Maldives Inland Revenue Authority has issued a circular instructing the taxpayers to pay withholding tax on payments made to all online travel agencies (OTAs), regardless of the arrangement agreed with the OTAs. As per the circular, the new rule comes into effect from 1 January 2017.
Major OTAs used by Maldives tourism sector include Agoda.com and Booking.com. Some OTAs, such as Agoda.com, collect payment from tourists who make bookings and pays the Maldivian tourist establishments after deducing their respective commissions. The new rule is believed to bring within the scope of withholding tax such OTAs, whose commissions now are not subject to withholding tax.
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