You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 13, 2018

New Decree on Multi-Level Marketing in Vietnam

Subscribe to Updates

Multi-level marketing (MLM) activities are allowed under the law in Vietnam. However, in recent years, a few MLM companies in Vietnam have been accused of not being fair to customers, not fulfilling tax obligations, and/or at times trading in low-quality products. A report from the Ministry of Industry and Trade (MOIT) showed that from June 2015 to November 2016, the MOIT inspected and initiated investigations into 65 MLM companies and imposed fines totaling VND 11 billion (approximately USD 485,000) for violations. By the middle of March 2018, the MOIT had revoked the licenses of 17 MLM companies and another 17 MLM companies had voluntarily stopped their operations. Currently, there are 33 MLM companies operating in Vietnam.

With the aim of tightening the existing MLM regulations and giving MLM companies a better legal framework under which to operate, the government issued Decree No. 40/2018/ND-CP on Management of Multi-Level Marketing Activities (Decree 40) on March 12, 2018. The new decree, which will take effect on May 2, 2018, revises and replaces Decree 42/2014/ND-CP dated May 14, 2014 (Decree 42). Some of the highlights of Decree 40 are provided below.

New Registration Requirements

Decree 40 adds a few new requirements to the conditions a company must satisfy to obtain an MLM license: The MLM company must operate an IT system with a server in Vietnam to manage its MLM network; it must have a website with full information on its MLM activities; and it must have a communications system to receive and resolve queries and complaints from MLM participants.

In addition, the MLM company needs to have charter capital of at least VND 10 billion (approximately USD 440,000), and make an escrow deposit equivalent to 5% of its charter capital (but not less than VND 10 billion – an increase from the VND 5 billion required under Decree 42) into a bank account. The escrow serves as security for the MLM participants and funds may be used toward payment of unpaid penalties to Vietnamese authorities, and/or compensation for damages should the MLM company breach any of its obligations to the MLM participants.

Additional Restrictions

As was the case under Decree 42, only goods (not services) are permitted to be traded under the MLM model, and certain types of goods, including pharmaceuticals, medical devices, and various chemicals, are prohibited. Decree 40 also adds digital content products to the list of prohibited goods.

To combat the risks associated with some forms of multi-level marketing, Decree 40, like the previous Decree 42, prohibits MLM companies from performing a wide range of acts, such as requiring deposits or monetary payments from MLM participants. The following acts are newly prohibited under Decree 40:

  • Conducting promotions using an MLM network in which participants in the promotion have more than one position/ID number (in other words, where participants could benefit from having multiple virtual identities).
  • Organizing commercial intermediary activities (for example, engaging a commercial agent or broker) for the purpose of maintaining, expanding, or developing MLM networks.
  • Receiving or accepting documents from MLM participants in which the participants renounce some or all of their rights or release enterprises from their obligations toward participants under provisions of Decree 40.
  • Failing to use the management system registered with the MOIT to manage MLM participants.

Implementation

Within nine months from May 2, 2018 (i.e., by February 2, 2019), companies which were licensed for MLM activities under the previous Decree 42 must satisfy all conditions for doing business under Decree 40 (for example, their IT system must have a server placed in Vietnam, and they must have a system to receive and resolve queries and complaints from MLM participants).

