MDP raises concerns over clarity of GST amendments targeting foreign operators

Opposition Maldivian Democratic Party (MDP) MPs on Sunday raised concerns in the People's Majlis over the implementation of proposed amendments to the Goods and Services Tax (GST) Act, calling for greater clarity on how the changes would affect businesses operating in the tourism sector.

The bill, submitted on Saturday by Kulhudhuffushi North MP Mohamed Dhawood of the ruling People's National Congress (PNC), was introduced for preliminary debate during Sunday's parliamentary sitting. Members are expected to vote on whether to accept the bill and refer it to committee for further review.

The proposed legislation seeks to implement the "destination principle" by imposing GST on goods and services supplied to the Maldives by foreign tourism-related businesses, including offshore booking platforms, foreign tour operators and overseas travel agents.

During the debate, most MPs expressed support for the objective of bringing entities currently operating outside the tax framework into the system. However, opposition members argued that the bill lacks sufficient detail on how the proposed measures would be implemented.

Kendhoo MP Mauroof Zakir said businesses already face challenges understanding existing tax requirements and warned that unclear legislation could create further difficulties.

"Even now, we receive complaints stemming from a lack of proper information or the need to consult legal counsel just to clarify simple tax compliance matters. We must consider the impact this will have on every business," he said.

Mauroof said the principal concern was the absence of clear information on how the amendments would operate in practice.

He questioned which businesses would be required to re-register, whether GST categories would change, which tax exemptions could be affected and what impact the amendments might have on prices. He also called for economic analysis and wider consultation before the legislation proceeds.

"Without answers to these questions, I cannot accept that such major changes can be introduced so rapidly or suddenly to the public under the guise of mere technical adjustments," he said.

Other MDP MPs echoed similar concerns, noting that the bill was submitted on Saturday and brought to the floor for debate the following day, leaving limited time for consultation with industry stakeholders.

Responding to the criticism, PNC Parliamentary Group Leader Ibrahim Falah said the government engages with relevant stakeholders before introducing legislative changes and would continue consultations during the committee stage.

Falah said feedback would be sought from key stakeholders in the tourism industry and that their views would be considered before the bill is finalised.

He added that the amendments would be implemented in a manner that avoids disruption to the tourism sector while ensuring benefits to the state.

Government MPs also argued that the bill would bring foreign online booking platforms and other overseas tourism service providers within the Maldivian tax system by requiring them to register with the Maldives Inland Revenue Authority (MIRA).

According to supporters of the bill, the changes would improve access to tourism-related data, strengthen revenue forecasting and provide greater visibility into bookings, sales and tax collections linked to foreign tourism businesses.

The bill is expected to proceed to committee review if approved by the Majlis.