The Maldives Association of Travel Agents and Tour Operators (MATATO) has today welcomed the government's decision to reverse legislative changes that required foreign tour operators and travel agents to pay TGST on the commission margins earned from selling Maldivian tourism products.
Tourism Minister Mohamed Ameen announced the decision to amend the law during a ceremony held last night to mark National Tourism Day. The move follows significant pushback from foreign businesses, some of whom had reached the point of considering a halt to selling the Maldives as a destination.
In a press statement following the government’s decision, MATATO highlighted the deep concerns previously raised by tourism industry stakeholders and international travel partners regarding the tax amendments.
MATATO expressed its gratitude to the government for listening to and responding to the industry's grievances. The association further reaffirmed its commitment to continuing its close cooperation with the government.
"MATATO stands ready to support the government in formulating a balanced framework that protects state revenue while ensuring the Maldives remains a competitive and easily marketable destination in international markets," said the MATATO Secretary General.
The association stated it expects the government and the Maldives Inland Revenue Authority (MIRA) to engage in comprehensive consultations with local tourism stakeholders and international travel partners when revising the current "destination principle" regulations.
The shift to taxing foreign businesses under the destination principle was originally implemented through an amendment to the Tax Act. Any reversal of this policy will require a further legislative amendment to the Act.
Since the initial announcement of the tax changes, industry professionals have voiced consistent concern, leading to the government’s eventual decision to reconsider and seek further legal amendments.
Foreign businesses had contested the tax, arguing that they already comply with all relevant Maldivian taxes and should not be liable to the Maldivian government for transactions already taxed in their home jurisdictions. Even businesses open to the tax expressed frustration over the lack of a transition period and the perceived haste of the implementation.
The organizations objecting to the regulation included major travel associations representing nearly all of the Maldives' top source markets for tourism.
