Parliament accepts GST bill targeting foreign tour operators, refers to committee

The People's Majlis on Sunday accepted a bill proposing amendments to the Goods and Services Tax (GST) Act to impose GST on goods and services supplied to the Maldives by foreign tourism-related businesses, sending the legislation to committee for further review.

The bill was submitted by Kulhudhuffushi North MP Mohamed Dhawood of the ruling People's National Congress (PNC). Following its introduction on Saturday, the proposed amendments were debated during Sunday's parliamentary sitting before being put to a vote.

Of the 73 members present, 71 participated in the vote. With 70 members voting in favour and one voting against, the Majlis approved the bill and referred it to the Committee of the Whole House for further examination.

The proposed legislation seeks to implement the "destination principle" within the Maldivian tax system by requiring GST to be collected on goods and services provided to customers in the Maldives by foreign tourism businesses.

The bill would apply to services provided by offshore booking platforms, foreign tour operators and overseas travel agents.

According to the bill, the measure is intended to bring foreign tourism-related transactions within the Maldivian tax framework and expand GST collection from businesses that currently operate outside the domestic tax system.

The legislation estimates that the proposed changes could generate an additional MVR 1.6 billion in annual state revenue. It also notes that implementation will require administrative expenditure by the Maldives Inland Revenue Authority (MIRA), with costs estimated at more than MVR 5 million.

During the debate, lawmakers from both the government and opposition expressed support for the objective of broadening the tax base. However, several members raised concerns about the lack of detail regarding implementation procedures.

Some MPs argued that businesses require greater clarity on compliance requirements and the practical application of the proposed rules. Members also called for consultations with industry stakeholders before the legislation is finalised.

The bill will now undergo committee review before returning to the Majlis for further consideration.