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Government tightens grip on retail business and online direct sales

Business operators running retail business similar to the pyramid model business, and selling services and products on line, will come under state control with hefty fines in case of defaults.

Government spokesman Maj Gen Sansern Kaewkamnerd said the Cabinet has endorsed the tough control in an amendment which was earlier screened by the Council of State to govern the retail and direct sale business.

Under the amended law which sets clear boundaries for both types of business, they  are now required to register their companies and punishments in the form of 20,000 Baht daily fines are specified in the event of default.

The spokesman said under the new law, businesses that have operations that invite individuals to join a network to sell products or services will be classified as retail businesses. Such businesses hand out benefits similar to the pyramid model business and as such are required to clearly define their business and financial activities because of the massive implications that its operations has on its members.

They must register as corporate enterprises with a registration capital no less than 5 million baht and essentially, must provide legitimate warranties on their products and services as well.

In the event of default, it has been specified that that fines of 20,000 baht per day will be charged.

With regards to direct sales operations, these involve businesses that sell products and services online on various websites.

The government has given its support to SMEs and OTOPs (One Tambon, One Product) to engage in such businesses. As such private individuals are permitted to register as private enterprises and require no registration capital.

Punishments for default for these businesses however are no less severe with defaults resulting in 1 year prison terms and maximum fines of 100,000 baht or 10,000 baht per day for the duration of the default period.

The government has advised all retail and direct sale businesses to make all required adjustments to comply with the new laws within 60 days of the legislation coming into force.

09/25/2016 |

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