Maldives moves to tax foreign booking platforms and tour operators

A bill seeking to impose Goods and Services Tax (GST) on goods and services provided to the Maldives by foreign tourism-related businesses has been submitted to the People’s Majlis.

The amendment to the Goods and Services Tax Act was submitted on Saturday by Mohamed Dawood, Member of Parliament for the Kulhudhuffushi North constituency representing the ruling People’s National Congress (PNC).

The bill has been included in the agenda for Sunday’s parliamentary sitting, where it is expected to be presented and debated.

According to the proposed legislation, the main objective is to implement the “destination principle” in the Maldives’ tax framework. Under the proposal, GST would be collected on goods and services supplied to the Maldivian market by foreign businesses operating in the tourism sector.

The entities targeted under the bill include offshore booking platforms, foreign tour operators and overseas travel agents.

The bill states that, because these businesses are not based in the Maldives, GST registration and tax collection will commence after arrangements are established in coordination with the Maldives Inland Revenue Authority (MIRA) to facilitate compliance and payment.

According to the explanatory notes accompanying the bill, collecting GST from these entities would allow the state to capture tax revenue from tourism-related transactions currently conducted through overseas providers.

The proposal estimates that annual state revenue would increase by approximately MVR 1.6 billion once the system is implemented. The projected revenue breakdown includes:

• MVR 299.3 million from overseas travel agents
• MVR 1.3 billion from foreign tour operators

The bill also outlines the expected administrative costs of implementing the system. According to the estimates provided:

• A one-time expenditure of approximately MVR 2.8 million may be required for implementation.
• Annual staffing and operational costs are estimated at MVR 5.1 million.

Despite these costs, the bill states that GST revenue collected under the proposed framework is expected to increase overall government revenue.

If approved by Parliament, the amendments are scheduled to come into effect on October 1.