GST on foreign booking platforms won't harm tourism, says MIRA chair
Under the proposed changes, GST would apply to offshore booking platforms, foreign tour operators and overseas travel agents.
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Deputy Minister of Finance and Chairperson of the Maldives Inland Revenue Authority (MIRA), Ahmed Saaid Musthafa, has said that the government's proposal to levy Goods and Services Tax (GST) on foreign booking platforms, tour operators and travel agents is not expected to have a negative impact on the Maldivian tourism industry.
The remarks were made during an appearance on PSM's Raajje Miadhu programme on Monday night.
The government has submitted an amendment to the Goods and Services Tax Act aimed at fully implementing the destination principle for taxation. Under the proposed changes, GST would apply to goods and services supplied to the Maldives through offshore booking platforms, foreign tour operators and overseas travel agents.
The government expects the amendment to come into force next month if approved by parliament.
Speaking about the proposal, Saaid said previous increases in tourism-related taxes had not resulted in a decline in tourist arrivals.
He acknowledged that the measure could increase costs for travellers purchasing tourism services through foreign platforms and operators. However, he said there was no indication that the change would reduce the Maldives' position as a tourism destination or affect visitor numbers.
“The question is whether rising prices will cause the Maldives to lose its overall competitiveness. What negative impact would it actually have on the country's tourism industry? Looking at recent history, significant changes have been made to tourism-related taxes, yet tourism growth rates continue to rise year after year,” Saaid said.
He also noted that taxing offshore booking platforms and travel intermediaries is a practice adopted in many countries.
According to the government, the amendment is intended to ensure that services consumed in the Maldives are subject to taxation regardless of where the supplier is located.
The proposed measure is expected to increase government revenue by approximately MVR 1.6 billion annually, equivalent to around US$104.1 million.
The bill is currently before parliament for consideration.
