In Vietnam, vouchers are now not only used as a method of promotion, but also as a kind of “product” sold by many e-commerce platforms. In particular, a voucher trader could sell vouchers to its users, which could be used for certain goods or services provided by certain suppliers. The users will then use the voucher to obtain the goods or services from the suppliers usually at a discounted price. As our analysis below will show, the legal nature of voucher business under Vietnamese law is unclear, and therefore business models based on trading of voucher could give rise to certain risks.

Voucher is not a kind of good or service

Although the law is silent on this matter, Vietnam governmental authorities seem to take the view that voucher is neither goods nor service:

Several guidelines from the General Department of Taxation provide that companies cannot issue Value-added Tax (VAT) invoice for the trading of vouchers. Meanwhile, under Article 3 of the Law On VAT 2008, all “goods, services” used for manufacturing, trading and consumption in Vietnam are subject to VAT, except for some limited non-taxable goods or services provided by law; and
It is unlikely that voucher is considered a non-taxable subject under the Law On VAT 2008. The tax authorities would have clearly confirmed in their guidelines on VAT invoice regarding vouchers, had voucher been deemed a non-taxable subject as such.

For this reason, business models based solely on voucher trading might be considered as not a form of “doing business” as defined under the law. In particular, Article 4.16 of the Enterprise Law 2014 defines “doing business” as “the continuous execution of one, some, or all of stages of the investment process, from manufacturing to consumption of products or providing services on the market to earn profit”. Therefore, it is arguable that sale of voucher is not a business activity permitted by law.

No legal ground for trading of non-promotional voucher

The law only provides regulations on trading of promotional vouchers (vouchers that entitle customers to purchase goods or use services of a company or its partners at a discounted price or to enjoy other benefits) through websites, which is considered online promotion service under Decree 52/2013 on E-commerce. There is no legal ground for the sale of non-promotional vouchers, those that are sold at a price equal to the price of the goods/services which can be received by using such vouchers.

Open-loop voucher as an unauthorised payment instrument

Another type of vouchers usually being sold is open-loop voucher. It is issued by the seller, but can be used to exchange for goods and services, or to pay for a part of goods and services at various partners of the voucher trading company. If the number of partners of voucher trading company is large and diverse enough, an open-loop voucher may be considered an authorised payment instrument due to some of its characteristics, for example:

the value on the voucher representing the amount paid in advance by the buyer to the issuer;
the voucher can be used as a substitute for money in the payment of goods or services; and
the act of using the open-loop voucher by the buyer is similar to a request for the execution of payment transaction sent to the issuer, since the issuer will eventually transfer the amount that it has received in advance of the buyer to the partners (third parties) on the basis of such voucher.

Potential violation of consumer rights

The voucher sold by voucher trading companies usually have an expiry date and stipulates that the users cannot convert the sold vouchers into cash if they are not used. This limitation is similar to a goods seller or a service provider not refunding excess cash to its consumer. Accordingly, the limitation applicable to a voucher may considered as a violation of consumers rights since it exempts the suppliers from one of its implied obligation (returning excess monies to customers).

This post is written by Nguyen Thuc Anh and edited by Nguyen Quang Vu.

Vietnam Business Law