Bill Proposes GST on Foreign Travel Agents and Online Booking Platforms

A bill has been submitted to the People’s Majlis to expand the Maldives’ Goods and Services Tax (GST) framework to foreign booking platforms, tour operators and travel agents selling tourism products and services in the Maldives, a move expected to strengthen government revenue while creating a more level playing field within the tourism industry.

The bill was submitted on behalf of the Government by Kulhudhuffushi South MP Mohamed Dawood and seeks to introduce the Destination Principle, a measure included in the State Budget approved last year.

Under the proposed amendments, the GST Act would be expanded from its current application to goods sold in the Maldives to cover goods and services supplied within the country. The changes would also extend tax obligations to foreign commercial entities providing taxable services in the Maldives.

The bill specifically proposes classifying inbound tourism products sold by businesses that do not have a permanent place of business in the Maldives as taxable tourism services. Charter trips sold by safari operators would also be included under the proposed framework.

The proposed changes are expected to bring foreign travel agents and international tourism platforms operating in the Maldivian market into the country’s tax framework, ensuring that tourism related services consumed in the Maldives are taxed regardless of where the service provider is based.

The Government estimates that the measure could generate an additional MVR 1.6 billion in annual revenue for the state. Of this, approximately MVR 299.3 million is projected to come from foreign travel agents, while around MVR 1.3 billion is expected from tour operators.

As Tourism Goods and Services Tax (TGST) is collected in foreign currency, the Government estimates the measure could increase state revenue by approximately USD 104.1 million annually.

The proposed tax rate for the newly covered businesses will be the prevailing 17 percent TGST rate.

The Government has said the implementation will be supported by streamlined communication channels and simplified procedures to facilitate tax collection from businesses that do not have a physical establishment in the Maldives.

According to the Government, the revenue generated is expected to increase further as administrative systems and communication links with foreign businesses are strengthened.

The proposed amendment forms part of broader efforts to modernise the Maldives’ tax system and ensure that economic activity taking place within the country contributes fairly to national revenue.

The bill is scheduled to be included in the agenda for tomorrow’s Parliament sitting. If passed, the amendment would mark a significant step towards implementing the Destination Principle in the Maldives and strengthening the country’s ability to capture tax revenue from the growing volume of tourism transactions conducted through overseas businesses and digital booking platforms.