Enterprises can depreciate fixed assets to calculate business efficiency, but it is not always considered a reasonable deductible expense when calculating corporate income tax.

Legal grounds:

• Circular No. 96/2015/TT-BTC.

In accounting, depreciation of fixed assets has the purpose of gradually converting investment capital into business costs to determine business efficiency according to the reasonable operating cycle of fixed assets.

However, in some cases, depreciation of fixed assets is included in expenses to determine business results in accounting but is not accepted in taxes when determining the amount of corporate income tax payable. Specifically includes:

1. Assets not used for business activities
2. Assets without documents proving ownership by the enterprise (except fixed assets for financial lease purchase)
3. Assets are not managed, monitored, or accounted for in accounting books
4. Depreciation exceeding the prescribed level
5. Depreciation of assets that have been fully depreciated
6. The depreciation corresponding to the original price exceeds VND 1.6 billion per car with 9 seats or less. Except for: vehicles used for passenger transport, tourism, and hotel businesses; Vehicles used for modeling and test driving for the auto business
7. Depreciation of assets that are civil aircraft and yachts not used for transporting goods, passengers, tourism or hotels
8. Constructions on land used for both business purposes and for other purposes, the value of the construction not used for business activities shall not be depreciated into deductible expenses.
9. Long-term land use rights are not depreciated and allocated to deductible expenses. Therefore, if buying houses or structures attached to long-term land use rights, the value of land use rights must be separated according to the price stated in the purchase contract but must not be lower than the land price prescribed by the Provincial People’s Committee at time of purchase. If it cannot be separated, the land price will be determined by the Provincial People’s Committee at the time of purchase.