The Parliament has passed a major amendment to the Goods and Services Tax (GST) Act, making it mandatory to levy GST on foreign tour operators, offshore booking platforms, and overseas travel agents providing services within the country.
The legislative update, aimed at closing long-standing tax loopholes, is estimated to generate an additional USD 103.8 million annually in state revenue.
The bill was introduced on behalf of the government by Kulhudhuffushi North MP Mohamed Dawood. It successfully passed the floor with 54 votes in favour and two against, following a review by the Whole House Committee and the inclusion of amendments proposed by Thulusdhoo MP Ibrahim Naseem.
The primary objective of the amendment is to strengthen the national tax framework by implementing the "destination principle." Under this rule, goods and services consumed locally are taxed in the jurisdiction where they are delivered. The new law specifies that inbound tourism products—defined as tourism-related services such as accommodation, dining, and local transportation—will be subject to GST regardless of whether the service provider maintains a permanent physical establishment in the Maldives.
Additionally, the legislation clarifies that any service will be deemed as provided within the Maldives if the physical work is performed locally or if it directly pertains to immovable property situated in the country.
According to government officials, the amendment resolves significant implementation challenges within the existing GST system. By capturing tax revenue from non-resident entities that profit from the nation's tourism sector, the government aims to reinforce the overall tax structure and ensure a fair, competitive environment for all travel service providers operating in the Maldives.