President Dr Mohamed Muizzu has ratified amendments to the Goods and Services Tax Act, making it mandatory to collect GST from foreign tour operators at a special ceremony held at the President’s Office today.
The Government proposed the bill to further strengthen the Maldives’ tax system. To begin implementing the destination principle in the country, the amendments set out rules for collecting GST on the value of goods and services supplied to offshore booking platforms, foreign tour operators and travel agents.
Under the amendments, services provided from a place where a business operates in the Maldives will be treated as services supplied in the country.
The same applies when a party in the Maldives carries out the practical work involved in providing a service, even if the service is provided to a party not registered in the country. Services connected to immovable property in the Maldives will also be treated as services supplied in the country.
The amendments also make GST mandatory on inbound tourism products supplied in the Maldives, even if the business carrying out the taxable activity has no permanent place of business in the country. The bill defines inbound tourism products as tourism-related activities carried out in the Maldives, including accommodation, food and transportation.
The bill is expected to address difficulties in implementing the GST system and further strengthen the system.
The Government also submitted an estimate of the revenue expected from the amendments. It estimates that collecting tax from offshore booking platforms, foreign tour operators and travel agents that have no permanent place of business in the Maldives will increase State revenue by USD 103.8 million annually.