MALE, 23 November 2023: Leaders in the Maldives travel and hospitality sectors lost their battle to prevent an increase in the country’s Tourism Goods and Service Tax earlier this week as the parliament approved an amendment bill that raises the tax effective January 2023.
The government had earlier proposed an increase in the Tourism Goods and Services Tax (TGST) from 12% to 16%, along with an increase in the GST from 6% to 8%.
The Tourism Goods and Service Tax will go up from 12% to 16% effective 1 January 2023 and applies to all goods and services sold at a resort.
On Tuesday, Maldives President Ibrahim Mohamed Solih ratified the amendment bill to increase the tax rates. Travel firms quoting holiday package prices worldwide will need to revise prices effective from 1 January.
In a report by the Maldives news channel PSM, Minister of Finance Ibrahim Ameer claimed the country’s inflation rate would remain low compared to other countries despite the tax hikes.
He estimated the tax increase would be just one of many factors raising inflation from around 3% this year to 5.4% in 2023, noting it was still well below the 11% inflation rate in the EU and the 10.4% rate in the UK.
The government expects to generate USD63 million from GST and USD136 million from TGST by next year. Therefore, the tax changes are expected to generate revenue of USD195 million.
(Source: PSM Public Service Media)