Indian tour operators seek 1-year delay to Maldives’ new TGST rules

The Indian Association of Tour Operators (IATO) has asked the Maldives government to postpone for one year the implementation of Tourism Goods and Services Tax (TGST) requirements for foreign tour operators, travel agents and online booking platforms that are not registered in the Maldives.

Amendments to the Goods and Services Tax Act passed in late August require overseas agents selling Maldivian resorts and guesthouses to pay 17 per cent TGST from 1 October. The Maldives Inland Revenue Authority (MIRA) has also launched a campaign to register foreign businesses covered by the changes.

Resorts and guesthouses are also required to provide MIRA with details of foreign travel agents with which they conduct business.

In a letter sent last month to Tourism Minister Mohamed Ameen, IATO President Ravi Gosain raised concerns about the potential impact of the changes on the Maldives tourism industry.

IATO represents more than 2,000 businesses and includes tour operators, travel agents, hoteliers and other stakeholders involved in India's inbound, outbound and domestic tourism sectors.

The association said the new tax and compliance requirements could create difficulties for Indian tour operators selling Maldives holidays.

“At a time when margins across the global travel and tourism supply chain are already under considerable pressure, the additional tax and compliance obligations could increase the cost of selling Maldives holidays,” IATO said in the letter.

IATO said there had not been adequate consultation with Indian tour operators and other international tourism stakeholders on the potential economic impact of the amendments, their legal implications outside Maldivian jurisdiction and the administrative challenges associated with implementation.

“We fully respect the sovereign right of the Government of Maldives to review its taxation policies and tourism-related revenues,” the association said. “At the same time, we believe it is important to consult the international travel trade before implementing measures that could directly affect tourist arrivals from India and other key markets.”

IATO therefore asked the government to reconsider the new TGST framework and hold further consultations with the travel industry.

In particular, the association called for implementation to be postponed for one year to avoid affecting bookings already made for the forthcoming tourism season.

“We believe implementation of this decision should be postponed for one year so that existing bookings for the upcoming tourism season are not affected,” the letter said.

IATO has also sought clarification on how the new rules will apply, including whether tax liability will be determined by the date a booking is made, the date payment is made or the date of travel.

The association has requested an opportunity to discuss the requirements with the Tourism Ministry and other relevant authorities.

India remains one of the Maldives’ main tourism source markets. So far this year, 90,706 tourists from India have visited the Maldives, accounting for 5.8 per cent of total arrivals. India currently ranks as the sixth-largest source market for tourist arrivals.

Industry organisations representing travel businesses in Europe, the United Kingdom and Russia have also raised concerns over the new TGST framework and called on the government to reconsider or amend the requirements.