Issue of December 2024 – New regulations on promotional activities under Decree 128/2024/ND-CP

Dear Valued Clients,

On October 10, 2024, the Government issued Decree No. 128/2024/ND-CP amending and supplementing several provisions of Decree No. 81/2018/ND-CP (“Decree 81“) dated May 22, 2018, detailing the Commercial Law regarding trade promotion activities (“Decree 128“). This new Decree introduces significant updates to promotional activities and officially takes effect on December 1, 2024.

In this Legal Update, we provide an overview and detailed analysis of these key changes in promotional activities – an essential aspect of trade promotion that businesses need to pay close attention to in the coming period.

1. Amendment to the maximum limit on the value of goods and services used for promotion

Decree 128 revises several provisions related to the maximum value limits for goods and services used for promotions under Article 6 of Decree 81. The updated provisions are as follows:

“The material value used for promotion per unit of promoted goods or services shall not exceed 50% of the selling price immediately before the promotional period of such goods or services, except for promotions carried out under the forms stipulated in Clauses 8 and 9, Article 92 of the 2005 Commercial Law; Article 8, Clause 2, Article 9; and Articles 12, 13, and 14 of this Decree [1].”

“The total value of goods or services used for promotions in a promotional program shall not exceed 50% of the total value of promoted goods or services, except for promotions conducted in the forms specified in Clauses 8 and 9, Article 92 of the 2005 Commercial Law; Article 8, and Clause 2, Article 9 of this Decree [2].”

Compared to Article 6 of Decree 81, the new provisions under Decree 128 clarify that the material value used for promotions shall not exceed 50% of the selling price “immediately before the promotional period of such goods or services” (previously, it only stated that it should not exceed 50% of the price “before the promotional period”).

Additionally, Article 1.1 of Decree 128 expands the scope of exemptions from the maximum value limits for goods and services used in promotions. In addition to the exemptions under Decree 81, other forms of promotions approved by state trade authorities are also exempt from these maximum value limits. This includes promotional activities involving the use of the internet, electronic means, or IT applications as stipulated in Article 15 of Decree 81.

2. Removal of time limit for centralized promotional programs

Previously, Decree 81 stipulated that centralized promotional activities organized by state agencies could only be conducted within specific timeframes, such as hours, days, weeks, months, or promotional seasons [3].

However, in practice, the limitation on the timeframe for such activities has reduced the effectiveness of product consumption at local retail stores. To encourage the organization of centralized promotional programs, Decree 128 removes the time limit for such activities. It also emphasizes the authority of state agencies (both central and provincial levels) to decide on the implementation of centralized promotional programs to achieve national and local economic development goals.

3. Revisions to notification requirements for promotional activities

Under Decree 81, businesses were required to notify state authorities before conducting promotional activities such as:

• Providing samples, offering sample services for customers to try for free [4];
• Giving away goods, providing services free of charge [5];
• Selling goods, providing services at prices lower than the previous selling prices, applicable during the notified promotion period (promotion in the form of discounts) [6];
• Selling goods, providing services with accompanying vouchers, service usage vouchers [7], etc.

Exceptions were made for cases where the total value of promotional gifts or prizes was less than VND 100 million or where businesses conducted promotions exclusively through e-commerce platforms or online promotional websites [8].

However, Decree 128 eliminates the requirement to notify state authorities for these forms of promotions. This amendment is aimed at simplifying and reducing administrative procedures in the promotional field.

4. Additional provisions on reporting requirements for promotional programs

Compared to the provisions in Decree 81, Decree 128 has added subjects that are not required to report the results of promotional programs for merchants selling goods or providing services with accompanying contest entry forms for customers to select winners according to the announced rules and prizes (or other equivalent forms of organizing contests and awarding prizes).

For the obligation to report the implementation of promotional programs with unclaimed prizes in promotional programs of a random nature, Decree 128 has extended the deadline for merchants to submit 50% of the announced value of unclaimed prizes from 15 working days to 45 days from the date of receiving the collection decision from the state management agency [9].

Additionally, Decree 128 has removed the requirement to report the results of submitting to the state budget for merchants implementing promotional programs with unclaimed prizes in promotional programs of a random nature. Previously, the law required that within 10 days from the date of submission to the state budget, merchants were responsible for sending a written report to the state management agency issuing the collection decision. However, from December 1, 2024, merchants are no longer required to report the results of submitting to the state budget from the date of submission to the state management agency issuing the collection decision.

As usual, we hope you find this Legal Update helpful and look forward to working with you in the upcoming time.

Kind regards,

ENT Law LLC

The full version of this Legal Update can be found here.

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[1] Article 1.1(a) Decree 128.

[2] Article 1.1(b) Decree 128.

[3] Article 6.4 Decree 81.

[4] Article 8 Decree 81.

[5] Article 9 Decree 81.

[6] Article 10 Decree 81.

[7] Article 11 Decree 81.

[8] Article 17 Decree 81.

[9] Article 1.7 Decree 128.