Maldives begins collecting 17% TGST from overseas tourism sellers

The Maldives has begun imposing Tourism Goods and Services Tax (TGST) on foreign tour operators, travel agencies and online booking platforms selling Maldivian resorts, guesthouses and other inbound tourism products without having a fixed place of business in the country.

The measure took effect on Thursday, 1 October, under the eighth amendment to the Goods and Services Tax Act, ratified on 31 August. The amendment brings offshore suppliers of inbound tourism products and related booking and agency services within the Maldives’ GST framework.

Under the changes, foreign tour operators, travel agents and online booking platforms covered by the law are subject to the existing tourism-sector GST rate of 17 per cent. The amendment does not introduce a new TGST rate, but extends the existing rate to qualifying supplies by overseas businesses without a fixed place of business in the Maldives.

The government has said the amendment implements the destination principle, under which tax is applied in the jurisdiction where the relevant goods or services are consumed. The new framework covers inbound tourism products including accommodation, meals, transport and other tourism activities in the Maldives, as well as agency and booking services relating to such products.

The Maldives Inland Revenue Authority (MIRA) said overseas suppliers covered by the changes are required to register for GST in the tourism sector. MIRA has introduced a dedicated registration process for overseas suppliers and has been conducting a campaign to register affected businesses.

Applications can be submitted through a dedicated portal on MIRA’s website using the MIRA 120 overseas supplier registration form. Businesses required to register include those supplying inbound tourism products and those providing related agency or booking services.

Once registered, overseas suppliers will be provided access to MIRAconnect, through which they can administer their tax obligations. Regulations introduced for the new framework require these suppliers to file GST returns and make GST payments electronically through MIRAconnect from 1 October.

Ahead of the implementation, MIRA had instructed resorts, guesthouses and other tourism businesses to provide information on foreign tour operators and agencies through which they sell their services overseas.

The changes have faced objections from parts of the international travel industry. Associations representing European tour operators had called on the government to postpone or reverse the measure, while warning of possible effects on Maldives sales. The Russian Union of Travel Industry also called for the changes to be reconsidered.

The government has estimated that extending the tax framework to overseas travel businesses could generate an additional MVR 1.6 billion in revenue. Of this, MVR 299.3 million is projected to come from overseas travel agents and MVR 1.3 billion from foreign tour operators.