A bill proposing the collection of Goods and Services Tax (GST) on tourism-related goods and services supplied to the Maldives by foreign businesses has been submitted to the People’s Majlis, with the proposed framework expected to strengthen the country’s revenue collection from international tourism transactions.
The amendment to the Goods and Services Tax Act was submitted on Saturday by Mohamed Dawood, Member of Parliament for the Kulhudhuffushi North constituency and a representative of the ruling People’s National Congress (PNC). The bill has been included in the agenda for Sunday’s parliamentary sitting, where it is expected to be formally presented and considered by lawmakers.
According to the proposed legislation, the amendment seeks to introduce the “destination principle” more comprehensively into the Maldives’ tax framework. Under this principle, GST would apply to eligible goods and services consumed or supplied to the Maldivian market, including tourism-related transactions carried out through businesses established outside the country.
The proposal specifically covers offshore booking platforms, overseas travel agents and foreign tour operators that facilitate travel and tourism services connected to the Maldives. These businesses play an important role in connecting international travellers with the Maldives’ tourism industry, including its extensive network of resorts, hotels and other accommodation providers, while a significant share of related commercial transactions is processed outside the country.
The proposed framework is intended to ensure that tourism-related economic activity generated by the Maldives contributes more directly to domestic tax revenue, regardless of whether the company facilitating the transaction is physically established in the country. This would broaden the tax base while creating a more structured mechanism for capturing revenue associated with tourism services sold through international intermediaries.
As many of the businesses covered by the proposal operate from overseas, the bill provides for GST registration and collection to begin once the necessary administrative and payment arrangements have been established in coordination with the Maldives Inland Revenue Authority (MIRA). This is expected to provide an appropriate compliance mechanism through which foreign businesses can register, report relevant transactions and make tax payments under the Maldivian system.
The explanatory notes accompanying the amendment state that the proposed approach would enable the State to collect GST from tourism-related transactions that are currently conducted through overseas service providers. Given the Maldives’ strong international tourism profile and the significant role played by foreign booking platforms, tour operators and travel agencies in generating visitor traffic, bringing these transactions within the GST framework could provide an important additional source of government revenue.
The proposal estimates that implementation of the new system could increase annual State revenue by approximately MVR 1.6 billion. Of this amount, around MVR 299.3 million is projected to be collected from overseas travel agents, while approximately MVR 1.3 billion is expected to be generated from foreign tour operators.
The estimated revenue represents a substantial return compared with the administrative expenditure required to establish and operate the system. According to figures included with the bill, approximately MVR 2.8 million may be required as a one-time implementation expenditure, while annual staffing and operational costs are estimated at MVR 5.1 million.
Despite these implementation costs, the proposed framework is projected to produce a significant net increase in government revenue. The additional income could further strengthen the State’s fiscal position by ensuring that a broader proportion of economic activity associated with the Maldives’ internationally recognised tourism industry is reflected within the domestic taxation system.
Tourism remains a central pillar of the Maldivian economy, supported by a globally competitive resort sector that attracts travellers from major international markets throughout the year. The country’s resort industry has developed a diverse portfolio ranging from established luxury properties to new-generation integrated resorts, private-island developments and internationally operated hospitality brands, strengthening the Maldives’ position as one of the world’s leading premium tourism destinations.
The growing role of international digital booking services, foreign tour operators and overseas travel agencies has also transformed how visitors discover, reserve and pay for holidays in the Maldives. The proposed amendment seeks to align the taxation framework with these evolving commercial practices, allowing the Government to capture revenue from services linked to the Maldivian tourism market even when the businesses facilitating those transactions are located abroad.
The proposal also reflects the Government’s broader emphasis on strengthening revenue administration and improving the sustainability of public finances while maintaining the competitiveness of the tourism sector. By extending GST collection to eligible foreign tourism businesses serving the Maldivian market, the framework is designed to improve the coverage of the tax system without relying solely on businesses physically established within the country.
If approved by the People’s Majlis, the amendments are scheduled to take effect on October 1, introducing a new mechanism through which overseas tourism businesses serving the Maldives would contribute GST on applicable transactions and potentially generate approximately MVR 1.6 billion in additional annual State revenue.
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