On July 15 2018, Decree 81/2018/ND-CP dated May 22 2018 (Decree 81) took effect and repealed Decree 37/2006/ND-CP dated April 4 2006 (Decree 37), detailing regulations on the law regarding commercial promotional activities. Decree 81 provides certain new regulations with the aim of facilitating commercial promotional activities and encouraging market development.
First, Decree 81 relaxes the 50% threshold applicable to the value of goods and services used in sale promotions, and the discount of promoted goods and services. Specifically, the value of goods and services used in sale promotions, and discounts on promoted goods and services can be up to 100% of the unit price of the promoted goods and services in the following circumstances: (i) in promotional programmes organised by the governmental authorities within a defined timeframe; or (ii) in a promotion on the occasion of a special holiday as defined by the labour law, for example, Lunar New Year, or other statutory holidays. However, even in the above-mentioned circumstances, this maximum discount does not apply to fresh or raw products, or goods and services covered by the government's price stabilisation policy, or to goods and services in cases of bankruptcy, dissolution, change of location, or change of industry or trade.
Second, a new regulation on sales promotion in the form of multi-level marketing is introduced under Decree 81. Decree 81 provides that the enterprise is only permitted to run its promotions on a multi-level basis if it has specifically registered the business line for multi-level marketing operations with the competent licensing authorities. In addition, Decree 81 provides that the enterprise must comply with the provisions of the law on management of multi-level marketing operation activities.
Third, principles for sales promotion under Decree 81 offer better protection of the customer benefits. Under this protection, the enterprise is not allowed to: (i) request the customers entitled to the promotion to give up, refuse or exchange the products or services of other enterprises; or, (ii) use lottery results as a basis for deciding winners or to offer prizes if its promotion is organised in the form of a prize-contest or game of chance.
Lastly, Decree 81 provides the necessary forms which the enterprise can use to announce its planned promotions, or register them with the competent authorities. This means that enterprises will not have to wait for any further guidance, such as circulars, to be issued by the authorities before it can implement its promotional activities.
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