DECREE 81 ON TRADE PROMOTIONS

LEGAL UPDATE

Decree No.37/2006/ND-CP (Decree 37) of 2006 provides guidance on the Commercial Law regarding trade promotion activities. Recently the Government promulgated Decree 81/2018/ND-CP (Decree 81) which is effective from 15 July 2018 and will replace Decree 37.

It is expected that Decree 81 will create a more efficient trade environment with simpler procedures and more detailed regulations on commercial promotions.

We have set out the most significant changes hereafter, which may be further revised.

1. Scope of eligible goods and services for promotions

In Decree 37 no scope is defined for goods and services that are eligible for promotion. Decree 81 defines the goods and services which may not be promoted: alcohol, cigarettes, lottery, the State's medical examination and treatment services, educational services provided by public establishments, public professional educational institutions, and other goods and services as prescribed by law.

Decree 81 also defines the goods that may not be used for sales promotion: alcohol, cigarettes, lottery, medications, milk for children under 24 months and other goods and services as prescribed by law.

Cash may also be used for promotion except for several forms as listed in Decree 81.

2. Maximum discount rate and value of promotions

The maximum discount rate of 50% on the unit price or the total promotion value as set out in Decree 37 remains in general applicable.

For concentrated promotions such as hourly, daily, weekly, monthly, or seasonal promotions and trade promotion activities decided by the Prime Minister the discount rate may be up to 100%. The maximum discount per unit is removed for promotions for certain products, such as:

- goods and services used for price stabilisation policy of the State;

- fresh products; and

-goods and services sold in case of bankruptcy or dissolution, change of address or business lines of the business.

The cap on total promotion value is removed for:

- promotions organised by the central or provincial Governments;

- promotional activities within the framework of programs; and

- public holidays including Tet and other national days.

3. Duration of price discount

Currently the policy for the duration of the price discount is strict. Decree 81 increases the duration of a price discount from 90 to 120 days.

4. Multi-level sale networks

There is a special stipulation for multi-level sale networks stating that organisations are not permitted to implement the trade promotion by way of multi-level sales if they have not registered their multi-level sales.

5. Lottery

Decree 81 also contains some changes with respect to lottery winning promotion schemes. The evidence identifying winners will be flexible as it can be in person or digitally. The current time limit of 180 days for a year, and 90 days for any specific scheme for lottery winning schemes is removed

6. Notification and registration procedures

6.1 Method of registration

Under Decree 81 both notification and registration will be carried out via online submission to the Ministry of Industry and Trade (MOIT) or the Department of Industry and Trade (DOIT), submission in person, or via post. This is expected to reduce the administrative burden and speed up the process.

6.2 Notification procedures

Based on Decree 37 businesses must notify the competent authorities 7 days before the promotion scheme would start. Under Decree 81, the time limit is reduced to 3 business days prior to the implementation of the promotion. The notification requirement may be removed for:

- promotions having prizes (goods or services) with a total value of under VND100 million; and

- businesses whose sales and promotions are being conducted solely online.

In case of online submission, the application dossier shall be sent to the local DOIT’s designated mail address or public portal.

6.3 Registration procedures

Prior to implementation of the promotion, businesses are obliged to proceed with the registration of trade promotion. Decree 81 shortened the response time for the competent authorities from 7 to 5 business days upon receipt of application dossier. The schemes may be executed in case of obtaining confirmation of the competent authorities. When MOIT confirms registration, it will be the responsibility to send the information to the relevant DOIT. The competent authorities are liable to publicize the information of the registered promotion (in writing, websites or other equivalent forms) no sooner than the promotion scheme starts.

6.4 Venues for notification and registration

Businesses may also go to more places to notify the authorities and register the promotion scheme, such as the post office, the premises or the websites of MOIT or DOIT.

6.5 Promotion scheme result

The deadline to make an announcement of the results of the scheme and to hand-over the prizes to the winners after the date the promotion is closed, has increased from 30 to 45 days.

Within 45 days after the date the promotion prize has been awarded, businesses will be obliged to submit a written report of the promotion result to the competent authority. This requirement may only apply to promotion schemes involving the customers’ participation in promotional games of chance. Other types of promotions will be exempted from such report obligation, except for some promotion types which the event result may have to be made public via at least one mass-media at the place of the event.

7. Trade exhibitions and fairs

Positive is that the timeline to register a trade exhibition or fair maybe shortened substantively in most cases. Currently a business need to register the trade exhibition or fair on 1 October of the year prior to execution of the event. The deadline for registration will be 30 days prior to the starting date of the event for domestic events and 45 days for overseas events. Upon receipt of the eligible dossier the competent authorities will have 7 business days to respond. The exhibitions and fairs may take place upon receipt of confirmation of the competent authorities.

For more information, please contact:

Mark Oakley / Managing Partner

mark.oakley@acsvlegal.com

Hieu Pham / Special Counsel

hieu.pham@acsvlegal.com

© 2017 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

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