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Business permit now required for Beijing online shops

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Posted 22nd October 2008 at 04:30 AM by Kerry Finch

Beijing netizens are raising a howl over a new rule issued by the Beijing Administration for Industry and Commerce (BAIC) requiring profit-oriented online stores to secure business permits.

In a survey conducted in Beijing, an overwhelming majority of 80% responded negatively to the new rule saying that it will kill fledgling online businesses and discourage newcomers from setting up shops online. But BAIC authorities maintain that there are advantages to the new rule that people may come to realize only after it has been fully implemented. The new rule is said to be a precursor to a move to impose the value-added tax on online sales which most businesses have avoided so far. BAIC insists that it is only equitable for these businesses to be able to remit the applicable taxes that their brick and mortar counterparts are being subjected to regularly. Moreover, while the new business permit requirement may be an additional burden to start-up and low earning businesses, it will effectively weed out those with substandard product quality and those that are not serious about their online businesses. This may translate into improved customer satisfaction.

The new rule seems to be in need of more detailed guidelines for its implementation. Netizens argue that the coverage of the rule is vague while a clearer definition of what is profit-oriented is still missing. On the matter of what is considered profit-oriented, BAIC appears to be lenient as it stated that the agreement between the parties will best determine whether a transaction is profit-oriented or not. Whether or not online businesses comply with this requirement still remains to be seen. The new rule took effect on August 1, 2008.
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