MLM Vietnam: Highlights on management of multi-level marketing business in Vietnam

The Vietnamese government has issued Decree 18/2023/ND-CP, which amends and supplements Decree 40/2018/ND-CP (12 March 2018) on multi-level marketing (MLM) business in Vietnam. The aim of Decree 18 is to eliminate those organisations and individuals from the market who are not strictly complying MLM business regulations, prevent businesses from using online activities to avoid supervision and inspection, and regulate MLM retail sales to end consumers. Decree 18 came into force on 20 June 2023.

Decree 18/2023/ND-CP (Decree 18) on the management of multi-level marketing business (MLM) was issued on 4 April 2023. Here, the Ecovis experts list some of the key points that they feel businesses should focus on:

• Foreign investors or foreign-invested business organisations, who are owners, members, or shareholders of an organisation registering for MLM are required to have at least three consecutive years of operation in an MLM business in another country or territory.
  This condition can reduce the risks of large-scale fraud by screening foreign investors for experience in MLM activities before they enter the Vietnamese market.
• To tighten the strict management of multi-level business activities, a business license allowing retail distribution, including retail activities through MLM must be submitted where the foreign investor or foreign-invested economic organisation is the owner, member, or shareholder of the enterprise.

Multi-level marketing business in Vietnam is complex. We know the rules and advise you.

Nghia Tran, Partner of Tax, Accounting and Consulting, ECOVIS AFA VIETNAM, Da Nang City, Vietnam

The general requirements for MLM business are:

• Organisations or individuals are not allowed to register for a MLM business if they were previously members, owners, or shareholders in a MLM business whose registration certificate has been revoked under the MLM regulations.
• Enterprises without any headquarter, branch, representative office, or business location in the province, must assign a local resident as the point of contact to the local authorities. This individual must be well trained, pass knowledge tests, and have their knowledge confirmation certified by the Ministry of Industry and Trade.
• Enterprises must notify the Department of Industry and Trade before carrying out online conferences, seminars, and training.
• Enterprise must ensures that at least 20 percent of MLM revenue in a fiscal year is generated from customers who are not the enterprise’s MLM participants.

For further information please contact:

Nghia Tran, Partner of Tax, Accounting and Consulting, ECOVIS AFA VIETNAM, Da Nang City, Vietnam
Email: nghia.tran@ecovis.com.vn