Government Proposes a Bill to Parliament with Significant Tax Increases on Tourism Sector and Airport Taxes

  • Maldives
  • Travel
PUBLISHED 14 October 2024

The Maldivian government has introduced a bill to parliament that seeks to implement substantial increases in various taxes, including the Green Tax, the Tourism Goods and Services Tax (TGST), and airport taxes. These amendments come as the parliament prepares to reconvene following its recess.


MP Mohamed Musthafa, representing the West Maafannu Constituency, is sponsoring the government-backed bill to amend the Goods and Services Tax Act. 


This amendment proposes an increase in the TGST from the current rate to 17 percent, effective June 2025. The amendment estimates a projected revenue of MVR 201.9 million from TGST in the coming year.


In another proposal, South Mahchangolhi MP Musthafa Hussain is sponsoring a bill to amend the Tourism Act, which aims to double the Green Tax imposed on tourists. Under this amendment, establishments currently charging USD 6 per day will be raised to USD 12, while those charging USD 3 per day will see a hike to USD 6. The bill estimates a revenue of MVR 963.6 million from this change in the next fiscal year.


The third bill targets the tax levied on outbound travelers at Maldivian airports. Sponsored by Gemanafushi MP Assadhulla Shihab, this government-backed proposal aims to increase the Departure Tax starting in December of next year. While the current USD 12 fee for locals traveling in economy class will remain unchanged, the tax imposed on foreigners will rise from USD 30 to USD 50. Additionally, the fee for locals and foreigners in business class will increase from USD 90 to USD 120, while fees for first-class travelers will jump from USD 90 to USD 240. Similarly, the charge for individuals traveling on private jets will rise from USD 120 to USD 480.


The bill also recommends an increase in the Airport Development Fee in accordance with the new Departure Tax rates, projecting revenues of MVR 769.5 million from Departure Tax and MVR 809.8 million from the Airport Development Fee.


These proposals are part of the government's response to growing concerns over managing debt burdens. The World Bank recently expressed worries regarding delays in necessary reforms by the government.


In conjunction with these tax hikes, the Maldives has implemented new regulations requiring all tourism revenue to be deposited into local banks, a move that has drawn criticism from stakeholders within the tourism industry. As the government navigates these financial adjustments, the consequences for the tourism sector and the broader economy remain a topic of significant discussion.