Tax hike will lead to MVR 50-100m tourism loss: MATI

Maldives Association of Tourism Industry (MATI), an association of resort owners, warned on Tuesday that the increase in T-GST on tourist establishments from January will lead to a loss of $50-100 million to resorts. 

President Ibrahim Mohamed Solih has ratified the tax increase bill. From January:

MATI Secretary General Ahmed Nazir told Atoll Times said that 70% of the country's tourism is dependent on a model of selling rooms to tour operators. He said:

"Resorts will have to bear the difference in tax rate from their own pockets. When there are thousands of travel agents, it's not like we can simply amend agreements," Nazir said.

Nazir said that in every government, MATI has insisted that any tax hike should be done only after giving at least a year for preparations. However, not enough time has been given for the latest tax hike, he added.

Nazir said this is not the right time to raise taxes. The reasons, according to MATI are: 

"We are presenting a record budget this year as well. I wonder if this is a situation where a record budget is needed even when we have to finance through tax hikes. What we are witnessing a dire global economic forecast," he said.

Nazir said although tax hikes may not lead to an observable decrease in the number of tourist arrivals, the industry as a whole will have to face the burden of significant losses. Tourists are coming from the efforts of the resorts despite the losses, he said.

"We have taken loans from banks, so we've to bring in tourists," Nazir said.

MATI's comments come a week after Maldives Association for Travel Agencies and Tour Operators (MATATO) said 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.

However, a body representing employees in the tourism industry refuted claims by its counterpart representing local travel agents and tour operators that the Maldives tourism industry.