Parliamentary motion seeking to delay implementation of 17% tax on foreign travel agents

A motion has been submitted to the Parliament seeking to delay the implementation of the GST Act amendment, which requires foreign travel agents to pay a 17 percent tax starting next month.

A report compiled by "Destination Future," a non-governmental organization focused on promoting Maldivian tourism while safeguarding the country’s environment and culture, stated that introducing a new tax amid a decline in tourism performance this year could pose significant challenges for businesses within the industry.

The report highlighted that applying GST to foreign travel agents would increase resort prices, potentially creating difficulties in attracting tourists. It further noted that foreign travel agents and airlines make substantial investments in marketing the Maldives, and increasing their tax obligations could further reduce their profit margins.

Destination Future’s report called on authorities to suspend the introduction of the 17 percent tax on foreign travel agents and recommended that the amendment eventually be repealed through further legislative changes.

Citing the findings of the report, North Galolhu Mohamed Ibrahim (Kudoo) submitted a letter to Parliament Speaker Abdul Raheem Abdulla, stating that the law was amended to introduce the 17 percent tax without conducting the necessary assessments in consultation with relevant international partners. He argued that the decision was based primarily on projected revenue figures, without sufficient consideration of the potential impact on the tourism sector. He therefore stressed the need for the parliament to review the amendment.

While the government has projected annual revenue of MVR 1.6 billion from foreign operators, Kudoo stated that the Majlis should examine the details of the tour operators subject to the tax and assess possible challenges in implementing the legislation. He emphasized the importance of ensuring that the amendment does not discourage tourists from choosing the Maldives as a destination.

He also highlighted that major international travel industry associations have raised serious concerns regarding the amendment.

In his letter, which referenced the Destination Future report, Kudoo requested that the issue be reviewed by the Parliament’s Public Accounts Committee.