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June 13, 2018

New Decree Affects Sales Promotion Activities in Vietnam

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On May 22, 2018, the government of Vietnam promulgated Decree No. 81/2018/ND-CP providing detailed regulations for the implementation of the Commercial Law for commercial enhancement activities (Decree 81). Decree 81 will come into effect on July 15, 2018, replacing Decree No. 37/2006/ND-CP, dated April 4, 2006 (Decree 37).

Commercial enhancement activities are defined under Article 3.10 of the Commercial Law as activities to promote and seek opportunities for the purchase and sale of goods or the provision of services. These include promotional activities, commercial advertising, display and introduction of goods and services, and trade fairs and exhibitions.

Decree 81 focuses on promotional activities and trade fairs and exhibitions. Commercial advertising, which was covered in Decree 37, has been removed and is regulated under current regulations on advertisements. Other notable changes under Decree 81, in comparison to Decree 37, include the following:

  • A trader is not allowed to impose conditions for enjoying its promotion incentives, such as by renouncing, rejecting, or exchanging another trader’s goods or services. This is a new principle aimed at prohibiting unfair competition.
  • The list of goods and services which are prohibited from use in promotions has been broadened, and includes wine, lottery tickets, tobacco, infant formula, drugs, medical examination and treatment services, education and tertiary training services provided in public facilities, as well as goods and services prohibited from circulation in Vietnam. However, Decree 81 specifically allows the use of money in promotions, in place of goods or services, in particular circumstances.
  • Exemptions are set out for the first time on the maximum value of goods and services used in promotions and the maximum price reduction of promoted goods and services, collectively referred to as “promotion value.” As a general rule, the maximum promotion value is still 50% of the price of the goods or services prior to the discount program, similar to Decree 37. However, Decree 81 allows a promotion value of up to 100% in so-called “concentrated promotions,” i.e., promotions taking place on holidays or special occasions as prescribed by the authorities.
  • Promotions via online platforms, such as e-commerce trading floors and promotional websites, are regulated for the first time. Basically, traders who wish to promote goods or services on such platforms are still required to follow the prevailing legislation on promotions. However, the owners of online platforms must ensure that promotional information on their platforms complies with the relevant laws and regulations on advertisements, promotions, and e-commerce.
  • The requirement of prior notification or registration of a promotion program with the relevant authorities is retained in Decree 81. However, Decree 81 provides an exemption for this requirement if the promotion program has a total value of less than VND 100 million, or if the trader sells the goods and conducts promotions via an e-commerce trading floor or promotional website. It is worth noting, however, that such exemption does not apply to promotions that involve participation in games of chance.
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