On October 10, 2024, the Vietnamese Government took a bold step forward in reshaping the trade promotion landscape by introducing Decree 128/2024/ND-CP (“Decree 128”), which will take effect from December 01, 2024. This crucial update amends Decree 81/2018/ND-CP (“Decree 81”), offering a fresh approach to managing trade promotion activities under the Law on Commerce. With the aim of clarifying existing regulations and enhancing transparency, Decree 128 brings renewed clarity and streamlined processes to help businesses thrive.

 Here are some key highlights of the changes introduced in Decree 128, offering clearer guidelines and reducing administrative burdens:

 1.   Maximum Value of Goods and Services for Promotion

One of the most significant revisions concerns the maximum value of goods and services eligible for promotion. Under Article 6.1 of Decree 128, the value of promotional goods or services must not exceed 50% of the selling price immediately before the promotion period, compared to Decree 81, which only vaguely referenced “the value before the promotion period”. This precise benchmark ensures businesses can confidently calculate promotional values, providing clearer compliance guidelines.

 2.  Simplified Notification Requirements

Decree 128 introduces a major shift in how businesses notify authorities of promotional activities. Under the previous Decree 81, businesses had to notify all relevant Departments of Industry and Trade (DOIT) in the respective locations where the promotion will occur before initiating any promotional program under the forms prescribed in Article 92.8 of the Law on Commerce and Articles 8, 9, 10, 11, 12, and 14 of Decree 81. Specifically, businesses had to notify the DOITs for the following types of promotions:

·     Organizing cultural, artistic, entertainment programs, and other events for customers for promotional purposes (Article 92.8 of the Law on Commerce);

·     Providing product samples or offering trial services for customers to use free of charge (Articles 8 of Decree 81);

·     Giving away goods or providing services free of charge (Articles 9 of Decree 81);

·     Selling goods or providing services at a price lower than the previous price during the promotional period as announced (promotion in the form of a discount) (Articles 10 of Decree 81);

·     Selling goods or providing services accompanied by vouchers or service usage coupons (Articles 11 of Decree 81);

·     Selling goods or providing services accompanied by raffle tickets for customers to select winners according to the announced rules and prizes (or other equivalent forms of organizing contests and awarding prizes) (Articles 12 of Decree 81); and

·     Organizing a loyalty program where rewards for customers are based on the quantity or value of goods and services purchased (Articles 14 of Decree 81).

Traders have to submit a notification dossier to the DOITs at least three working days before starting the promotional program (Article 17.1). Promotions valued under VND 100 million or conducted exclusively through e-commerce platforms and online promotional websites were exempt from this requirement (Article 17.2). These regulations created administrative burdens, reducing businesses’ agility in planning and executing effective promotional activities.

With new regulations under Decree 128, notification is only required for promotional activities related to game of skill (Article 12) and loyalty (frequent membership) programs (Article 14), giving businesses greater flexibility and ability to implement marketing strategies without unnecessary red tape.

3.   Extended Time Limit for Announcing Results and Awarding Prizes

The 45-day limit for announcing results and awarding prizes remains unchanged under Decree 128, but with one key improvement: businesses now have the option for an extension in cases of force majeure, offering flexibility when unforeseen circumstances arise (Article 1.7(a) of Decree 128 amending Article 21.1 of Decree 81).

4.   Streamlined Reporting and Prize Contribution Rules

Under Article 1.7(b) of Decree 128 amending Article 21.2 of Decree 81, traders must submit a report to the competent State agency within 45 days from the end of the prize-awarding period for promotional programs specified in Articles 12 and 13 and other forms under Clause 9, Article 92 of the Commercial Law. If 50% of the prize value without winners must be contributed to the state budget, the State agency will issue a collection decision within 7 working days of receiving the trader's report. The payment deadline has been extended to 45 days from receiving the collection decision, and the requirement to send a follow-up report within 10 days of making the payment has been omitted, streamlining the process and providing more flexibility for traders. This updates the previous rules in Decree 81, where traders had to pay within 15 working days and send a follow-up report within 10 days of payment.

Decree 128 marks a milestone in advancing Vietnam’s trade promotion framework. By cutting down on administrative hurdles and providing clearer guidance, the Decree empowers businesses with the flexibility and support needed to craft more effective promotional strategies. As Vietnam’s trade environment continues to evolve, Decree 128 stands as a testament to the Government’s dedication to fostering an open, dynamic, and business-friendly ecosystem for the future.

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