What is the time limit of the promotional program to reduce the price of clearance sale to conduct a bankruptcy process in Vietnam?
- What is the time limit of the promotional program to reduce the price of clearance sale to conduct a bankruptcy process in Vietnam?
- What is the maximum discount for promotional products?
- What are the penalties imposed upon the enterprise implementing a 70% discount promotion program for clearance sale?
What is the time limit of the promotional program to reduce the price of clearance sale to conduct a bankruptcy process in Vietnam?
Pursuant to Article 10 of Decree 81/2018/ND-CP of Vietnam stipulating on promotion and discount as follows:
- Where sales promotion is done in the form of discount, the discounted price of the promoted product offered at any time during the period of sales promotion shall comply with regulations prescribed in Article 7 of this Decree.
- Discount on goods or services whose sale prices or charge rates are particularly quoted by the State is prohibited.
- Discount of goods or services to lower than the minimum levels in cases where the State has set price frames or minimum prices for such goods or service is prohibited.
- Taking advantage of this form of sales promotion to dump goods or services is prohibited.
- Total duration of sales promotion done in the form of discount for a certain goods or service mark must not exceed 120 days in a year excluding the duration of sales promotion programs conducted in the form of discount included in the concentrated sales promotion programs and trade promotion programs decided by the Prime Minister.
Thus, if an enterprise conducting sales promotion to reduce prices discharges inventories and prepares to carry out bankruptcy procedures, the duration of the promotion program must not exceed 120 days in a year excluding the duration of sales promotion programs conducted in the form of discount included in the concentrated sales promotion programs and trade promotion programs decided by the Prime Minister.
What is the time limit of the promotional program to reduce the price of clearance sale to conduct a bankruptcy process in Vietnam? (Image from the Internet)
What is the maximum discount for promotional products?
According to the provisions of Article 6 of Decree 81/2018/ND-CP of Vietnam and Article 7 of Decree 81/2018/ND-CP of Vietnam, the maximum discount of promotional product is specified as follows:
Article 6. Maximum value of promotional product
1. The promotional value of a unit of promoted product must not exceed 50% of the price of such promoted product unit before the promotion, except for promotion in the forms prescribed in Clause 8 in Article 92 of the Commercial Law and Article 8, Clause 2 in Article 9, Article 12, 13 and 14 of this Decree.
2. Total value of the promotional product of a sales promotion program conducted by traders must not exceed 50% of total value of promoted product, except for forms of promotion prescribed in Clause 8 in Article 92 of the Commercial Law, Article 8 and Clause 2 in Article 9 of this Decree.
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4. For time-limited sales promotion (effective within a certain frame of hours, days, weeks, months or seasons), the limit shall be 100% of the value of the promotional product. Such limit shall also be applied to sales promotion activities included in programs or activities of sales promotion decided by the Prime Minister.
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Article 7. Maximum discount rate for the promoted product
1. The maximum discount must not exceed 50% of the prices of such promoted products before the sales promotion.
2. For time-limited promotion prescribed in Clause 5 in Article 6, 100% discount shall be offered. 100% discount may be also applied to sales promotion activities included in programs or activities of sales promotion decided by the Prime Minister.
Thus, the maximum discount must not exceed 50% of the prices of such promoted products before the sales promotion.
What are the penalties imposed upon the enterprise implementing a 70% discount promotion program for clearance sale?
Pursuant to Clause 2, Article 33 of Decree 98/2020/ND-CP of Vietnam (amended by point d, Clause 24, Article 3 of Decree 17/2022/ND-CP of Vietnam) stipulating as follows:
Violations against regulations on sales promotion
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2. A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed for committing one of the following violations:
a) Doing a sales promotion for goods or services by a trader that is not allowed to do sales promotion for such goods or services;
b) Failing to enter into a sales promotion service contract when doing a sales promotion for goods or services of another trader or hiring a trader to do a sales promotion for goods or services;
c) Failing to notify, notify changes (hereinafter referred to as “notify”) or register, register changes (hereinafter referred to as “register”) to competent authorities when implementing sale promotion or failing to truthfully notify or register;
d) Failing to notify or report sale promotion results or failing to notify or report (except for cases under Clause 1a of this Article) or failing to accurately notify or report;
dd) Failing to perform, improperly performing or delaying the performance of contents of the sales promotion program which have been notified or committed with customers or notified or registered with competent authorities;
e) Performing a sales promotion program in which total value of promotional goods or services exceeds the prescribed maximum one;
g) Doing a sales promotion program in the form of discounts in which the discount rate for the promoted goods or services exceeds the prescribed maximum one;
h) Doing a sales promotion program by reducing the prices of goods or services below their minimum prices in case the price bracket or minimum prices of such goods or services are regulated by the State; reducing the prices of goods or services whose prices are quoted by the State;
i) Doing a sales promotion program in the form of discounts for a period exceeding the permitted one;
k) Using proofs of prize-winning in the form that is same as or similar to the lottery form exclusively issued by the State or using the lottery results as the basis for determining prize winners or gifting or awarding prizes in sales promotion programs in the forms prescribed in Clause 5, Clause 6 and Clause 9 Article 92 of the Commercial Law;
l) Failing to implement or improperly implementing the regulation on transfer of 50% of the announced prize to state budget in case the winner in a promotional game of chance is unidentified;
m) Terminating the sales promotion program ahead of the schedule announced or confirmed by a competent authority, unless otherwise permitted by law or the adjusted schedule of the sales promotion program is certified by a competent authority;
n) Terminating the sales promotion program ahead of the schedule announced or confirmed by a competent authority in cases other than the ones prescribed by law;
o) Doing sales promotion against the rules of sales promotion;
p) A trader’s representative office performs a sales promotion program for that trader or hires another trader to do sales promotion for that trader in Vietnam.
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Thus, enterprises that implement a 70% discount for clearance sale are fined from VND 10 million to VND 20 million.
Note: This is only the penalty for individuals, and for organizations, the sanction will be doubled. If the enterprise carries out clearance sale and bankruptcy process, it will not be penalized because the enterprise in this case is not limited to the discount rate.
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