Italian tour operator suspends Maldives bookings over new TGST rules

An Italian tour operator has suspended new bookings and sales to the Maldives in response to the implementation of Tourism Goods and Services Tax (TGST) requirements on foreign tour operators and online booking platforms from Thursday.

Kia Ora Viaggi, an Italian tour operator, said on its website that it had suspended new bookings and sales of Maldives holidays from 1 October following the implementation of the new tax framework by the Maldives Inland Revenue Authority (MIRA).

The company said the decision was taken to protect its business and customers booking through the operator.

“This is a decision taken after careful consideration in response to the new tax regime introduced by the Maldivian government,” the company said.

Kia Ora Viaggi said the manner in which the new tax requirements were introduced and implemented had left it with no alternative but to take the measure. It argued that imposing the tax on overseas operators without an office or permanent establishment in the Maldives was not justified.

The company said taxes are already paid in the Maldives on services purchased within the country, including resort accommodation, tourist transfers and other services obtained directly in the Maldives.

It also questioned the requirement for tax to be paid in the Maldives on consultancy services provided in Italy, arguing that such services have no territorial connection to the Maldives.

Kia Ora Viaggi said customers who have already confirmed holidays to the Maldives should not be concerned. The company said it was working to honour existing bookings at the agreed prices.

The suspension of new sales will remain in place “until conditions of fairness and respect for international rules are restored”, the company said.

According to Kia Ora Viaggi, its decision forms part of wider opposition to the changes among European travel businesses. The European Travel Agents’ and Tour Operators’ Associations (ECTAA) has sent a formal letter to the Maldives Embassy in Brussels, while the Association of British Travel Agents (ABTA) has requested the Maldives Tourism Ministry to postpone implementation of the requirements.

“If other governments begin following the Maldives model, it would not be feasible for us to manage foreign tax obligations in every destination to which we sell travel,” Kia Ora Viaggi said.

The concerns raised by tour operators have not resulted in a delay to the implementation. MIRA said on Thursday that the new TGST requirements for foreign tour operators and online booking platforms had taken effect.

Under the changes, foreign tour operators, travel agencies and online booking platforms that sell Maldives tourism products without maintaining an office in the country are required to register with MIRA and collect TGST. MIRA has also launched a campaign to register overseas businesses covered by the requirements.