The Parliament has today approved tax hikes and higher duty rates for tobacco and vape products.

The amendments to the Green Tax, Tourism Goods and Services Tax (TGST) and Airport Fees were passed with 71 votes in favour. Eight opposition Maldivian Democratic Party (MDP) MPs voted against the bills.

With these amendments, TGST will be increased from 16 percent to 17 percent from June 2025 and Green Tax will be increased from USD 6 to USD 12 from January 2025.

Higher Airport Fees will be charged from all passengers except Maldivians travelling from economy class. A USD 12 fee and a USD 12 tax are already being charged from Maldivians travelling from economy class.

The government has estimated that changes to the Green Tax will generate a revenue of MVR 963.6 million in 2025 and MVR 1.19 billion in 2026. The expected revenue from higher TGST is MVR 201.9 million in 2025 and MVR 330.8 million in 2026.

The government also hopes to collect MVR 726.5 million in airport departure fees and MVR 809.8 million in airport development fees next year.

The tax hikes are in contravention of a pledge by President Dr. Mohamed Muizzu during the presidential election of 2023. The higher taxes were proposed due to a worsening financial crisis as the government continues to delay cost-cutting measures.

Meanwhile, the Parliament has also passed a bill to amend the Export-Import Act to increase import duties on vapes, electric cigarettes and tobacco.

The bill passed with 71 votes in favour. Eight MDP members voted against the bill.

The bill passed today proposes to increase the duty on flavours and chemicals added to electronic cigarettes or other tobacco products to 50 percent and by MVR 8 per milliliter.

Import duty on heated tobacco products will be increased by 50 percent and the price of each stick will rise by MVR 8.

Additionally, the import duty on cigarettes will be increased by MVR 8 per cigarette.

The change is expected to generate MVR 180.3 million in revenue this year alone, while the amount is expected to be at MVR 1,058.7 million from import duties on cigarettes alone next year.