People’s Majlis is now considering a government-backed amendment to the Goods and Services Tax Act (Law No. 10/2011) that would, for the first time, require foreign tour operators, overseas travel agents, and offshore booking platforms to register with the Maldives Inland Revenue Authority and charge 17% Tourism GST on sales of Maldives travel services. The bill, submitted on August 15, 2026, by Kulhudhuffushi North MP Mohamed Dhawood, is slated to take effect on October 1, 2026. Its accompanying cost estimate projects MVR 1.6085 billion — roughly USD 104 million — in additional annual revenue, against MVR 2.8 million in setup costs and MVR 5.1 million in yearly administration.

The intent is understandable. The Finance Ministry has noted that of some USD 5.6 billion in annual tourism receipts, only about USD 3.2 billion is recorded as entering the domestic banking system, and it views offshore selling as a principal cause. Capturing more of the value of a Maldives holiday within the Maldivian tax net is a reasonable ambition, and the destination principle on which the bill rests — taxing services where they are consumed — is orthodox tax policy, applied in many jurisdictions.

Yet good intentions and sound principles do not by themselves make workable law. Before the vote, three questions deserve careful answers, because on present evidence the amendment is unlikely to deliver the revenue attributed to it, and may place pressure on revenue the state already collects reliably.

How a GST actually collects

It helps to begin with what a GST is. A goods and services tax is borne by the final consumer and collected in stages: every registered business charges tax on what it sells, deducts the tax it paid on what it bought, and remits the difference. The net payment at each stage equals the tax rate applied to that stage’s value added — no more. MIRA’s own guidance on the operation of GST describes precisely this mechanism.

Consider a guesthouse room contracted to a foreign operator at USD 700 per night. The guesthouse adds 17% TGST — USD 119 — and remits it. Suppose the operator resells the night to a traveler at USD 850. If that operator becomes a Maldivian GST registrant, its output tax is USD 144.50, from which it deducts the USD 119 already charged by the guesthouse. The additional revenue reaching MIRA is USD 25.50 — which is 17% of the operator’s USD 150 margin, and nothing else. However large the gross booking values flowing through foreign platforms, a credit-invoice GST can only ever collect on the slice of value the intermediary itself adds.

This mechanical point frames everything that follows. If the amendment operates as a normal GST, its yield is 17% of genuine offshore margin — a modest base. If it instead applies 17% to gross selling prices without credit for the tax resorts and guesthouses have already charged, it taxes the same room twice, and the second charge will find its way into either Maldivian room rates or Maldivian net rates. Neither outcome resembles the headline figure.

Question one: what new value does the amendment actually reach?

Maldives inventory reaches travelers through two distribution arrangements with very different tax profiles, and the bill does not distinguish them.

In the first — the agency arrangement used by the major online platforms — the property is the merchant. When a traveler pays USD 2,500 for a stay booked through a platform, that USD 2,500 is the property’s own revenue, and the property charges and remits TGST on the full amount. The platform’s income is a commission, commonly in the range of 15 to 25%; on an 18% commission of USD 450, Maldivian law already imposes a 10% withholding tax — USD 45 — under Section 55(a)(6) of the Income Tax Act, which covers commissions for services supplied in the Maldives and which MIRA has applied to booking commissions since its 2016 circular. In this arrangement there is no room value outside the tax net: the accommodation is taxed at the retail price, and the intermediary’s fee is taxed as income. Layering 17% GST onto the same USD 450 commission would raise the combined Maldivian charge on that fee to about 27%, a result that would need justification on its own terms.

In the second — the wholesale arrangement of tour operators and bed banks — the property sells at a contracted net rate and the operator packages and prices independently. Here TGST is charged on the net rate, and the operator’s margin arises offshore. This margin is the one flow in either arrangement that Maldivian GST does not currently touch. But it is worth being precise about what that margin is. It is not idle profit skimmed from the Maldives; it funds source-market advertising, sales networks, trade-show presence, consumer-protection guarantees, currency and charter risk, and the cost of unsold inventory. Net rates are set low because the operator carries the burden of filling rooms through low seasons and building demand in new markets — a function that resorts would otherwise have to finance themselves. A levy that compresses this margin will be absorbed the way commercial actors always absorb such costs: through higher packaged prices for the destination, harder bargaining on net rates, or a quiet reweighting of catalogs toward destinations that impose no such charge. Each of those channels feeds back into the existing TGST base.

So the honest answer to question one is: the only genuinely new base is the wholesale margin, net of everything already taxed — and it is the smaller and slower-growing of the two channels.

Question two: how was MVR 1.6 billion calculated?

