Online business

Online Businesses Fine Warning

Online business owners face a drop in income due to an increase in competition and a $50 fee for an e-commerce license.
A person shops online for clothes in Phnom Penh. Kiripost/stringer
A person shops online for clothes in Phnom Penh. Kiripost/stringer

Online business owners have expressed their challenges as Cambodia’s Ministry of Commerce (MoC) warns online sellers they face being fined for operating without an e-commerce license.

As of July 3, the MoC has received 4,503 applications for e-commerce licenses. Until now, the total statistics have not been finalized, said Penn Sovicheat, MoC’s Undersecretary of State and spokesman.

“If online merchandisers still have not applied for the e-commerce license, they will be fined not less than 10 million riels. If they continue to sell online without proper permission, they will be punished by law from one to two years imprisonment,” said Sovicheat.

Van Lang, 21, is an online cosmetic business owner for Lazy.E. She told Kiripost this week that she has already registered for an e-commerce license by paying about $50 for two years despite her monthly revenue from selling online cosmetic products being less than 250 million riels per year.

She added, “Even though my revenue from online sales is less than 250 million riels per year, I also spend on online advertisement. So they still require me to pay $50 the same way.”

Lang spends between $50 and $200 per month promoting her online business on social media platforms, such as Facebook, Instagram, and TikTok. Even though her sales have been low for some time, she continues creating more content everyday to reach her target customers online.

“For some months, I didn’t earn any profit, but I have to test my content marketing [on boosting],” Lang said.

Lang’s revenue is on the decline while her business operation costs and competition are on the rise. Since April this year, Facebook ads in Cambodia are subject to a 10 percent value added tax (VAT).

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The ministry also requires tax payment on her online business. As all her cosmetic products are from Thailand, import taxes are already included at the border. As the number of online sellers continues to grow, Lang’s cosmetic business also sees more competitors enter the online marketplace.

Over the past six months, her sales have significantly declined. On a quiet day, Lang does not receive a message through her online shop, despite increasing the amount spent on her shop’s Facebook Page. She has also seen her Facebook Page reach decline, while boosting is less effective than before.

Yet, Lang believes this new regulation has both pros and cons for online sellers. “I think what the ministry is doing now [required for the license] also has a good side because some online business owners have imported counterfeit products. I think $50 is not a huge amount to pay [tax for two years] if the ministry can follow their stated principles [in regulation].”

Online businesswoman Heng Sreypov runs two online shops, lebeur.lotion for cosmetics and tulips.bae for home improvement and gardening products. Until now, she hasn’t applied for the online business license. Sreypov believes her online stores are too small.

She told Kiripost through chat messages, “I don’t know how to register. I have tried to register via an online [website], but it’s successful. So I don’t know what to do.”