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A resort in Maldives. (Photo/Dhigali Maldives)

TEAM refutes tax hike linked tourism loss claims

An association representing local travel agents and tour operators said over $50 million will be lost from booking cancellations alone.

25 November 2022

A body representing employees in the tourism industry on Thursday refuted claims by its counterpart representing local travel agents and tour operators that the Maldives tourism industry may face a loss of $50 million in the first three months or first quarter of 2023 due to the increase in T-GST. 

The president has ratified the GST and TGST hike bill, which will come into effect from 1 January 2023. The change includes:

  • GST from 6% to 8%

  • T-GST from 12% to 16%

Expressing displeasure over the tax hike, Maldives Association for Travel Agencies and Tour Operators (MATATO) said in a statement on Thursday:  

  • In the first three months of 2023 (Quarter 1), over $50 million will be lost from booking cancellations alone

  • Maldivian workers in the tourism industry will see nearly MVR 2,000 reduction in service charges, as service charges are calculated after deducting GST

In a counter statement, the Tourism Employees Association of Maldives (TEAM) said it is unlikely that mere increase in taxes will lead to cancellation of bookings and loss of service charge on employees. Past tax hikes did not result in any such change in bookings, it said.

"However, with this change, we believe that the profitability of tour agents and tourist operators will be affected to some extent," TEAM said, adding that it would have been better if adequate time had been given before the change in the tax regime.

TEAM believes:

  • Taxing businesses is important to boost government revenues, improve economic conditions, and increase employee salaries

  • Increasing T-GST on tourists and gradually increasing tax on business profits and income tax is critical for the country's economy to grow

  • Tax hike should have a positive impact on salaries of employees in various industries

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