Parliament Amends GST Act to Tax Foreign Tour Operators and Booking Platforms

The Maldivian Parliament has passed a significant amendment to the Goods and Services Tax (GST) Act, mandating that foreign tour operators, overseas travel agents, and offshore booking platforms pay GST on services provided within the country. The legislative change is designed to close persistent tax loopholes that allowed non-resident entities to profit from the local tourism sector without contributing to the national treasury. The government estimates that the amendment will generate approximately USD 103.8 million in additional annual state revenue. Introduced by Kulhudhuffushi North MP Mohamed Dawood, the bill passed the floor with 54 votes in favor and two against. The final version included refinements proposed by Thulusdhoo MP Ibrahim Naseem following a comprehensive review by the Whole House Committee. At the core of the amendment is the "destination principle," a tax framework ensuring that goods and services are taxed in the jurisdiction where they are consumed. Under this rule, inbound tourism products—including accommodation, dining, and local transportation—will now be subject to GST. Crucially, this applies regardless of whether the service provider maintains a physical office or permanent establishment in the Maldives. To prevent ambiguity, the legislation clarifies that any service is considered provided within the Maldives if the physical work is performed locally or if the service directly relates to immovable property situated in the country. Government officials stated that the amendment resolves long-standing implementation challenges within the existing GST system. By ensuring that offshore entities contribute their fair share, the government intends to create a more equitable and competitive environment for local travel service providers who have previously operated at a tax disadvantage.