The government has announced plans to amend the Goods and Services Tax (GST) Act to introduce the destination principle in the Maldives.
Tourism and Civil Aviation Minister Mohamed Ameen made the announcement while speaking at a ceremony held to mark National Tourism Day.
The amendments to the Goods and Services Tax Act, aimed at requiring foreign tour operators to pay GST based on the value of goods and services supplied in connection with tourism in the Maldives, were ratified by President Dr Mohamed Muizzu on August 31.
The bill includes provisions to introduce the destination principle in the Maldives by imposing GST on goods and services supplied to offshore booking platforms, foreign tour operators and travel agents.
Speaking at the National Tourism Day ceremony, Minister Ameen said amendments had been made to the GST Act within the past two months, including additional provisions for collecting GST under the destination principle.
The minister said the government had received significant concerns from the tourism industry regarding the changes, particularly from travel agents.
“At the same time, we identified major concerns within the industry, including concerns raised by travel agents. These concerns were related to the timeframe and several other issues surrounding the matter. In relation to this, many leading figures from the industry, as well as a large number of travel agents, sent requests to the President. At present, the President has decided to bring amendments to the GST Act based on the destination principle as soon as possible,” Minister Ameen said.
Inbound tourism products to be subject to GST
The amendments submitted to the People’s Majlis include inbound tourism products among activities subject to GST, even when the business providing the service does not have a permanent establishment in the Maldives.
The bill defines an inbound tourism product as tourism-related services provided in the Maldives, including accommodation, food and transportation.
The government estimates that if the proposed amendment requiring foreign tour operators to pay tax is approved, it could generate approximately MVR 1.61 billion in additional annual revenue for the state.
The estimated revenue includes approximately MVR 299.3 million from foreign travel agents and MVR 1.3 billion from foreign tour operators.
The proposed changes are intended to ensure that tourism-related goods and services supplied within the Maldives are taxed under the destination principle, including services arranged or provided through overseas-based tourism businesses.
