GST rules for overseas tourism platforms to take effect in October
The amendment was published in the Government Gazette following a ratification ceremony at the President's Office and has entered into force.
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President Mohamed Muizzu on Monday ratified amendments to the Goods and Services Tax (GST) Act applying the destination principle to services provided by offshore booking platforms, foreign travel agents and overseas tour operators selling tourism services in the Maldives.
The amendment was published in the Government Gazette following a ratification ceremony at the President's Office and has entered into force. Tax collection under the new provisions will begin in October.
The changes are intended to apply GST based on where a service is consumed rather than where the service provider is established.
Under the amended law, overseas travel agents, tour operators and booking platforms selling Maldives tourism products will be brought within the country's GST framework even if they do not have a physical presence in the Maldives.
As these businesses operate outside the country, the Maldives Inland Revenue Authority (MIRA) will introduce registration and tax filing arrangements for non-resident businesses to comply with the requirements.
Collection of GST under the new framework is scheduled to begin in October.
The government expects the changes to generate about MVR 1.6 billion in additional revenue annually.
Of this amount, MVR 299.3 million is expected to be collected from overseas travel agents, while about MVR 1.3 billion is projected to come from foreign tour operators.
The amendment has raised concerns among businesses involved in selling Maldives tourism products overseas.
Foreign travel agents and tour operators have launched an online petition calling for changes to how the new tax requirements are applied. The petition argues that commissions, margins and service income generated through operations outside the Maldives should not be treated in the same manner as tourism services supplied within the country.
The Maldives Association of Travel Agents and Tour Operators (MATATO) has also raised concerns over the structure and implementation of the amendments.
MATATO has said it supports taxation of tourism services where appropriate but has called for consultation with the industry, a transition period and measures to address compliance requirements for overseas businesses.
The association has also raised concerns about the potential impact on local travel agents and destination management companies that work with foreign partners.
