Update on Promotion activities in Vietnam from 2024

On October 10, 2024, the Government issued Decree 128/2024/ND-CP amending and supplementing several articles of Decree 81/2018/ND-CP detailing the Commercial Law on trade promotion activities, which will take effect from December 1, 2024. Decree 128/2024/ND-CP amends certain regulations related to promotion activities in Decree 81/2018/ND-CP so it bring many update on Promotion activities in Vietnam from 2024. In the article below, Viet An Law Firm will provide clients with some noteworthy content about the update on promotion activities in Vietnam from 2024 in Decree 128/2024/ND-CP.

Amendment of regulations on maximum value for goods and services used for promotions

Foods and services used for promotions must not include wines, lottery, cigarettes, curative medicines for human use including those permitted for circulation as regulated by the Ministry of Health (except for the case in which promotion is dedicated to traders involved in drug trading), goods and services that have been banned from circulation in Vietnam and other goods and services prohibited from promotion as required by laws.

Decree 128/2024/ND-CP amends several regulations concerning the maximum value for goods and services used for promotions in Article 6 of Decree 81/2018/ND-CP. Accordingly, the maximum value for goods and services used for promotions is regulated as follows:

• The material value used for promotions for a unit of goods or services being promoted cannot exceed 50% of the sale price immediately before the promotion period of that unit of goods or services, except for promotion using the forms stipulated in Clause 8 and Clause 9 Article 92 of the Commercial Law 2005; Article 8, Clause 2 Article 9, Article 12, Article 13, Article 14 of Decree 81/2018/ND-CP.
• The total value of goods and services used for promotions in a promotion program cannot exceed 50% of the total value of the goods and services being promoted, except for promotion using the forms stipulated in Clause 8 and Clause 9 Article 92 of the Commercial Law 2005, Article 8 and Clause 2 Article 9 of Decree 81/2018/ND-CP.

Thus, compared to Article 6 of Decree 81/2018/ND-CP, the new regulations in Decree 128/2024/ND-CP concerning the maximum value for goods and services used for promotions include 02 noteworthy points:

• Clearly defining that the material value used for promotions must not exceed 50% of the sale price at the time “immediately before the promotion period of that unit of goods or services” (previously, it only stated that it must not exceed 50% of the price “of the unit of goods or services being promoted before the promotion period”).
• Adding an exception where the maximum material value used for promotions and the total value of goods and services used for promotions does not apply, specifically in the case Clause 9, Article 92 of the Commercial Law 2005: Other forms of promotion if approved by the State management agencies in charge of commerce.

Amendments to regulations related to concentrated promotion programs

Identification of programs under concentrated promotion programs

One of the subjects of concentrated promotion programs amended in Decree 128/2024/ND-CP is the case: Government agencies (central and provincial levels) issuing decisions to organize the execution of concentrated promotion programs to implement national or local economic development goals.

Thus, the new Decree does not clearly define the forms of concentrated promotion programs effective within a certain frame of hours, days, weeks, months, or seasons conducted by the state agencies as stipulated in Decree 81/2018/ND-CP. The state agencies will determine this to implement national or local economic development goals.

Maximum value limit for goods and services used for promotions under concentrated promotion programs

The change in regulations regarding the identification of programs under the concentrated promotion programs category leads to amended regulations on the maximum value limit for goods and services used for promotions under these programs. Specifically:

• In cases where a concentrated promotion program is organized, the maximum value limit for goods and services used for promotions is 100%.
• The maximum value limit for goods and services used for promotions of 100% also applies to promotion activities within the framework of programs and commercial promotion activities decided by the Prime Minister,

Maximum discount rate for goods and services used for promotions under concentrated promotion programs

The maximum discount rate must not exceed 50% of the prices of such promoted goods and services before the promotion period. However, for goods and services promoted under concentrated promotion programs, Decree 128/2024/ND-CP has amended the regulations in Article 7 of Decree 81/2018/ND-CP as follows:

• In cases where a concentrated promotion program is organized, the maximum discount rate for goods and services used for promotions is 100%
• The maximum discount rate for goods and services used for promotions of 100% also applies to promotion activities within the framework of programs and commercial promotion activities decided by the Prime Minister.

Thus, while previously the maximum discount rate of 100% for promoted goods and services applied only to concentrated promotion programs (promotion programs effective within a certain frame of hours, days, weeks, months, or seasons), under the new regulations, this maximum discount rate of 100% also applies to promotion programs on Tet holidays and other holidays as prescribed in the labor law, such as the Lunar New Year and other holiday periods.

Amendments and additions to regulations on notification of promotion activities

Cases requiring notification of promotion activities

According to Decree 128/2024/ND-CP, traders must notify promotion activities to all Departments of Trade and Industry of localities where the promotion is conducted before conducting promotion programs only in 02 cases in Articles 12 and 14 of Decree 81/2018/ND-CP:

• Sale of goods or provision of services together with promotional contest entry form for selecting the prize winner according to rules and prizes already announced (or other equivalent forms of organizing competitions and awarding prizes);
• Organization of frequent client programs as the basis for awarding clients according to the quantity or value of goods or services purchased in the forms of client cards or coupons acknowledging the goods or service purchase.

