Bid to exempt smaller guesthouses from Green Tax hike fails

The Parliament’s Whole House Committee on Wednesday rejected an amendment submitted by the main opposition Maldivian Democratic Party (MDP) to revise tax legislature submitted by the government so that guesthouses with less than 25 rooms are exempt from the planned hike in the Green Tax.

The government has submitted three bills to increase taxes next year. This includes legislature seeking to double the Green Tax, one to increase the Tourism Goods and Services Tax (GST) Act, and one to increase the Airport Departure Tax and Airport Development Fee.

The Tourism Act currently prescribes a Green Tax of USD 3 per night for guesthouses with less than 50 rooms.

The government has proposed doubling the Green Tax for guesthouses from USD 3 to USD 6, and from USD 6 to USD 12 for resorts and city hotels.

The sub-committee selected to review the legislature passed the bills on Tuesday without making any changes.

During a meeting of the Whole House Committee on Wednesday, Kendhoo MP Mauroof Zakir, a lawmaker from the MDP, presented an amendment to exempt guesthouses with less than 25 rooms from the tax hike. The amendment was seconded by South Hithadhoo MP Ibrahim Nazil, the leader of MDP’s parliamentary group.

However, the amendment was rejected with a majority vote of 68-11.

The committee then voted 67-11 to pass the bills without making any revisions.

The in Green Tax is set to take effect on January 1, 2025, and is expected to result in an additional injection of MVR 963.6 million in tax revenue.

Meanwhile, the bill to amend the Good and Services Tax Act seeks to increase the TGST from 16 percent to 17 percent.

The committee passed the bill with a majority vote of 68-10.

The change in TGST is set to take effect on June 1, 2025.

The third bill, one to amend the Airport Taxes and Fees Act will see the Airport Departure Tax and the Airport Development Fee raised from USD 30 to USD 50 for foreign ‘economy class’ passengers, from USD 90 to USD 120 for both local and foreign ‘business class’ passengers, from USD 90 to USD 240 for ‘first class’ passengers, and from USD 120 to USD 480 for passengers who depart of private jets.

The committee passed the bill with a majority vote of 67-11.

The bills will now be sent for floor votes, but are expected to pass as the main ruling People’s National Congress (PNC) holds a supermajority of seats in the Parliament.

The Finance Ministry estimates the tax hikes will boost revenue by nearly MVR 3 billion.