“Legal knowledge gaps among digital women entrepreneurs”

Afifa Sultana, an SME entrepreneur in Dhaka who sells export quality products through social media, thinks her business scale is not large enough to follow the legal aspects of a business. Although she doubts it and showed keen interest to have clear ideas on this from reliable sources. Online-based businesses need three major documents, Trade License, Tax, and VAT certificates, not all businesses need VAT certificates though. More than 90% of Bangladesh’s 7.8 million businesses are informal, primarily due to the absence of trade licenses. Women entrepreneurs in Bangladesh have majority ownership of only 1.7% of formal firms in Bangladesh. 

Insights from a discussion with women entrepreneurs reveal several barriers: Lack of Awareness: Some entrepreneurs believe small businesses don’t require legal documents, while others fear legal processes. Lethargic authorities and unethical practices like bribery deter them from obtaining trade licenses and tax certificates. Due to limited financial resources, many cannot afford lawyers or accountants. In addition, women often struggle with bookkeeping and accountability, making it difficult to comply with tax regulations. While five out of ten entrepreneurs expressed a desire to learn about legal requirements, they struggled to find accessible and reliable sources. The NBR website, though available, is slow and contains incomplete information, making it unhelpful for most users.

Proposed solutions include developing a mobile app for women entrepreneurs that offers user-friendly guidance, legal terms, payment gateways, and renewal options. Simplifying the documentation process and highlighting the benefits of compliance would encourage greater participation. Expanding initiatives like the Dhaka South City Corporation’s five-year business licenses nationwide could provide further support. Additionally, introducing incentives such as enhanced tax rebates for women entrepreneurs would be beneficial. By improving access to information and streamlining processes, these efforts could empower women to formalize their businesses, driving economic growth and increasing government tax revenues.