Majlis Committee Backs Tourism GST Rollback and Higher Registration Threshold
- Parliament's Economic Affairs Committee unanimously backed repealing the overseas tourism GST that took effect on 1 October, with tax collected to be refunded.
- The rules had extended the 17 per cent Tourism GST to foreign tour operators and agents, with projected revenue forgone of MVR 1.61 billion.
- The committee also raised the mandatory GST registration threshold to MVR 1.5 million and the deregistration threshold to MVR 750,000, both from 1 January 2027.
The Maldives is moving to roll back a tax on overseas sales of its holidays after travel trade groups warned that operators could have to absorb the cost on winter packages already sold. Parliament’s Economic Affairs Committee unanimously backed the repeal on 8 November and added a separate measure to raise the threshold for mandatory Goods and Services Tax (GST) registration to MVR 1.5 million.
The overseas tourism rules took effect on 1 October under an amendment ratified by President Dr Mohamed Muizzu on 31 August. The government applied what it called the destination principle, bringing accommodation, meals, transport and other services used by tourists in the Maldives into the tax system even when the seller had no fixed place of business in the country.
The rules extended the 17 per cent Tourism Goods and Services Tax to overseas tour operators, travel agents and booking platforms. For a reseller, the tax was calculated after deducting amounts payable to suppliers already registered or required to register for GST. For a business providing a booking or agency service, the tax applied to the fee it charged.
European travel trade groups asked the government to delay implementation, citing the cost of complying with the new rules and the difficulty of passing on the tax to customers who had already booked at fixed prices. Italian tour operator Kia Ora Viaggi suspended new Maldives bookings from 1 October. Tourism Minister Mohamed Ameen later told UK travel trade association ABTA that the government intended to repeal the measure to protect the Maldives’ competitiveness.
The bill as introduced would require tax collected under the overseas tourism rules from 1 October until the repeal takes effect to be refunded. It leaves the refund process unspecified. The fiscal note puts the projected revenue forgone at MVR 1.61 billion, of which about MVR 1.31 billion was expected from foreign tour operators and MVR 299.3 million from overseas travel agents.
The committee also incorporated a proposal from the 2027 State Budget to raise the mandatory GST registration threshold from MVR 1 million to MVR 1.5 million from 1 January 2027. The change would ease filing and collection requirements for smaller businesses whose turnover falls between the two thresholds and whose obligation to register depends on turnover.
For businesses already registered, the committee backed a separate increase in the turnover threshold for applying to deregister, from MVR 500,000 to MVR 750,000. Eligible businesses would need to show that the value of their supplies was below MVR 750,000 in the preceding 12 months and is expected to stay below that level in the following 12 months.
The bill still requires a final vote in Parliament, presidential ratification and publication in the Government Gazette.
