APS News Desk/01 Published: 12 March 2020, 03:39 PM
Mazharul Islam
Trade license is issued by local government to ensure that the enterprises are carrying out their businesses within the limits of respective local government in compliance with the relevant laws of the land. Obtaining trade license is mandatory for every business entity from the respective local government where it operates. If any business entity has more than one branch or regional office situated under different local governments, it requires to obtain trade license for each branch from respective local government authority according to rule 43 (1) of the City Corporations (Taxation) Rules, 1986.
The purposes of issuing trade license are to collect tax from the license holder, specify local limits for operating its business, determine the nature of business (profession, trade or calling) and to determine the duration of license. So, an enterprise has to operate any business or profession which is mentioned in the license and has to conduct its business within the area for which the license is issued. The enterprise has also to pay tax as charged by the respective local government authority in accordance with Model Tax Schedules published by government from time to time for every financial year. Trade license remains valid for the financial year and it requires to be renewed annually on payment of the tax within 3 months of its expiry according to rule 44(5) of the City Corporations (Taxation) Rules, 1986.
Trade licenses are issued exclusively in the name of the licensee and are not transferable in any way. This license may not be used for any purpose other than commercial purposes. If it is detected that any wrong declaration was furnished in the application form of license, or the terms and conditions under which it was issued are violated, the license can be cancelled and the licensee shall be liable to penal action as per relevant laws of the land. However, to cancel or take penal action, the licensee has to be given a reasonable opportunity of showing cause.
The relevant laws dealing with the provision of trade license are-the Local Government (City Corporation) Act,2009, the City Corporations (Taxation) Rules, 1986 (other local government have similar rules), the Local Government (Municipality) Act, 2009 and the Local Government (Union Parishad) Act-2009. It is unfortunate that no law has provided any provision for obtaining trade license for micro merchants who have no specific location of business and run business with very few capital over van, walkway etc. Because of not having trade license, they are unable to open a bank account or MFS (mobile financial services) account and get banking facilities. Though they are contributing to our economic development, we are doing little for them which results in failure to accelerate sustainable and inclusive economic growth of Bangladesh.
A study conducted by United Nations Capital Development Fund (UNCDF) in 2018found that almost 20lac people are involved in the micro-merchant retail sector in Bangladesh and they transact more than $18.42 billion annually and interact with millions of customers every day which is the second-largest market in Bangladesh after the ready-made garments (RMG) market. According to the study, their businesses are most commonly small neighborhood kiosks, shops or stores with monthly sales ranging from $436 to $3,195. A large number of micro-merchants – 6 in 10; say they have had a trade license at some point, meaning that they were formalized businesses at some point. However, micro-merchants are not leveraging any formalized structure to access formalized services such as bank loans, nor are other sectors leveraging micro-merchant segment to expand products and services. Almost all micro-merchants have mobile phones, and 3 in 10 micro merchants have a smartphone and this number is likely to increase as smartphones are becoming more affordable.Micro-merchants are aware of digital financial services, especially MFS and they appreciate the convenience of services provided by MFS providers. However, only 3 in 10 micro-merchants are currently having an MFS account.
In the age of digital Bangladesh, a great number of people who are contributing to economic development of the country are still deprived of getting digital financial facilities. If such micro merchants are brought under formal financial services and given a license alternative to trade license, it will boost up the wheel of economic development of the country.
The Sustainable Development Goal (SDG) Agenda 8(10) urges for capacity building of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all. The Vision 2021 reaffirms Bangladesh government’s commitment to providing financial services at the doorsteps of the citizens in an easy, fast and low cost manner. Since Bangladesh is looking forward to transforming itself into a developed economy by 2041, ensuring financial services are accessible by everyone, irrespective of status, can contribute to achieve the above mentioned target of SDG Agenda and Vision 2021. “To give a boost to the economy we need to collaborate with each other — among the government agencies, mobile phone operators, financial service providers and development partners — to make sure digital financial services are accessible by everyone, irrespective of status” said Md. Arfan Ali, president and managing director of Bank Asia Ltd. (The Daily Star)
The government should prioritize the inclusion of micro-merchants and other micro, small and medium enterprises in the formal financial sector to accelerate sustainable and inclusive economic growth. To make sure digital financial services are accessible by everyone, policymakers and financial service providers need to step forward and work together to design policies and find a solution by providing alternative license. Bangladesh Bank may issue directives to financial institutions to serve such micro merchants by opening bank or MFS account through the license alternative to trade license.
Mazharul Islam is a Corporate Legal Practitioner and Legal Analyst and the writer is reached on Email: mazharkj528@gmail.com
