Committee backs higher GST threshold, removal of foreign tour operator tax

Parliament's Economic Committee on Sunday evening approved amendments to the Goods and Services Tax (GST) Act to increase the annual turnover threshold for mandatory GST registration from MVR 1 million to MVR 1.5 million.

The committee approved the bill after incorporating additional amendments to implement the government's proposal to raise the registration threshold from 1 January 2027.

The proposed increase, announced by Minister of Finance and Public Enterprises Hassan Zareer during the presentation of the 2027 state budget, is intended to support small and medium-sized enterprises and expand their contribution to the economy.

Zareer said President Dr Mohamed Muizzu had decided to increase the threshold to reduce the tax compliance burden on smaller businesses.

The GST amendment bill was originally submitted to reverse provisions introduced in August requiring foreign tour operators, travel agencies and online booking platforms selling Maldivian resort and guesthouse accommodation without maintaining an office in the Maldives to pay 17% tax.

During Sunday's committee meeting, Feydhoo North MP Ismail Nizar proposed additional amendments to the bill to incorporate the revised GST registration threshold announced in the budget.

Under the proposed changes, businesses with a permanent establishment in the Maldives conducting taxable activities would be required to register for GST if the total value of goods and services supplied over a 12-month period, or a shorter period, exceeds MVR 1.5 million.

The existing threshold of MVR 1 million would remain applicable until the end of 2026, with the revised threshold taking effect from January 2027.

Nizar said the amendments were intended to support small businesses and reduce the difficulties they face.

The committee also approved provisions allowing businesses already registered for GST to apply for deregistration if they meet specified turnover requirements.

Under the proposed criteria, a business may apply to cancel its GST registration if the total value of goods and services supplied during the preceding 12 months is below MVR 750,000.

The business must also reasonably expect the total value of its supplies over the following 12 months to remain below MVR 750,000.

The additional amendments proposed by Nizar were seconded by Faresmaathodaa MP Ashraf Rasheed.

The Economic Committee unanimously approved the bill with the amendments during its meeting on Sunday evening.

The bill will now proceed through the remaining parliamentary process before the proposed changes can become law.