The cost estimate published with the bill states the projection — MVR 299.3 million and MVR 1,309.2 million across its two components — but not the taxable base from which it was derived. The base can, however, be inferred. At 17%, MVR 1.6085 billion implies newly taxed value of MVR 9.46 billion a year, on the order of USD 614 million.

For the projection to hold, that USD 614 million must consist of offshore margins and fees that are currently untaxed, attributable solely to services consumed in the Maldives, and collectible in practice. Each requirement narrows the field considerably. Commissions under the agency arrangement are already within the withholding net. Room revenue under both arrangements already bears TGST at either retail or net rates — including it again would count value the state has already taxed. Package components consumed outside the Maldives — international airfare, insurance, stopover nights en route — lie beyond the reach of any destination-based Maldivian tax. And whatever remains must then be collected, in full, from foreign firms with no Maldivian presence, beginning six weeks after the bill’s first reading.

None of this means the true figure is zero. It means the published materials do not show how the figure was reached, and the plausible bases point to an amount well below the projection. A revenue estimate of this size, attached to legislation moving on this timetable, would ordinarily be accompanied by its derivation. Requesting that derivation before the vote is not obstruction; it is the minimum diligence the number requires.

Question three: how would this be administered across borders?

Two practical matters remain, and both deserve more attention than the bill gives them.

The first is that the offshore margin is not untaxed — it is taxed elsewhere. A foreign operator is a taxpayer in the jurisdiction where it is registered: its Maldives margin forms part of its trading profit and is subject to home-country corporate income tax, and in some jurisdictions to travel-specific consumption-tax regimes on margins, such as the European Union’s Tour Operators’ Margin Scheme for travel within Europe. These firms already carry full registration, filing, and audit obligations at home. The Maldives, meanwhile, has a very limited network of double-taxation agreements with its main source markets, and a foreign GST is not the kind of charge a company can generally credit against its home income-tax liability. A 17% Maldivian levy on the margin would therefore sit on top of home-country taxation with no relieving mechanism on either side — the classic profile of a tax that changes behavior rather than collecting revenue.

The second is apportionment. A Maldives holiday sold in Zurich or Guangzhou is rarely a room alone. An USD 8,000 booking may bundle long-haul airfare, insurance, a stopover night in a third country, domestic transfers, and the operator’s own service charge into one price, with the operator’s margin spread across all of it. The bill does not say how the Maldives-attributable portion of price or margin would be determined. Would MIRA prescribe an apportionment formula? Require booking-level cost data from firms in a dozen jurisdictions? Verify allocations recorded in foreign currencies under foreign accounting standards, without treaty instruments through which to compel production — on a recurrent administration budget of MVR 5.1 million? An operator acting entirely lawfully can allocate the greater part of its margin to the non-Maldives elements of a package, and the authority would have little practical means of testing that allocation. Until the apportionment question is answered, the tax has no ascertainable base at the level of the individual taxpayer.

It is instructive that the jurisdictions that have successfully extended VAT or GST to cross-border travel and platform services — the EU, New Zealand, Canada, Singapore — each preceded implementation with years of consultation, statutory definitions of the taxable amount, explicit mechanisms to prevent double taxation, and generous lead times for global systems changes. The pattern is not bureaucratic caution for its own sake; it reflects how difficult this particular tax design is to get right. A six-week runway does not shorten that difficulty. It defers it to the dispute stage.

A better approach is needed

The case assembled above leads to a conclusion firmer than a request for further study. Once the credit mechanism is applied, the commission channel is recognized as already taxed twice over, the wholesale margin is traced to treasuries abroad, and the apportionment question is left unanswered, nothing of substance remains beneath the MVR 1.6085 billion figure. It is not a conservative estimate, or an optimistic one; it is a number without a base — a revenue promise that will not hold water under the most basic scrutiny, presented to Parliament as if it were budget-ready arithmetic. Legislators being asked to vote on the strength of that figure are, in effect, being asked to endorse a fiction.

What the amendment would deliver is not revenue but damage, and the damage is not speculative. A 17% uncreditable levy layered onto channels that already bear TGST at retail prices and 10% withholding on commissions gives every foreign seller of the Maldives a reason to reprice the destination, squeeze net rates, or shift inventory elsewhere — and every consequence of those responses lands on the existing tax base, on resort revenues, and on the country’s standing with the global distribution system it depends on. A tax that cannot be assessed, cannot be enforced, and cannot be credited does not collect; it corrodes.

There are real instruments for the problem the government has identified — repatriation and banking measures, transfer-pricing scrutiny of related-party sales structures, and full enforcement of the withholding tax already on the statute book. Those deserve the Majlis’s attention. This bill does not. It should be rejected in its current form, and no revenue projection derived from it should enter the budget arithmetic until its authors can publish the calculation they have so far declined to show.