GST on foreign tour operators proposed, revenue expected at MVR 1.6bn

An amendment requiring foreign tour operators and offshore booking platforms to pay GST on services supplied to the Maldives is expected to generate more than MVR 1.6 billion annually, according to the government’s cost estimate.

The amendment, submitted by PNC MP Mohamed Dawood on behalf of the government, seeks to specify in law the services and procedures applicable to offshore booking platforms, foreign tour operators and overseas travel agents. The purpose is to implement the destination principle within the Maldives’ tax framework.

The bill proposes to include inbound tourism services provided by persons who do not have a permanent place of business in the Maldives. It also requires businesses registered as tourism service providers to issue tax invoices within three days of supplying services.

The amendment outlines how foreign tourism businesses will charge and collect GST on services supplied to the Maldivian market. According to the government’s cost estimate, a one-time expenditure of MVR 2.8 million will be required for implementation, while annual recurrent costs of MVR 5.1 million are expected for staffing and operations.

The estimate states that offshore booking platforms, foreign tour operators and travel agents will begin registering and paying GST in the Maldives once MIRA engages them and establishes simplified tax payment arrangements.

If the amendment is passed, the government expects to receive MVR 1.61 billion in annual revenue under the new framework.

The bill is proposed to come into force on October 1, and is therefore expected to be passed before the end of the current session or during an extraordinary session.