Destination Future has called on the Government and the People’s Majlis to halt the implementation of new Tourism Goods and Services Tax obligations for foreign tourism distributors, warning that the measure could weaken demand at a time of declining resort utilisation and expanding accommodation capacity.
The recommendation was presented in a 39-page policy submission addressed to President Dr Mohamed Muizzu, Tourism and Civil Aviation Minister Mohamed Ameen, Finance and Public Enterprises Minister Hassan Zareer, People’s Majlis Speaker Abdul Raheem Abdulla, Visit Maldives Corporation CEO and Managing Director Abdulla Yasir, Commissioner General of Taxation Fathimath Ameeza and the chair of Parliament’s Economic Affairs Committee.
Destination Future recommended using the fastest lawful mechanism available to pause mandatory tax collection, penalties and enforcement before the provisions take effect on 1 October 2026. Its preferred outcome is an urgent legislative amendment withdrawing the provisions covering foreign tourism distribution.
The Eighth Amendment to the Goods and Services Tax Act brings qualifying foreign suppliers of inbound tourism products and related agency services within the Maldivian TGST framework, even when they do not have a fixed place of business in the country. The applicable TGST rate is 17 percent, with a special method used to determine the taxable value of inbound tourism products.
Destination Future argued that foreign tour operators, wholesalers, online travel agencies, travel advisers, airlines and charter operators form part of the Maldives’ route to international markets. It warned that where retail prices cannot be increased, the tax could reduce already narrow distribution margins and influence how companies allocate marketing budgets, inventory and air capacity among competing destinations.
The organisation said any commercial impact may not appear immediately because existing bookings, contracts and charter commitments were arranged before implementation. Instead, the effect could emerge through future contracting cycles if international partners gradually direct additional investment and sales activity elsewhere.
Its submission cited tourism data showing that arrivals declined by 5.2 percent during the first seven months of 2026, while average operational bed capacity increased by 6.5 percent. Overall occupancy fell from 59.4 percent to 56.2 percent.
Within the resort segment, bednights declined by approximately 3.7 percent, operational beds increased by about 2.4 percent and occupancy fell from 69.1 percent to 64.9 percent. The submission also noted that the Government’s development register listed 165 tourism projects as of April 2026.
Destination Future acknowledged that this deterioration occurred before the amendment’s implementation and did not attribute the decline to the new tax provisions. It instead presented the figures as evidence of the market conditions in which the policy is being introduced.
The submission also referred to concerns raised by the German Travel Association, ABTA, the European Travel Agents’ and Tour Operators’ Associations and the Maldives Association of Travel Agents and Tour Operators. It said the concerns raised during a government stakeholder webinar on 15 September demonstrated the difficulty of preparing for a new cross-border tax framework within the available period.
As an alternative, Destination Future proposed establishing a National Tourism Growth and Revenue Working Group involving government institutions, tourism associations, commercial and revenue specialists, resort representatives and Maldivian destination management companies.
The proposed group would examine alternative revenue measures while developing a demand strategy focused on bednights, occupancy, average daily rates, visitor spending, air connectivity and foreign exchange earnings. International airlines, charter companies, tour operators, wholesalers and booking platforms would be consulted separately through structured hearings.
Destination Future also recommended using Visit Maldives Year 2027 to secure additional production from existing tourism partners, develop new distribution channels and increase low-season demand. It proposed measuring performance through indicators such as additional bednights, length of stay, airline seats, charter capacity, partner production and occupancy rather than relying mainly on arrival numbers.
The organisation further called for the publication of the assumptions behind the Government’s projected MVR 1.61 billion in annual revenue from the amendment, followed by an independent fiscal and commercial impact assessment.
If the Government does not withdraw the provisions, Destination Future recommended deferring implementation until at least 1 October 2027. Its fallback proposal includes protecting contracts and bookings agreed earlier, introducing a penalty-free transition and redesigning the framework to address registration thresholds, complex business-to-business transactions, commercial confidentiality and possible duplicate taxation.
Destination Future has requested a technical meeting with the Government before 28 September to present its findings and discuss alternative tourism revenue strategies.
