The government will reverse amendments to the Goods and Services Tax (GST) Act requiring foreign tour operators to pay Tourism Goods and Services Tax (TGST), with Parliament expected to pass the changes within the next two weeks, Minister of Tourism and Civil Aviation Mohamed Ameen has said.
Speaking at a press conference at the World Travel Market (WTM), Minister Ameen said the government had decided to remove the destination principle introduced for TGST, which required foreign tour operators to pay the tax.
The minister said resorts, hotels and tourism service providers operating in the Maldives generally comply with local laws and regulations. However, he noted that some operators were not providing services at fair market prices.
Minister Ameen said the government had initially decided to impose a 17 per cent TGST on tour operators based on recommendations from international financial institutions. The measure came into effect on 1 October following amendments to the law.
He said more than 100 major tour operators had since registered with the Maldives Inland Revenue Authority (MIRA).
However, following concerns raised by the tourism industry, the government has now decided to reverse the decision and restore the previous arrangement, under which foreign tour operators would not be required to pay TGST.
Minister Ameen said the decision followed extensive consultations with relevant authorities and stakeholders in the industry.
He said discussions had been held with the Ministry of Tourism and Civil Aviation, the Ministry of Finance and Public Enterprises, the Attorney General's Office, the Commissioner General of Taxation, MIRA and industry representatives.
The proposed amendment has now been submitted to the relevant parliamentary committee. Minister Ameen said Parliament was expected to pass the bill within one to two weeks, resolving the issue.
However, he stressed that the amendment would still allow MIRA to determine fair market prices.
The minister said MIRA would retain the authority to establish fair prices if resort operators declared prices for TGST purposes that were lower than the actual market rates.
He added that the government's policy was to work closely with the tourism industry, investors, development partners and all stakeholders to support the sector.
Minister Ameen said the government would continue working to ensure that businesses operating in the Maldivian tourism industry did not face unnecessary difficulties.