Gov't says tax hike will not affect tourism

The President’s Office has stated that the changes in the tax system in the Maldives will not affect the tourism sector.

The decision to increase the Tourism Goods and Services Tax (TGST) from 12% to 16% next year sparked concerns among some who described the change as a loss of millions to the entire tourism sector.

Speaking at a press conference, the Spokesperson at the President’s Office Miuvaan Mohamed said that the change was not made suddenly without any consideration. He said that the government made the change after studying the impacts and conducting thorough assessments.

Noting that the economy faced huge challenges during the COVID-19 pandemic, Miuvaan said that the entire tourism sector was able to overcome the pandemic. He said the government would always assist and cooperate with the tourism sector and other sectors that needed assistance due to the economic slowdown or any other situation. As such, he cited the deferral of land rent of resorts and the provision of income support to employees during the pandemic.

The Bill on Amendment to the Goods and Services Tax Act was passed to increase the Goods and Services Tax (GST) and TGST in an effort to increase state revenue. The government approved the amendment bill to increase TGST from 12% to 16% and increase GST from 6% to 8%. The government expects to generate USD63 million from GST and USD136 million from TGST next year. Therefore, the tax changes are expected to generate total revenue of USD195 million.