual use of the assets as well as change to other methods during the process of using the assets.

Currently, when registering a business, businesses can choose some information related to accounting and taxes such as VAT calculation method, invoice form, social insurance payment deadline, but there is no choice yet of the method of depreciation of fixed assets. Therefore, businesses need to pay attention to informing about the choice of depreciation method for fixed assets.

Pursuant to Point d, Clause 2.2, Article 6 of Circular No. 78/2014/TT-BTC, amended and supplemented by Circular No. 96/2015/TT-BTC as follows:

Article 6. Deductible and non-deductible expenses when determining taxable income

2. Expenses that are not deductible when determining taxable income include:

2.2. Depreciation expenses for fixed assets fall into one of the following cases:

d) Depreciation exceeding current regulations of the Ministry of Finance on management, use and depreciation of fixed assets.

The enterprise shall notify the method of depreciation of fixed assets that the enterprise chooses to apply to the tax authority directly managing it before carrying out depreciation (for example, notify the choice to implement the depreciation method of straight line…). Every year, enterprises depreciate fixed assets according to current regulations of the Ministry of Finance on the management, use and depreciation of fixed assets, including cases of accelerated depreciation (if conditions are met).

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Pursuant to Clause 3, Article 13 of Circular No. 45/2013/TT-BTC as follows:

Article 13. Method of depreciation of fixed assets:

3. Enterprises decide for themselves the depreciation method and time for depreciation of fixed assets according to the provisions of this Circular and notify the directly managing tax agency before starting implementation.

According to the above regulations, enterprises must notify the method of depreciation of fixed assets to the tax authority before performing depreciation to ensure that depreciation costs of fixed assets are included in deductible expenses when determining obligations of CIT. So:

• After business registration, businesses can immediately submit a notice of registration of fixed asset depreciation method to the tax authority;
• Or businesses can also submit this notice when investing or purchasing fixed assets, but must ensure to submit it before performing depreciation.