E-COMMERCE LAW – The Impact on Cambodia’s Online Business

Date: 04 Nov 2020

Overview

Following the promulgation of the E-Commerce Law on 2 November 2019, two significant implementing regulations were recently issued, which set out and the procedures to apply for permits and licenses to operate electronic commerce businesses and the exemptions therefrom:

  • Sub-Decree 134 dated 27 August 2020 on the Classifications, Formalities and Procedures on the Issuance of Permits and Licenses to Intermediaries and Electronic Commerce Service Providers and Exemptions (“Sub-Decree 134”); and
  • Prakas 290 dated 9 October 2020 on Provision of Permits and Licenses for Electronic Commerce (“Prakas 290”).

Scope of Application

The permit and licensing requirements to operate electronic commerce are applicable to the following:

  • individual persons;
  • sole proprietorships;
  • legal persons; and
  • branch offices of foreign companies,
  • which conduct electronic commerce within Cambodia and/or from Cambodia to overseas or from overseas to Cambodia.

Certain individual persons and sole proprietorship are exempted from the above permit requirements. These include, among others: (1) persons making commercial advertisements for goods or services that do not give rise to an offer to form a contract; (2) reservation or booking of services requiring no deposit or payment from the customer; (3) persons selling goods or services with an annual turnover of less than that of a small taxpayer (being USD 62,500); and (4) training by an association or non-governmental organization for non-profit making purposes, whether directly or indirectly.

Nevertheless, the above exempt persons must notify the Ministry of Commerce about their electronic commerce for the purposes of data collection and consumer protection.

What are the Application Requirements?

The Ministry of Commerce is the competent authority issuing the permit and license for electronic commerce carried out by e-commerce service providers and intermediaries. Pursuant to the E-Commerce Law, the e-commerce licensing system is classified into two categories, being permits for individual persons and sole proprietorships and licenses for legal persons and branch offices of foreign companies.

In terms of the licensing process, legal persons and branch offices of foreign companies who wish to apply for a license for an e-commerce service provider or intermediary with the Ministry of Commerce must first complete commercial and tax registration with the Ministry of Commerce and the tax authority and obtain an online certificate from and register a domain name with the Ministry of Posts and Telecommunications.

An applicant must also put in place and submit to the Ministry of Commerce the following:

  • documents confirming the payment method to be provided by a licensed payment services provider approved by the National Bank of Cambodia;
  • the electronic system to be used is accurate pursuant to the conditions under the E-Commerce Law;
  • the business model and consumer protection information to be provided to consumers; and
  • the sample contract between an intermediary and the commerce service provider regarding minimum information requirements for consumer protection.

A license is valid for three years and is renewable subject to the procedures under Prakas 290.

What’s Next?

Local businesses

The licensing framework under the E-Commerce Law introduces a dual licensing system under which an ecommerce business is subject to a business license from the competent regulator as well as electronic commerce permit or license from the Ministry of Commerce.

While insurance is explicitly excluded from an electronic commerce service provider under the E-Commerce Law, no similar explicit exemption has so far been provided under the E-Commerce Law and its implementing regulations for other key sectors such as logistics and online banking.

If you are an electronic commerce service provider or an intermediary, you are required to apply for a permit or license for electronic commerce within six months following the entry into force of Sub-Decree 134, being by 27 February 2021.

Given that an online certificate from the Ministry of Posts and Telecommunications is a pre-condition to a license for electronic commerce and the process thereof may take a few weeks, it is highly advisable that you start the process as soon as practicable.

Foreign businesses

While the E-Commerce Law and Sub-Decree 134 expressly refers to electronic commerce provided from overseas to Cambodia, to date, there has not been any clear guidance issued by the Ministry of Commerce on how it will regulate foreign businesses selling services and goods online from overseas to consumers in Cambodia.

We are available for any queries that you may have about your online businesses, including the licensing application, compliance with data and consumer protection. We can also assist in preparing your template intermediary contract and consumer protection form. For any queries, please contact us at cambodia@dfdl.com.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

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