Over the last decade or so, with the proliferation of social media in the country, online businesses, which are mostly unlicensed, have been growing. There are only 79 e-commerce licence holders registered with the industry, commerce and employment ministry as of now. With the explosion of unlicensed online businesses, retailers who rely on walk-in customers say they have particularly been affected.
Online businesses operate on a preorder basis, allowing them to receive payments upfront and avoid the overhead costs of renting physical spaces. Most of the unlicensed online businesses post their goods online on social media platforms.
Customers seek out the latest products and draw price comparison with products they see online. Shopkeepers in Thimphu say lenient or non-existent regulation for online businesses exempts them from paying Business Income Tax. Besides, goods are sold at cheaper prices online.
“As we have to pay rent for the shop, our prices for the products are higher compared to the online business owners who do not have to pay rent. So there is a decrease in the number of customers visiting our shop, which is affecting our business. In order to mitigate the effect, the government needs to monitor the licensing of online businesses,” said Kezang Tshomo, a shopkeeper.
“The business isn’t going well these days, there are barely any customers. Besides, the increase in online business has presented additional challenges. People come in looking for products they see online and demand similar products from our shop. Taxation should be applied to both retail and online businesses. If the government could inspect the matter of unlicensed online business, we would be grateful because our tax rate seems inflated and the online shop owners on the other hand seem to be earning more without any taxes imposed,” said Tenzin Wangmo, another shopkeeper.
According to industry, commerce and employment ministry, since online businesses do not have a fixed establishment and can be operated from any convenient place, it is very difficult to monitor them.
The ministry said it is currently developing an action plan to implement the e-commerce policy, which was approved last year.It also said the e-commerce guideline has recently been incorporated in the Trade and Industry Rules and Regulations 2023 for better enforcement.
Meanwhile, the Consumer and Competition Affairs Authority has registered 12 complaints of fraudulent practices by unlicensed online businesses in the current financial year. Except for four complainants who could not be traced, the authority said it has facilitated refunds in most of the cases. The authority advises people to seek the support of the police in such cases.
The ministry said the authority is carrying out various advocacy programmes informing the general public not to engage with unlicensed or unknown entities online.
Interns (Sherab Yangchen, Tshering Wangmo and Tshering Yuden)
Edited by Kipchu
