An amendment to the Goods and Services Tax Act has been proposed to mandate the collection of taxes from foreign tour operators. The measure, introduced on behalf of the government by Mohamed Dawoodh, the member of parliament for North Kulhudhuffushi, establishes a statutory framework for levying the tax on goods and services provided to offshore booking platforms, foreign tour operators, and travel agents.
The legislation is intended to implement the "destination principle" within the country, resolving administrative hurdles in tax collection while strengthening national fiscal architecture. Under the draft provisions, goods transport will be classified as domestic supplies if transport originates within the country or if suppliers make goods available domestically. Services provided from physical business establishments operated within the country are likewise treated as locally supplied.
For entities not registered in the country, services are deemed locally supplied if physical work is executed domestically at delivery or relates directly to local immovable property. The regulatory scope explicitly covers inbound tourism products, encompassing accommodation, dining, and transportation, alongside related booking and agency services.
The tax mandate applies regardless of whether a business maintains a permanent establishment in the country. Slated to take effect on 1 October 2026, the policy is projected to yield an estimated USD 103.76 million annually once collection commences from offshore booking platforms, foreign tour operators, and travel agents operating without a permanent physical presence in the country.