Related Professionals

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

June 6, 2025
As from July 1, 2025, as part of its ongoing efforts to digitalize and streamline the delivery of public services, the Vietnamese government will officially conduct administrative procedures, both online and offline, only via electronic identity (“e-ID”) accounts on the VNeID platform. In particular: Online administrative procedures carried out via the National Public Service Portal or via information systems for administrative procedures at the ministerial or provincial level are required to be implemented by using e-ID accounts only. When receiving dossiers, authorities will be required to check and verify the e-IDs of companies or individuals responsible for conducting administrative procedures. Further, it is worth noting that to complete the registration of an e-ID account for a company, the legal representative of the company must hold a level-2 e-ID account. Compliance Considerations Vietnam’s first regulation of e-ID accounts for individuals and organizations was issued in Decree No. 59/2022/ND-CP dated September 5, 2022, on electronic authentication and identification. This decree was subsequently replaced by Decree No. 69/2024/ND-CP dated June 25, 2024, which governs the same matters. Registration and operation of e-ID accounts are centralized through VNeID, a digital ID app developed by the National Population Data Center under the Ministry of Public Security of Vietnam. Although the registration of e-ID accounts for companies is not explicitly mandated by law, the absence of an e-ID account may hinder companies from completing administrative procedures, including licensing and reporting obligations. Such non-compliance could consequently result in administrative penalties. To mitigate unexpected non-compliance and administrative fines due to the lack of an e-ID account, companies should be well prepared for and implement the registration of a company e-ID account as soon as possible.
Read More
June 4, 2025
On April 2, 2024, the Cambodian Competition Commission (CCC) issued Decision No. 087 on Requirements and Procedures of Exemptions under the Law on Competition, outlining the requirements and procedures for requesting exemptions for agreements or activities that could prevent, restrict, or distort competition in Cambodia. Franchise agreements often include clauses such as price fixing, exclusive supply arrangements, or territorial restrictions, which could potentially raise concerns under the Law on Competition. Therefore, it is necessary for both franchisors and franchisees to understand how the law applies to their agreements and whether an exemption request may be required. Some arrangements under franchise agreements may fall within the scope of prohibited practices under the Law on Competition. These include horizontal and vertical agreements, abuse of dominant position, and anti-competitive business combination. If a business owner contemplates that their franchise agreement could be interpreted as anti-competitive, they must assess whether to apply for an exemption. Key Criteria for Exemption Under Decision No. 087, the CCC may grant an exemption if the applicant can demonstrate that the proposed agreement or activity meets all four of the following conditions: Significant and identifiable benefits: The agreement must provide clear technological, social, or economic benefits such as cost efficiencies, qualitative efficiencies, initiations of new technologies, or environmental and sustainable benefits. Necessity of the agreement/activities: These benefits must not be achievable without the proposed agreement or activity. The applicant must show that prevention, restriction, or distortion of competition are essential to realizing the benefits. Benefits outweigh harm: The positive impacts must significantly outweigh any adverse effects caused by the prevention, restriction, or distortion of competition, and the benefits should be likely to materialize within one year. No elimination of competition: The agreement must not eliminate competition in any substantial aspect of goods or services. Application and Supporting Documents
Read More
June 4, 2025
On June 1, 2025, Thailand’s Office of Central Company and Partnership Registration of the Department of Business Development opened a public hearing period on its draft notification regarding criteria and supporting documents for establishment of partnerships and limited companies in which foreign nationals are involved as investors or have signing authority. The draft notification requires applicants for registration of establishment of partnerships and limited companies to submit financial evidence of the capital contributions made by each Thai partner or shareholder in the following cases: When a partnership or limited company has partners or shareholders who are foreign nationals holding shares or equity amounting to less than 50% of the total capital contribution or registered capital in the partnership or company; or When a limited company has no foreign shareholders but has a non-Thai director who is an authorized or co-authorized signatory. The amounts shown in this financial evidence must be in accordance with the capital contribution or shareholding amount of each Thai partner or shareholder. Evidence can be provided in one of the following forms: Financial evidence issued by a bank to verify or demonstrate financial status. Copy of bank statement for the past six months. Copy of personal income tax or corporate income tax document (Form PorNgorDor.90 or PorNgorDor.91 for individuals; Form PorNgorDor.50 or PorNgorDor.51 for corporate shareholders). Any other supporting document showing the source of funds used for the capital contribution. The consultation period will be open until June 20, 2025, and the draft may be subject to additional revisions before it is finalized and made legally binding.
Read More
May 28, 2025
Tilleke & Gibbins attorneys in Vietnam have contributed the 2025 edition of Doing Business in Vietnam, a comprehensive Q&A-style resource from Thomson Reuters Practical Law that provides essential insights for companies navigating business operations in Vietnam. The guide presents a detailed overview of the country’s legal framework and regulatory environment, reflecting recent updates in Vietnamese legislation and practice. This annually updated guide offers key information on the following areas: Legal system: Structure of the Vietnamese judiciary and the role of codified law. Foreign investment: Conditions for market access, licensing requirements, foreign ownership restrictions, and investment incentives. Business vehicles: Formation and operation of legal entities, including limited liability companies, joint-stock companies, and representative offices. Employment: Employment contracts, social insurance, labor rights, and procedures for hiring foreign nationals. Tax: Overview of corporate income tax, personal income tax, value-added tax, and other tax obligations. Intellectual property: Procedures for protecting and enforcing patents, trademarks, copyrights, and other IP rights. Data protection: Compliance requirements under Vietnam’s data privacy laws, including the Personal Data Protection Decree. Competition law: Antitrust rules and regulatory oversight under the Law on Competition. Anti-bribery and corruption: Legal framework and enforcement practices aimed at curbing corrupt activities. E-commerce and digital business: Regulations governing online platforms, digital content, and cross-border services. Marketing and advertising: Laws and guidelines on advertising standards and consumer protection. Product regulation and liability: Safety requirements, product liability issues, and roles of relevant authorities. Doing Business in Vietnam is part of Practical Law’s global series of legal guides designed to support international practitioners and businesses. To access the most recent edition of the Vietnam guide, visit the Practical Law website and sign up for a free trial.
Read More