Maldives to Tax Offshore Tourism Bookings Under New Destination Principle

The Maldivian government has clarified that businesses exporting goods to the country will be excluded from the upcoming implementation of the 'destination principle' for Goods and Services Tax (GST). This system ensures that GST is imposed at the location where goods or services are sold or consumed, rather than where they originate. A bill currently before the Majlis (Parliament) seeks to amend the GST Act to capture revenue from offshore booking platforms, foreign tour operators, and international travel agents. This move is designed to bring significant revenue from the tourism sector into the national tax system—funds that the government says are currently bypassing the local treasury. Speaking on PSM News’ 'Raajje Miadhu' programme, Deputy Minister for Finance and Public Enterprises and MIRA Board Chairperson, Ahmed Saaid Musthafa, emphasized that the shift is not a new tax but a reform of existing structures. He noted that the decision follows technical advice from the International Monetary Fund (IMF) and is being implemented carefully to avoid placing an undue financial burden on Maldivian consumers. “The policy of the current government is to introduce changes to the tax system in a way that brings in GST revenue that is currently not being collected by involving an external party,” Musthafa stated, confirming that the administration is adhering to its policy commitments to protect citizens from tax hikes. Meanwhile, MIRA Assistant Commissioner General Mohamed Ali Waheed confirmed that the Maldives Inland Revenue Authority is ready to execute the changes once the legislation is passed. He highlighted that while some global giants, such as Amazon, initially resisted similar systems in other countries, the destination principle has now become a global standard that major businesses have adapted to. Waheed clarified that the current bill is narrowly focused on inbound tourism products and offshore booking platforms, meaning e-commerce platforms for physical goods are not currently within the scope of the legislation. MIRA is now finalizing the necessary systemic updates and regulatory procedures to ensure a seamless transition upon the bill's enactment.