Parliament Passes Bill to Levy TGST on Booking Platforms, Tour Operators and Travel Agents

The Parliament today passed a bill to amend the Goods and Services Tax Act to impose Tourism Goods and Services Tax (TGST) on qualifying tourism services sold in the Maldives by offshore booking platforms, foreign tour operators and travel agents.

The bill was passed with 54 votes in favour and two against. Hanimaadhoo MP Abdul Gafoor Moosa and Keyodhoo MP Mohammed Niushad voted against the legislation.

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The bill, submitted to Parliament on behalf of the government by Kulhudhuffushi Constituency MP Mohamed Dawoodh, introduces the “Destination Principle”, under which tax would apply based on where a tourism service is consumed rather than where the service provider is based.

Under the existing framework, GST generally applies to businesses operating in the Maldives. The amendment would expand the definition of goods and services supplied in the country to cover inbound tourism products sold by offshore entities that do not have a permanent establishment in the Maldives.

The amendments are scheduled to take effect on 1 October, with qualifying services supplied by foreign entities subject to the standard 17 per cent TGST rate.

The bill also proposes a broader definition of charter operations to specifically include charter trips sold by safari vessels.

According to government estimates, implementing the Destination Principle could generate an additional MVR 1.6 billion in annual revenue. Foreign tour operators are projected to contribute MVR 1.3 billion, while overseas travel agents are expected to contribute MVR 299.3 million.

As TGST is payable in foreign currency, the government estimates the amendments could generate an additional USD 104.1 million in state revenue.

The proposed system would require new administrative and payment mechanisms through the Maldives Inland Revenue Authority (MIRA), particularly because offshore booking platforms and travel agencies may not have a physical presence in the Maldives.

The government estimates that establishing the necessary administrative mechanisms will cost MVR 7.9 million, including MVR 2.8 million in one-off setup costs and MVR 5.1 million in annual recurrent expenditure, mainly for additional staffing.

Revenue collection is expected to increase gradually as MIRA develops compliance and payment arrangements for international tourism operators and other offshore service providers.

The legislation comes as the Maldives continues to face pressure on its foreign currency reserves, with the government seeking measures to increase foreign currency inflows and strengthen official reserves.

The Committee of the Whole House’s report on the bill was also approved during today’s sitting. Thulusdhoo MP Ibrahim Naseem proposed amendments to clarify certain definitions in the legislation, which were incorporated into the bill.