Maldives poised to hike tourism tax

THE government of the Maldives is poised to increase the Tourism GST from 3.5 percent to 6 percent from January 1. This is expected to be followed by a further hike to 10 percent in 2013.

However the government has agreed to reduce the Tourism Goods and Services Tax (T-GST) from 10 percent to eight percent. The Tourism Goods and Services Tax Bill submitted to the parliament proposes to increase the current amount of 3.5 percent to six percent next year and 10 percent in 2013 in exchange for lowering import duties, claiming that this will benefit businesses by allowing them to pay tax at the point of sale. But a presentation given by Economic Development Minister Mahmood Razi last evening said that eight percent will be deducted as T-GST from 2013 onwards.

Razi revealed that the government agreed to reduce the amount to eight percent on the request of industry stakeholders and would facilitate other concessions based on the concerns of the industry.  

President Mohamed Nasheed had earlier said the government, under its newly announced economic reform programme, would facilitate in extending resort leases to 99 years and owning the land. The government began collecting a 3.5 percent T-GST this year after giving the opportunity for resorts to extend their leases for 50 years. The tourism industry earlier criticised the government’s taxation plans but prominent businessmen and the Maldives Association of Tourism Industries (MATI) have since voiced support for the government’s fiscal and economic reform programme.