Maximum discount rate for the promoted product

Maximum discount rate for the promoted product in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is sales promotion?

According to Clause 1, Article 88 of the Commercial Law 2005, sales promotion means activities of commercial promotion conducted by traders to promote the purchase and sale of goods or the provision of services by offering certain benefits to customers.

2. Maximum discount rate for the promoted product in Vietnam

Article 7 of Decree 81/2018/ND-CP stipulates the maximum discount rate for the promoted product as follows:

- The maximum discount must not exceed 50% of the prices of such promoted product before the sales promotion.

- For time-limited promotion prescribed in Clause 5 in Article 6 of Decree 81/2018/ND-CP, 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.

- Maximum discount rate must not be applied to sales promotion of:

+ Goods or services by price stabilization programs of the State;

+ Fresh foods;

+ Goods or service of the businesses going bankrupt, dissolving, changing their location or business sector or trade

3. Promoted product and promotional product in Vietnam

Promoted product or promotional product must comply with regulations of the Commercial Law 2005 and the following regulations:

- Promoted products must not include wines, lottery, cigarettes, breast milk substitutes, medicines for human use including those permitted for circulation as regulated by the Ministry of Health (except for the case in which sales promotion is dedicated to traders involved in drug trading), examination and treatment service of public medical facilities, education service provided by public educational facilities or public vocational training facilities, goods and services that have been banned from circulation in Vietnam and other goods and services prohibited from sales promotion as required by laws.

- Promotional products must not include wines, lottery, cigarettes, curative medicines for human use including those permitted for circulation as regulated by the Ministry of Health (except for the case in which sales promotion is dedicated to traders involved in drug trading), goods and services that have been banned from circulation in Vietnam and other goods and services prohibited from sales promotion as required by laws.

- Money can also be used as promotional merchandise, except for sales promotion conducted in the forms prescribed in Article 8, 10 and 11 of Decree 81/2018/ND-CP.

(Article 5 of Decree 81/2018/ND-CP)

4. Principles of sales promotion in Vietnam

Pursuant to Article 3 of Decree 81/2018/ND-CP, principles of sales promotion are prescribed as follows:

- Sales promotion program must be implemented in a lawful, honest, public and transparent manner and must not harm legitimate rights and benefits of consumers, other traders, organizations or individuals.

- The trader doing sales promotion must enable the winners to receive prizes and take responsibility to handle complaints (if any) regarding the sales promotion program.

- The trader doing sales promotion must guarantee the quality of goods and services that are target of the sales promotion (hereinafter referred to as ‘promoted product”) and goods and services used for sales promotion (hereinafter referred to as ‘promotional product”).

- Sales promotion must ensure:

+ Customers are not required to give up, refuse or exchange goods and services of other traders or organizations;

+ The trader doing sales promotion must not directly make comparisons of their goods and services to those of other traders, organizations or individuals.

- The lottery results must not be used as a foundation to determine the prize winner or to present and reward bonuses in sale promotion program in the forms prescribed in Claus 5, 6 and 9 in Article 92 of the Commercial Law 2005.

Nguyen Ngoc Que Anh

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