Green Tax Revenue Surges with Tourism Recovery
As of 5 June 2025, the Green Tax has generated MVR 966.3 million, marking an 89% year-on-year increase from MVR 509.9 million in 2024. Introduced in stages since 2015 and recently revised in January 2025, the Green Tax is applied to tourists staying at various accommodations, from resorts to guesthouses. The increased rates—now US$12 for resorts and US$6 for guesthouses—have significantly boosted collection figures.
Q1 2025: Strong Economic and Environmental Synergy
In Q1 2025, the Maldives collected MVR 528 million in Green Tax, accounting for 8.1% of all USD-denominated revenue, trailing only TGST and Income Tax. This increase is directly tied to a 5.7% rise in tourist arrivals and a 3.3% increase in bed nights over the same period in 2024, demonstrating the strong linkage between tourism activity and environmental revenue generation.
However, there is a slight dip in the average duration of stay — a crucial indicator for revenue per tourist. In the first three months of 2025, only a 0.7 % bed night growth was observed amongst tourist arrivals. Projections for 2025, however, show a tempered GVA growth of 2.5%, revised downward due to weaker-than-expected performance in the first quarter.
December 2024: Key Contributors and Seasonal Peaks
December alone saw MVR 109.5 million in Green Tax, with K. Atoll, R. Atoll, and Adh. Atoll contributing the most. Resorts, as expected, were the primary source of revenue, reinforcing the environmental responsibility of the high-end tourism sector.
Green Fund Deployment: From Collection to Impact
Green Tax revenues feed directly into the Maldives Green Fund, which supports critical climate-resilient infrastructure. In December 2024, MVR 172.4 million was disbursed from the Fund across diverse projects:
- HA. Maarandhoo: MVR 19.3M for water and sewerage
- AA. Feridhoo: MVR 17.7M for sanitation infrastructure
- Addu City: MVR 12.4M for a regional waste management facility
With a year-end fund balance of MVR 1.61 billion, the Green Fund exemplifies how tourism-derived taxes can fuel scalable, community-level environmental solutions.
Plastic Bag Fee: Modest Revenue, Meaningful Shift in Behaviour
Complementing the Green Tax, the Plastic Bag Fee—introduced under the Waste Management Act—collected MVR 1.55 million in Q1 2025. While this represents a 46.5% decline from the same period in 2024, the trend is not viewed as a failure. Instead, it indicates reduced consumption of single-use plastics, a key policy objective.
Businesses are required to charge MVR 2 per plastic bag and include it in GST filings, although the fee itself is GST-exempt. The modest revenue suggests growing consumer awareness and business compliance—encouraging indicators amid a national push to combat plastic pollution.
Policy Implications for Business and Finance
For the private sector—especially those in tourism, infrastructure, and retail—the performance of green fiscal instruments carries several key implications:
- Investment Opportunities: With over MVR 1.6 billion in the Green Fund, there is potential for public-private partnerships in environmental infrastructure.
- Regulatory Compliance: Growing environmental oversight will likely expand to broader categories of consumption-based taxes and levies.
- Sustainability Signalling: Firms that align with the government’s environmental goals can better position themselves with international investors and eco-conscious consumers.
Conclusion: Green Finance as a Catalyst for Climate Action
This Environment Day, the Maldives stands at a critical juncture. With children at the frontline of climate and pollution impacts, and with the economy intricately tied to tourism, the country’s environmental tax strategy must evolve from revenue collection to climate adaptation leadership. The Green Tax and Plastic Bag Fee are not just fiscal tools—they are vehicles for transformation, carrying the weight of a nation’s promise to future generations.
