Adjustment of regulations on promotional activities
To simplify administrative procedures related to promotional activities and to create more favorable conditions for businesses, on 10 October 2024, the government issued Decree 128/2024/ND-CP (“Decree 128”) amending and supplementing several articles of Decree 81/2018/ND-CP (“Decree 81”) dated 22 May 2018, which detailed the Commercial Law regarding trade promotion activities.
Some notable changes are as follows:
Except for promotional programs involving games of chance, rewards, or contests, businesses are permitted to freely organize and implement promotions.
According to Decree 81, all promotional programs must undergo notification or registration procedures, including simple forms like providing free samples, giving away goods, and offering free services, etc…
However, Decree 128 only requires businesses to notify promotional activities when implementing programs in one of the following two forms:
(i) Sale of goods or provision of services accompanied by a prize draw ticket for customers to select winners according to the announced rules and prizes; and
(ii) Organizing a loyalty program for customers, whereby rewards for customers are based on the quantity or value of goods or services purchased, reflected in the form of customer cards, receipts, or other forms.
For promotional programs involving elements of chance, Decree 128 maintains the requirement to register the promotional program as stipulated in Decree 81.
This breakthrough reform aims to streamline administrative procedures, making it easier for businesses to independently conduct promotional activities and stimulate consumer demand for their products and services.
No maximum limit on the value of goods and services used for promotions via the internet
Decree 128 has added “promoting goods and services in which the process involves the use of the internet, electronic means, devices, and information technology applications” to the list of promotional forms that do not have a limit on the value of goods and services used for promotions.
Based on this new regulation, businesses operating on digital platforms (such as e-commerce platforms) will be allowed to offer promotional goods or services with any value, instead of being limited to below 50% of the main product’s value as before. This regulation is expected to support sellers in handling excess inventory or outdated goods more flexibly and proactively.
Businesses are not required to carry out reporting procedures for state budget remittance
Decree 128 has eliminated the reporting procedures for remitting to the state budget for 50% of the prize value with no winner. This is a significant step forward in the area of promotional activities, helping to reduce the administrative burden on businesses conducting promotional programs. However, businesses should still note that, although they are no longer required to report state budget remittances, they must keep documentation related to budget remittance to serve inspection and monitoring of promotional program implementation in the future.
According to the provisions in Decree 128, the deadline for businesses to remit to the state budget for 50% of the prize value with no winner has also been extended from 15 working days to 45 days from the date of receipt of the collection decision from the state management authority. This new regulation will provide businesses with more time to arrange for their budget remittance obligations.
Decree 128 takes effect from 1 December 2024
