In a “post-COVID” era of interconnectivity, more retail businesses have opted to evolve their business to e-commerce to accommodate the behavioral shifts in the shopping habits of Malaysian consumers. In light of the accelerating emergence of online businesses, we have set out below a few of the key legal must dos for setting up and building an online business in Malaysia.
REGISTRATION WITH THE COMPANIES COMMISSION OF MALAYSIA (“CCM”)
Every company, regardless of whether it is an online entity or a physical business, needs to be registered with CCM.
Registration ensures that the online business is legally recognised and will give its customers the opportunity to verify any business information, providing credibility, trust and confidence in the online business.
To register, an online business must complete the relevant forms and pay the prescribed fees to CCM within 30 days of operating its online business.
PAYMENT METHOD
Frictionless checkout experiences are pivotal to building an online business. The right payment methods not only offer convenience to the customers, but also reduce fraud and increase transaction speed.
Online businesses should consider signing up to a payment gateway service provided by an entity licensed by the Central Bank of Malaysia (“BNM”) (https://www.bnm.gov.my/application-for-approval-and-registration) to enable payments on its online platform to be made via credit card or debit card without the online business having to obtain BNM approval.
Additionally, the use of a payment gateway will provide security and reliability to an online business.
COMPLIANCE WITH THE CONSUMER PROTECTION (ELECTRONIC TRADE TRANSACTIONS) REGULATIONS 2012 (“2012 REGULATIONS”)
The 2012 Regulations apply to those who operate a website that sells or provides services online or an online marketplace.
To comply with the 2012 Regulations, all online business operators must comply with the following three (3) salient requirements:
- provide full disclosure of information on the website or online marketplace;
- allow for the rectification of any errors prior to the confirmation of any purchase and issue acknowledgement of receipt for any sales; and
- maintain a record of third-party suppliers for at least two (2) years.
REGISTER AND DECLARE INCOME WITH THE INLAND REVENUE BOARD (“IRB”)
Online businesses must also be registered with the IRB and declare any income derived from its business.
Pursuant to the Guidelines on Taxation of Electronic Commerce 2013 issued by the IRB, online businesses are subject to the same tax treatment as conventional businesses.
Get in touch with us if you have any questions on incorporation of an online business! We regularly advise start-ups and SMEs on the process of incorporation, regulatory compliance and investment / funding exercises.