Maldives Targets $103 Million Annual Revenue Through New Foreign Tour Operator Tax

The Maldivian government has proposed an amendment to the Goods and Services Tax (GST) Act that would mandate tax collection from foreign tour operators and offshore booking platforms. Introduced in the Majlis by Mohamed Dawoodh, Member of Parliament for North Kulhudhuffushi, the legislation seeks to create a statutory framework for taxing services provided by entities operating outside the country's borders. The core of the proposal is the implementation of the "destination principle," a tax strategy designed to ensure that value-added taxes are collected where the service is actually consumed. By doing so, the government aims to resolve long-standing administrative hurdles and strengthen the national fiscal architecture. Under the draft provisions, the regulatory scope specifically targets inbound tourism products, including accommodation, dining, and transportation, as well as the agency services associated with them. The law will classify services as locally supplied if the physical work is executed within the Maldives or relates directly to local immovable property, regardless of whether the provider maintains a permanent physical establishment in the country. Additionally, the amendment clarifies that goods transport will be treated as domestic supplies if the transport originates within the Maldives or if the suppliers make the goods available domestically. Services provided through physical business establishments operated within the country will continue to be treated as locally supplied. Once implemented, the policy is projected to generate approximately USD 103.76 million in annual revenue. The government has slated the new tax obligations to take effect on October 1, 2026, providing offshore booking platforms and foreign travel agents a transition period to align with the new fiscal requirements.