Tengiz Andguladze, 29, was held when officials went to his shop at 7pm and discovered no documentation to support his business.
Nearby Thai businesspeople drew a map so authorities could find his shop and said they feared the continuing operation of the business would affect neighboring legal businesses.
Santi Pawai, chief of the Ministry of Tourism and Sports and Director of the Business and Guide Registration Branch, conducted the raid and said Mr Andguladze would not be allowed bail from the local police station tonight.
He is likely to appear in Phuket Provincial Court on Friday morning.
His Royal Andaman Express business would be closed permanently, Khun Santi said.