Maldives government moves to scrap tax on foreign tour operators

The Maldivian government has submitted a bill to parliament to repeal the Goods and Services Tax (GST) levied on foreign tour operators and online booking platforms. The bill, introduced on Tuesday by Colamafushi constituency MP Ibrahim Dheedhi on behalf of the government, seeks to remove all provisions of the GST Act that were added to enforce the 'destination principle' on foreign agents and travel platforms. The tax was introduced on 1 October following the president's ratification of the eighth amendment to the GST Act on 31 August. However, the move faced widespread criticism from the tourism industry and major source markets, including Russia and India. European travel associations, including France's EDV (Les Entreprises du Voyage) and SETO (Syndicat des Entreprises du Tour Operating), as well as Italy's ASTOI Confindustria Viaggi, sent a joint letter to MIRA Tax Commissioner Fathimath Ameez. They argued that the tax would create financial and administrative burdens, as tour operators had already sold holiday packages for the upcoming winter season at pre-tax prices. They also noted that EU consumer protection laws prevent them from retrospectively increasing package prices, which would leave smaller operators facing heavy losses. The associations requested that the tax be applied only to future bookings and that its enforcement be deferred until 2027. On the third day after the tax took effect, President Dr. Mohamed Muizzu announced a reversal of the decision. The bill submitted to parliament today formalises that reversal, proposing the removal of the relevant sections from the GST Act.