In the industry 4.0 era, the Internet opens up countless possibilities, business support tools, and connections for businesses. As one of the services on the Internet, the cross-border advertising model is trusted and chosen by many businesses to market their products.
On 20 July 2021, the Government issued Decree 70/2021/ND-CP regulating a number of issues on cross-border advertising services (“Decree 70“), which will come into effect as of 15 September 2021. Decree 70 will change regulations on cross-border advertising activities with the following notable contents:
Investors no longer have to go through Vietnamese partners to conduct service
According to the previous regulations in Decree 118/2013/ND-CP, when investing in this field, foreign investors will have to conduct through an advertising service business registered in Vietnam.
In practice, most service users contact cross-border advertising platforms themselves instead of through a third party, therefore, this provision will be removed from 15 September when Decree 70 officially entered into force.
Obligation to notify before doing business
Decree 70 requires foreign individuals and organizations providing cross-border advertising services in Vietnam to carry out procedures for notifying information of Vietnamese service providers at least 15 days before their operation.
Because the requirement to go through a party in Vietnam has been removed, the foreign party providing services will now have to notify information about: (i) name of organization and transaction, address of head office where advertising service provision activities are registered, location of main server system and server system in Vietnam (if any) and (ii) information about the contact point in Vietnam, including the name of the representative organization or individual in Vietnam (if any), email and contact number.
In addition, the authority to receive the notice will now be the Ministry of Information and Communications instead of the Ministry of Culture, Sports and Tourism.
Comply with the law when performing services
Decree 70 indicates a number of more specific obligations on service providers and users, specifically to ensure:
- Comply with the provisions of Vietnamese law on advertising, regulations on network security and regulations on management, provision and use of Internet services and information on the internet;
- Advertisement publishers, advertisers must require service providers to (a) have technical solutions so that they can actively control and remove advertising products that violate Vietnamese law on the system and (b) ensure that advertising products are not placed in content that violates the law.
- With respect to tax regulations, normally, foreign companies owning technology platforms will sign cooperation agreements and authorize Vietnamese partners to declare and pay taxes. State agencies can only work and collect taxes from the Vietnamese side, while the foreign side can be said to be “impossible”. However, this new regulation still leaves open the possibility of controlling tax revenue for this type of service.
As such, the parties should pay attention to this content, and may even consider including it in the contract to avoid unnecessary violations and disputes.