Additionally, the cases that do not require the administrative procedure for notification of promotion activities as follows:

• Carry out promotions in the forms specified in Clause 8, Article 92 of the Commercial Law and Articles 8, 9, 10, and 11 of Decree 81/2018/ND-CP: Organizing cultural, artistic, or entertainment programs or other events for clients for promotion; provision of sample goods or services free of charge; gifting of goods or services; discount; and sale of goods or provision of services together with cards or coupons.
• Carry out promotions in the forms specified in Article 12 and Article 14 of Decree 81/2018/ND-CP with a total value of prizes and gifts under 100 million VND;
• Only carry out promotions in the forms specified in Article 12 and Article 14 of Decree 81/2018/ND-CP for goods and services sold and provided through e-commerce trading floors, e-commerce trading floor applications, online promotion websites, and online promotion applications.

Compared to previous Decree 81/2018/ND-CP, starting from December 1, 2024, the regulations will include some adjustments as follows:

• If the forms of promotion specified in Clause 8, Article 92 of the Commercial Law and Articles 8, 9, 10, and 11 of Decree 81/2018/ND-CP previously required notification, from December 1, 2024, these forms of promotion will no longer require the notification procedure.
• The new regulation facilitates promotion forms through e-commerce. Therefore, if the promotion program is of a form that requires notification but the goods or services are sold or provided through e-commerce trading floors, e-commerce trading floor applications, online promotion websites, and online promotion applications, the notification procedure will be exempted. This is a new regulation that has not appeared in previous promotion regulations.

Methods for submitting promotional notifications

Previously, Clause 3, Article 17 of Decree 81/2018/ND-CP stipulated 04 methods for traders to select to notify the implementation of promotions. Under the new regulations, there are now only 03 methods: Via postal services, in person, and through a public online service system.

Additionally, the new regulations in Decree 128/2024/ND-CP include some noteworthy changes:

• The method of submitting a notification dossier with an e-signature or a scan of the notification of promotion bearing the signature and seal of such traders to the email address published by the Departments of Industry and Trade has been abolished;
• The method of submitting by post has been replaced with the method of submitting via postal services;
• The method “using the public online service system provided by the Department of Industry and Trade” has been amended to “submitting 01 notification through  the National Public Service Portal or the provincial-level administrative procedure resolution information system”.

Thus, traders selecting the online submission method can submit their notifications through the National Public Service Portal or the provincial-level administrative procedure resolution information system.

Amendments and additions to regulations on registration of promotion activities

Components of the promotion registration dossier

Components of the promotion registration dossier as prescribed in Decree 128/2024/ND-CP include:

• 01 Registration form for promotion;
• 01 Promotion program regulations;
• Sample of winning’s proof or detailed description of winning’s proof.

Thus, the new regulations have abolished the requirement for a copy that do not need to authenticate documents regarding the quality of promotion goods according to the provisions of the law. Therefore, traders should note that they do not need to submit this document when registering for promotions.

Publishing promotion results, awarding and reporting the results of promotion programs

• The new regulations add provisions for force majeure cases regarding the publishment of the promotion results. Accordingly, the duration of publishing promotion results and awarding of promotion programs must not exceed 45 days from the day the sales promotion programs end, except in cases of force majeure as stipulated by law.
• The duration for remitting the value of the prize in cases where there are no winners has been extended. Accordingly, within 45 days from the receipt of the decision to remit from the state management authority, traders must remit 50% of the published value of the prize without the winner from the promotion program into the state budget (previously 15 days).
• The regulation requiring traders to submit a written report regarding the remittance in cases where there are no winners has been abolished. Previously, the trader must send a written report to state management agencies that issue the collection decision within 10 days from the day on which the prize value is remitted into the state budget. However, the new regulation only requires traders to retain relevant documents related to the reporting of the implementation results of the promotion program.

New forms related to notification and registration of promotions from December 1, 2024

Appendix of Decree 128/2024/ND-CP has updated new forms related to promotion activities, including 15 forms. This includes adding and replacing some forms in the Appendix as follows:

• Addition of Form 06a “Registration for amendment and supplementation of the promotion program” after Form 06;
• Addition of Form 15 “Report on State management of trade promotion”;
• Replacement of Forms 01, 02, 03, 06, 07, 08, 10, 13, and 14.

Among these forms, notable changes include amendments in Form 01 regarding the notification of promotion and Form 02 regarding the registration for promotion. Specifically, for the information regarding the names of traders involved in the promotion, the specific content of participation and duty of each trader engaged in such promotion (if the promotion program is done by more than one trader or the traders do promotion for goods or services of other traders), the new regulations do not require the submission of an agreement or contract with the notification and registration forms.

For the new Form 06a regarding “Registration for amendment and supplementation of the promotion program”, the content is mainly similar to the form for notifying amendment and supplementation of the promotion program, including some details such as trader information, the start date for amendment and supplementation, reasons for adjustments, commitments,…

Clients who have related questions or need legal support about update on promotion activities in Vietnam from 2024, please contact Viet An Law Firm for the best support!