Maldives submits bill to repeal 17% tax on foreign booking platforms, tour operators

The government has submitted a bill to Parliament seeking to repeal amendments to the Goods and Services Tax (GST) Act that introduced a 17% tax on services provided by overseas booking platforms, travel agents and tour operators.

The proposed legislation was submitted on Tuesday by Kolamaafushi MP Ibrahim Didi on behalf of the government. The bill received its first reading during the parliamentary sitting.

The tax provisions came into effect on 1 October under the eighth amendment to the GST Act, which was ratified by President Dr Mohamed Muizzu on 31 August.

The amendment introduced the destination principle for taxation in the Maldives, extending GST obligations to offshore booking platforms, foreign travel agencies and tour operators providing services connected to tourism products in the country.

However, following concerns raised by tourism businesses and international travel companies, the government has moved to reverse the provisions less than a month after their implementation.

The bill seeks to discontinue GST collection on inbound tourism products and related agency or booking services provided by businesses without a permanent establishment in the Maldives.

It also proposes repealing the provisions of the GST Act governing tax collection from overseas booking platforms, travel agencies and tour operators.

Earlier this month, Tourism Minister Mohamed Ameen announced that President Muizzu had decided to amend the legislation following representations from industry stakeholders.

"Several leading industry stakeholders and travel agents have submitted requests to the President regarding this matter. The President has now decided to introduce amendments to the TGST legislation as soon as possible, based on the destination principle," Ameen said at a ceremony marking Maldives Tourism Day.

The minister acknowledged that the changes had raised concerns among tourism businesses and travel agents.

The original amendment had faced opposition even before it came into effect.

In September, associations representing European tour operators called on the Maldivian government to postpone implementation or withdraw the amendment, warning that they could stop promoting the Maldives if the tax was enforced.

The Russian Union of Travel Industry (RST), one of Russia's largest tourism industry associations, also called for the amendment to be withdrawn, arguing that its provisions could not be implemented by foreign tourism businesses.

Russia is among the Maldives' leading tourist source markets.