Depreciation expense of idle assets due to Covid-19

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On 2 July 2020, Hai Phong Tax Department issued Official Letter No. 1930/CT-TTHT regarding the deductibility of depreciation expense recorded during the operation suspension period because of Covid-19’s impact for corporate income tax (“CIT”) calculation purpose. Detail as following:

In the event that, under the Covid-19’s effect, the taxpayer had to temporarily suspended the operation of some fixed assets (“FAs”), which does not fall into either cases of temporarily suspension due to (i) seasonal operation with the suspension time less than 09 months, or (ii) FAs repairs, relocation, periodic maintenance with the suspension time less than 12 months, and the fixed assets would be resumed to business operation after such temporary suspension, the depreciation expenses of such FAs during the suspended period shall not be treated as deductible expenses for CIT calculation purpose.