GST changes could affect local travel agents and tourist arrivals, MATATO warns

The Maldives Association of Travel Agents and Tour Operators (MATATO) on Wednesday raised concerns over amendments to the Goods and Services Tax (GST) framework that will bring online booking platforms, foreign tour operators and overseas travel agents within the Maldivian tax system.

In a statement, MATATO said it supports a tax system in which foreign businesses pay their share, but said the changes do not address concerns raised by Maldivian travel agents and tour operators or provide enough protection for local businesses.

The association also said the Maldives Inland Revenue Authority (MIRA) had not conducted sufficient consultation with tourism industry stakeholders before the changes were introduced.

Under the amendments, foreign businesses providing tourism-related services to the Maldives without a permanent place of business in the country will be required to register for GST.

MATATO said the structure through which Maldives tourism products are distributed and sold involves businesses across several markets, making enforcement of the requirement difficult.

The association said local travel agents should not be responsible for explaining Maldivian tax requirements to thousands of overseas partners or ensuring that those businesses comply with the law.

It also questioned the assumption that imposing GST obligations on foreign travel businesses would result in more business for Maldivian agents.

“If selling the Maldives becomes an administrative burden, foreign partners are highly likely to shift their business to alternative destinations. The greatest harm from this will be suffered by local small and medium-sized enterprises (SMEs),” MATATO said.

The changes are scheduled to take effect on 1 October 2026.

MATATO said contracts, prices and bookings for the coming tourism season had already been agreed between businesses.

Introducing tax obligations after those agreements have been concluded could result in foreign operators, Maldivian suppliers or tourists having to bear costs that were not accounted for when contracts were signed, it said.

The association called for a transition period to allow businesses to adjust their agreements and operations before the requirements are enforced.

MATATO also raised concerns about requirements for Maldivian travel agents to provide information about their overseas business partners for tax compliance purposes.

The association said client and supplier information forms part of the commercial data developed by travel businesses over time and warned against collecting such information without safeguards governing how it is stored, accessed and used.

“Client and supplier data represent critical trade secrets developed over many years of hard work. Broadly collecting such data without a robust data protection framework in the Maldives poses significant security risks,” MATATO said.

The association called on the government and MIRA to introduce a registration threshold for foreign operators, distinguish between business-to-business and business-to-consumer transactions, and simplify compliance requirements for companies without a physical presence in the Maldives.

It also called for measures to protect business information and an assessment of how the changes could affect Maldivian travel agents and tourist arrivals.

MATATO said increasing state revenue should not come at the expense of local travel businesses.

The association reiterated its support for requiring foreign businesses earning revenue from the Maldives tourism market to pay taxes, but called for further consultation between the government, MIRA and the tourism industry before the requirements are implemented.