European tour operators call for delay to Maldives’ new GST rules

European tour operator associations have called on the Maldives to postpone or reverse changes to the Goods and Services Tax (GST) regime that will bring services provided by overseas booking platforms, travel agents and tour operators within the country’s tax system from October.

President Mohamed Muizzu ratified the eighth amendment to the GST Act on 31 August. The changes introduce the destination principle in the Maldives and extend GST obligations to offshore booking platforms, foreign travel agents and tour operators providing services connected to the Maldives.

French and Italian travel industry groups have raised concerns over the financial and administrative implications of implementing the changes at short notice.

French travel agency and tour operator association Les Entreprises du Voyage (EDV) and tour operating trade union SETO jointly wrote to Maldives Inland Revenue Authority (MIRA) Commissioner General of Taxation Fathimath Amaana, calling for the implementation date to be postponed.

The groups said hotels and resorts typically provide rates to tour operators about a year in advance, after which packages are priced and sold to travellers. As a result, packages for the coming winter season have already been sold under existing pricing arrangements.

They said consumer protection rules in France and the European Union impose restrictions on increasing the price of a travel package after it has been sold.

According to the groups, this means tour operators would have no way to pass the additional tax arising from the Maldives’ GST changes on to customers who have already purchased their packages.

EDV and SETO also said the rules do not differentiate between businesses based on their size. They warned that the resulting costs could be difficult for smaller French tour operators to absorb and could force some to stop selling Maldives holidays.

The two organisations called on the Maldives to allow sufficient time for the industry to prepare and to hold consultations before implementation. They proposed postponing the changes to an agreed date in 2027.

Italian tour operator association ASTOI Confindustria Viaggi has raised similar concerns.

In a letter signed by its president, Pier Ezhaya, ASTOI noted that Italy is an important source market for Maldivian tourism, with more than 153,000 Italian tourists visiting the Maldives annually.

While acknowledging the Maldives’ right to determine its own fiscal policies, ASTOI said the changes could have financial, administrative and economic consequences for foreign tour operators.

The association said several aspects of implementation remained unclear, including requirements relating to registration, reporting and invoicing.

ASTOI also said the period provided for businesses to prepare for the changes was insufficient.

It called on the Maldives to withdraw the amendment or make further changes to address the concerns raised by overseas tour operators.