The People’s Majlis will consult tourism industry stakeholders before passing proposed amendments that would bring foreign booking platforms, tour operators and travel agents under the Maldives’ tax framework, PNC Parliamentary Group Leader Ibrahim Falah has said.
Speaking during the preliminary debate on the government-sponsored bill on Sunday, Falah sought to assure tourism businesses that the proposed changes would be reviewed with the industry’s input and would not be implemented in a way that disrupts the sector.
The bill, submitted on behalf of the government by Kulhudhuffushi North MP Mohamed Dawood, seeks to establish mechanisms to collect Goods and Services Tax (GST) from offshore companies providing booking and other tourism-related services connected to the Maldives.
Falah said extensive consultations would be carried out once the legislation reaches the parliamentary committee stage.
“During the committee stage, we will consult with everyone working in the Maldivian tourism sector and seek their advice and guidance,” Falah said.
He added that constructive recommendations from the industry would be considered by both the government and President Dr. Mohamed Muizzu before the amendments are finalised.
“God willing, this government will pass these amendments in a manner that benefits the public without causing any disruption to the industry,” he said.
The assurance comes after lawmakers from both sides of Parliament called for industry consultation while debating the proposed changes.
Several opposition Maldivian Democratic Party (MDP) MPs expressed support for the principle of taxing foreign companies generating revenue from Maldivian tourism. However, they stressed that a significant structural change to the tax system should only proceed after its potential impact on tourism businesses has been properly assessed.
Falah, whose PNC holds a supermajority in Parliament, said the proposed amendments are not intended to place additional financial obligations on Maldivian resorts and guesthouses.
Instead, he said the legislation seeks to address a gap that allows foreign companies to generate income by selling Maldivian tourism products without making a comparable tax contribution to the country.
Falah pointed to overseas companies that market resort rooms and facilitate bookings for travellers visiting the Maldives, arguing that local tourism businesses already meet their obligations to the Maldives Inland Revenue Authority (MIRA) while some foreign intermediaries remain outside the country’s tax framework.
“Foreign entities sell these beautiful islands and the resort rooms built by individuals like [Velidhoo MP] Mohamed Abbas without paying anything to the state,” Falah said.
He argued that foreign businesses benefiting from the country’s tourism industry should also contribute to the state and said such gaps in the existing system should not be allowed to continue.
Falah also noted that the broad support expressed by opposition lawmakers during the debate reflected the need to address the issue.
Under the bill, tax legislation would be amended to introduce rules for collecting GST on qualifying services provided by offshore booking platforms, foreign tour operators and travel agents.
The government says the changes are intended to resolve difficulties within the existing tax collection system while broadening and strengthening the country’s tax framework.
The financial implications could be substantial if the legislation is implemented as currently proposed.
Estimates accompanying the bill project that the changes could generate an additional MVR 16 billion in annual state revenue, including approximately MVR 13 billion from foreign tour operators and MVR 299.3 million from foreign travel agents.
The proposal is particularly significant for the Maldives due to the international nature of its tourism industry. A large share of holidays to the country are marketed and sold overseas through tour operators, travel agencies and online booking platforms before visitors arrive in the Maldives.
Tourism remains the country’s largest economic sector and one of the government’s most important sources of tax and foreign currency revenue.
As the bill progresses through Parliament, attention is now expected to shift to the committee review, where lawmakers will have an opportunity to hear directly from tourism businesses and other stakeholders before deciding on the final form of the amendments.
