Government moves to repeal TGST on foreign tour operators, reversing October tax change

The government has submitted a bill to Parliament seeking to reverse Tourism Goods and Services Tax (TGST) requirements introduced this month for offshore booking platforms, foreign tour operators and travel agents supplying inbound tourism products to the Maldives.

The amendment, sponsored by Kolamaafushi MP Ibrahim Didi on behalf of the government, received its first reading in Parliament on Tuesday. It would repeal provisions that took effect on 1 October requiring overseas suppliers without a fixed place of business in the Maldives to register and pay GST on qualifying inbound tourism products and related booking or agency services.

The requirements were introduced under the Eighth Amendment to the Goods and Services Tax Act, ratified on 31 August. The amendment extended the existing 17% TGST rate to tourism-related products supplied through offshore booking platforms, foreign tour operators and travel agents under the destination principle.

The government subsequently announced plans to revise the framework following concerns raised by tourism industry stakeholders and international travel agents. Tourism Minister Mohamed Ameen said earlier this month that changes would be introduced after representations were made to the government over the new requirements.

The proposed repeal would also have a significant revenue impact. Financial estimates reported with the bill indicate that the state would forgo MVR 1.6085 billion in revenue previously projected from offshore booking platforms and foreign tour operators under the new tax framework.

Alongside removing the tax requirements, the bill proposes stronger provisions targeting GST avoidance. The proposed changes would allow the Commissioner General of Taxation to disregard transactions considered to have been structured to obtain an improper tax benefit, including arrangements intended to reduce or delay GST payments.

The changes would take effect once the amendment is passed by Parliament, ratified and published in the Government Gazette.