The depreciation period of pipe network 15 years, sewage structures 10 years (including special equipment) and other fixed assets shall not be less than the relevant provisions of the Regulations for the Implementation of the Enterprise Income Tax Law of People's Republic of China (PRC).
For the BOT/TOT project of sewage treatment, the significance of clarifying the depreciation of fixed assets is mainly reflected in the following two aspects.
(1) Depreciation expense is an element of enterprise cost and a necessary condition for evaluating enterprise economic benefits. Correct depreciation provides a source of funds for the renewal and replacement of fixed assets. We must choose the correct depreciation method and accurately calculate the depreciation expense of fixed assets. Otherwise, it will not only affect the correctness of enterprise costs, but also affect the correct evaluation of economic benefits of enterprise business activities, enterprise profit accounting and taxation, and then affect the investment and financing decisions of all parties concerned.
(2) Equipment replacement fund is a reliable guarantee for normal operation and intact handover of equipment. Because BOT projects involve investment and financing, the operating life of franchise period is generally 20 years. According to the regulations of the Ministry of Finance on depreciation of fixed assets, the production buildings of sewage treatment plants are generally more than 20 years, but the depreciation period of general equipment is less than 20 years. Among them, mechanical equipment 10 ~ L4 years, power equipment1~18 years, electronic computer 4 ~ 10 years and general test equipment 7 ~ 12 years.