News Desk
In a swift U-turn just weeks after enforcing a controversial tax overhaul, the government has submitted legislation to Majlis seeking to repeal an amendment that required foreign tour operators, travel agencies, and offshore booking platforms to pay Tourism Goods and Services Tax.
The bill, sponsored by Ibrahim Didi, a ruling party member representing the Kolamaafushi constituency, was formally submitted to the People’s Majlis on Tuesday. The move effectively dismantles the short-lived implementation of the “destination principle” in tourism taxation, responding directly to heavy pushback from local trade groups and major global operators.
The contested amendment was ratified by President Dr Mohamed Muizzu on 31 August and officially came into force on 1 October. At its inception, fiscal authorities estimated that extending the tourism tax to overseas intermediaries and digital booking channels would yield an additional 1.6 billion rufiyaa, or roughly $103.7 million, in annual state revenue.
However, mere days into its implementation, Mohamed Ameen, the Minister of Tourism, announced that the president had agreed to walk back the measure following emergency representations from industry leaders.
The policy timeline unfolded with remarkable speed. Following the ratification in late August and its enforcement on 1 October, an immediate outcry from domestic and foreign operators forced the government to announce a planned rollback within days. By 20 October, formal repeal legislation was laid before Parliament.
The tax measure faced immediate condemnation from key source markets—including major tour operators across Russia, India, France, and Italy—as well as the Maldives Association of Travel Agents and Tour Operators.
In a detailed critique, the industry association argued that the government’s tax model fundamentally misunderstood the global tourism distribution chain, which relies on multi-layered networks of international agents, wholesale consolidators, and digital booking aggregators.
“The amendment failed to recognize the operational realities of global distribution, creating severe administrative barriers and putting small and medium-sized local agencies at immense risk.”
— Maldives Association of Travel Agents and Tour Operators
Industry experts issued a series of warnings regarding the measure’s economic fallout. Imposing additional compliance burdens on foreign partners risked driving international marketing budgets away from the archipelago and diverting travel traffic toward competing tropical destinations.
Furthermore, the October enforcement date conflicted directly with established contracting cycles, as peak-season bookings and fixed-rate contracts had already been finalized months in advance. Local representatives also highlighted privacy risks, noting that regulations compelling domestic agencies to disclose sensitive commercial data regarding foreign partners strained international trade relationships and threatened small and medium-sized enterprises that depend on global partner networks.
With the repeal bill now before the People’s Majlis, lawmakers are expected to fast-track its passage to restore market certainty ahead of the high winter tourist season.
