On October 10, 2024, the Government promulgated Decree No. 128/2024/ND-CP ("Decree No. 128") to amend certain provisions of Decree No. 81/2018/ND-CP ("Decree No. 81") governing commercial promotion activities. In response to these amendments, ATA Legal Services has compiled a summary of the key changes as follows:
1. Stipulate the precise definition of the reference selling price for goods and services to be discounted during a promotional campaign.
Decree No. 128 has provided a clearer definition of the reference price for promotional goods and services, specifying that it is “the selling price immediately before the promotion period."
By using the “the selling price immediately before the promotion period”, we can ensure greater transparency in promotions and prevent businesses from manipulating prices to inflate discount percentages.
2. Supplementing the list of cases exempt from the value cap for promotions
Prior to Decree No. 81, certain promotional activities were exempt from the maximum value restrictions. These included:
- Sponsoring cultural, artistic, and entertainment events for customers;
- Providing free samples or trials of goods and services;
- Complimentary distribution of goods or services without any purchase requirement;
- Selling goods or providing services accompanied by a contest entry form for customers, with winners selected based on the rules and prizes announced (or equivalent forms of contests and prize-giving);
- Selling goods or providing services, coupled with participation in a luck-based program where participation is tied to the purchase of goods or services, and winning is based on the participant's luck, according to the stated rules and prizes (luck-based promotion);
- Running a customer loyalty program to incentivize repeat purchases by offering rewards based on the quantity or value of goods or services purchased. Rewards may be distributed through customer cards, purchase receipts, or other means.
However, according to the new regulations in Decree No. 128, in addition to the aforementioned cases, other forms of promotion, if approved by the state management agency of commerce (as stipulated in Clause 9, Article 92 of the Vietnamese Commercial Law 2005), will also not be subject to the maximum limit on the value of goods and services used for promotion. Specifically, promotional activities for goods and services that are conducted using the internet, electronic devices, and information technology applications as prescribed will be allowed to offer promotions exceeding 50% of the selling price immediately prior to the promotion.
3. Lifting the time restriction on concentrated promotional activities.
Decree No. 81 previously mandated that government-led centralized promotional activities had to be carried out within a specified time frame, organized in the format of hours, days, weeks, months, or promotional seasons.
The limitation on the duration of concentrated promotional campaigns has proven to be ineffective in boosting product consumption at local stores. To address this, Decree No. 128 removes this time constraint, granting more flexibility to organize these campaigns. Additionally, the decree emphasizes the role of government agencies in approving and implementing targeted promotional programs to support economic development.
4. Additional regulations on reporting the results of promotional campaigns
Compared to the provisions in Decree No. 81, the reporting of promotion program results has some new points as follows:
- Decree No. 128 has added an exemption for merchants selling goods or providing services with accompanying contest tickets for customers to select prize winners according to the announced rules and prizes (or other equivalent forms of contests and prize-giving).
- Regarding the obligation to report the implementation of a promotional program with no winning prizes in a promotional program of a random nature, Decree No. 128 has extended the deadline for businesses to deposit 50% of the announced value of the unclaimed prize of the promotional program from 15 working days to 45 days from the date of receipt of the decision to deposit from the state management agency.
Decree No. 128 has eliminated the requirement for businesses to report on the results of state budget payments for promotional programs with no winners in random prize-based promotions. Accordingly, from December 1, 2024, businesses will no longer be required to report on the results of state budget payments from the date the state management agency issues a decision to collect the budget.
Decree No. 128/2024/ND-CP takes effect from December 01, 2024.
Comment: