Logo of Phnom Penh Post newspaper Phnom Penh Post - E-commerce businesses told to register as fines, penalties kick in

E-commerce businesses told to register as fines, penalties kick in

Content image - Phnom Penh Post
A customer looks for product on an online shopping website. Hong Menea

E-commerce businesses told to register as fines, penalties kick in

The Ministry of Commerce has issued a fresh call to businesses and legal persons conducting e-commerce operations in Cambodia to apply for the required permits or licences and pay any applicable fines.

In a letter issued on July 7, the ministry recapped that it had postponed the implementation of fines for the late submission of applications four times, which it noted went into effect on July 4.

Without providing a concrete timeframe, the letter says that individuals, sole proprietorships, branches and subsidiaries of foreign companies, and other legal persons that “have just started to conduct or intend to conduct e-commerce operations” can apply for any necessary permits or licences “without any penalty”.

Although six categories of e-commerce businesses are exempt from registration requirements – according to ministry undersecretary of state Penn Sovicheat – the letter encourages these to confirm their eligibility for the exemption at the ministry. According to ASEAN Now, Cambodian businesses using e-commerce solutions to sell internationally must also obtain the applicable permits or licences.

Inter-Ministerial Prakas No 316 says providing false information or forged documents required for registration is punishable by a one million riel ($250) fine, while conducting unauthorised e-commerce transactions can result in a 10 million riel charge.

Sovicheat told The Post that as of July 8, the ministry had received a total of 6,962 applications for e-commerce permits and licences: 5,641 at its headquarters, 1,201 at provincial commerce departments and 120 online.

Theab Sovannareth, co-founder of Smile Shop, which operates online, told The Post that obtaining a permit or licence is useful for business management and protection purposes, and reduces risks associated with daily operations.

“Although there are some difficulties and complications in preparing documents during the application process, we benefit a lot from the permits and licences – they ensure that our businesses are legal and standardised,” he said.

The ministry’s Trade Training and Research Institute (TTRI) recently reported that the total market value of e-commerce in Cambodia in 2021 was to the tune of $970.10 million, marking an increase of 19.29 per cent from $813.25 million in 2020. Fashion accounted for the lion’s share at $263.30 million or 27.14 per cent, followed by electronics ($254.40 million); beauty, health, personal and household care ($230.50 million); toys, hobby and do-it-yourself ($62.94 million); food ($57.19 million); furniture ($46.29 million); beverages ($44.29 million); and media ($11.19 million), the TTRI said.

Following the boom caused by the Covid-19 crisis, growth in the e-commerce market is expected to moderate to 15.17 per cent in 2022, and accelerate each of the subsequent three years for an average of 16.424 per cent each year in the 2022-2025 period, reaching a value of $1.11729 billion this year, $1.28723 billion in 2023, $1.50986 billion in 2024 and $1.78234 billion in 2025.

According to Sovicheat, the six categories of e-commerce businesses exempt from the registration requirements are – first: advertisers that do not list prices of, or directly sell goods or services to consumers, and are not subject to a contract.

Second: information providers involved in interactions such as negotiations that do not take deposits for their services or directly create sales contracts, such as booking services.

Third: individuals or sole proprietorships with sales revenue below the lower income threshold of the lowest tax bracket.

Fourth: family-owned, temporary or seasonal businesses, such as those in agriculture.

Fifth: vendors who sell their own artworks.

Sixth: providers of online private tutoring, training, workshops or similar educational services.

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