Maldives to repeal foreign tour operator tax

The government has submitted legislature to Parliament seeking to repeal an amendment requiring foreign tour operators, travel agencies and offshore booking platforms to pay Tourism Goods and Services Tax (TGST), just weeks after implementing it.

The bill, sponsored by Kolamaafushi MP Ibrahim Didi, was submitted to the Parliament on Tuesday.

The move to repeal the government amendment that introduced destination principle in taxation of tourism services follows pushback from industry stakeholders.

The amendment in question was ratified by President Dr. Mohamed Muizzu on August 31 and took effect on October 1. But mere days later, Tourism Minister Mohamed Ameen announced that President Muizzu had decided to amend the law in light of concern from industry leaders and travel agents.

The government had estimated an additional MVR 1.6 billion in annual tax revenue with the change.

However, the tax received pushback from the Maldives Association of Travel Agents and Tour Operators (MATATO), as well as leading global tour operators from Russia, India, France, and Italy, among others.

MATATO said the amendment failed to recognize the complexity of the tourism distribution system, where bookings are handled through multiple layers of global agents, consolidators, and platforms. The association said the government had not considered how these systems actually operate, nor the practical challenges Maldivian agents will face.

MATATO warned the move would reduce the advertising of Maldives by foreign agents and increase the risk of business shifting to other destinations. It also warned the amendment could harm small and medium-sized Maldivian travel agencies, who rely heavily on foreign partners.

MATATO also highlighted that the amendment was set to take effect in October, even though bookings and contracts for the upcoming tourism season have already been completed. This, they said, will impose an additional financial and administrative burden on local agents. The association further expressed concern over the requirement for Maldivian agents to provide detailed information about foreign business partners for tax purposes, calling it intrusive and risky for commercially sensitive data.