The Maldives Association of Travel Agents and Tour Operators (MATATO) has raised concerns with the Maldives Inland Revenue Authority (MIRA) over the implementation of the destination principle, warning that the timeline and registration requirements could create challenges for local tourism businesses and their international partners.
MATATO said it held detailed discussions with MIRA on Wednesday on the practical implications of the new framework, particularly for travel agents and tour operators that have already contracted and sold Maldives holidays for the upcoming tourism season.
While the association said it supports a fair taxation system, it stressed that implementation should take into account how international tourism distribution operates and avoid placing Maldivian travel businesses at a competitive disadvantage.
Thousands of overseas partners could be affected
One of the main issues raised by MATATO relates to requirements for foreign travel agents and tour operators conducting business through Maldivian partners to register with MIRA.
Local travel companies can work with thousands of overseas partners spread across numerous source markets, making communication and compliance with new requirements a significant undertaking.
MATATO therefore called for additional time, clearer registration procedures and awareness materials in multiple languages to ensure foreign partners understand their obligations.
The association also raised concerns over the amount of information local businesses could be required to provide about their overseas partners.
According to MATATO, greater clarity is needed on these requirements, particularly regarding commercially sensitive information, confidentiality and data protection.
Existing bookings pose challenge ahead of October deadline
The October implementation date was another major concern raised during the discussions.
MATATO said a significant portion of the upcoming tourism season, including holidays taking place after October 1, has already been contracted, priced and sold in overseas markets.
This could create complications if the new tax obligations result in additional costs on bookings agreed before the rules take effect.
The association highlighted European markets in particular, where consumer protection requirements can restrict travel companies from increasing the price of packages after they have already been sold.
As a result, MATATO warned that Maldivian agents or their international partners could ultimately have to absorb some of the additional costs associated with existing bookings.
Destination principle expands tax reach
The concerns follow recent changes to the Maldives’ Goods and Services Tax framework introducing a destination-based approach to certain transactions connected to the country.
Under amendments ratified by President Dr Mohamed Muizzu, services connected to the Maldives can be treated as supplied domestically in specified circumstances, including certain services provided by foreign businesses without a permanent establishment in the country.
The framework is particularly significant for the tourism industry, where resorts and local travel companies rely heavily on international tour operators, travel agencies and online platforms to sell accommodation and holiday packages overseas.
The government expects the wider GST amendments, which include measures targeting foreign businesses earning revenue from Maldives-related tourism services, to generate additional state revenue.
MATATO, however, said implementation needs to recognise the structure of the international tourism supply chain and the role played by local travel companies.
The association noted that Maldivian agents have spent decades developing relationships with overseas partners and bringing visitors into the country, arguing that protecting and strengthening these businesses should remain a priority.
MATATO seeks awareness sessions with MIRA
MATATO has requested further collaboration with MIRA to conduct awareness workshops for its members before the new requirements are implemented.
The association is also seeking additional clarification on the regulations, registration procedures and compliance requirements affecting local agents and their overseas partners.
MATATO welcomed MIRA’s willingness to engage with the tourism industry and said it hopes discussions will continue towards practical solutions that safeguard government revenue without adversely affecting local businesses.
The issue is particularly significant given tourism’s central role in the Maldivian economy. A substantial share of visitor bookings originates overseas, making international travel agents, tour operators and digital booking platforms an important part of the country’s tourism distribution network.
With the new framework due to take effect in October, MATATO’s discussions with MIRA are expected to focus on how the rules can be implemented while allowing businesses and their overseas partners sufficient time and guidance to comply.
