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As of November 5, 2024, three significant amendments were officially enacted and published in the Gazette, impacting the Tourism Goods and Services Tax (TGST), Green Tax (GRT), and Airport Taxes and Fees.
Below is a summary of the key updates to each act, along with their respective implementation dates, to provide clarity on the upcoming changes and plan accordingly.
1. Goods and Services Tax (GST) Act (10/2011)
The key change introduced by the 7th amendment is an increase in the TGST from 16 to 17% effective from July 1, 2025.
Subsection 15 (a) (2) of the GST Act is revised, effective from November 5, 2024, to exclude goods and services provided exclusively to employees in cafes, as well as in shops, within tourism establishments from being classified as tourism goods and services. Previously, this exclusion applied only to employee-only shops.
2. Maldives Tourism Act (2/99)
The amendments to the Maldives Tourism Act introduce changes to both operational procedures and green tax rates.
The green tax rates are increased from January 1, 2025, as follows:
- For tourist resorts, tourist hotels, tourist vessels and guesthouses and tourist hotels located in inhabited islands with more than 50 rooms, the GRT will rise from USD 6 to USD 12.
- For hotels and tourist guesthouses located in inhabited islands with fewer than 50 rooms, the GRT will increase from USD 3 to USD 6.
Additionally, the amendment exempts GRT for children under 2 years of age, effective from January 1, 2025.
Changes to leasing of islands and land for development as tourist resorts:
- Repeal of Subsection 5 (d) (2): This removes the requirement for the Ministry of Tourism to seek approval from the President’s Office when leasing lands or islands.
- Revision of Subsection 5 (f): This shifts the authority to discuss and publish details related to leased lands and islands from the President’s Office to the President directly.
3. Airport Taxes and Fees Act (29/2016)
The amendments to the Airport Taxes and Fees Act include increases in departure taxes and airport development fees, specifically for travel classes above economy class effective from December 1, 2024, as detailed below:
Departure Tax
|
Travel Class |
Current rates ($) |
New rates ($) |
||
|
Maldivian Passengers |
Foreign |
Maldivian |
Foreign |
|
|
Economy Class |
12 |
30 |
12 |
50 |
|
Business Class |
60 |
60 |
120 |
120 |
|
First Class |
90 |
90 |
240 |
240 |
|
Private Jet |
120 |
120 |
480 |
480 |
Airport Development Fee
|
Travel Class |
Current rates ($) |
New rates ($) |
||
|
Maldivian Passengers |
Foreign |
Maldivian |
Foreign |
|
|
Economy Class |
12 |
30 |
12 |
50 |
|
Business Class |
60 |
60 |
120 |
120 |
|
First Class |
90 |
90 |
240 |
240 |
|
Private Jet |
120 |
120 |
480 |
480 |
Revisions to Refund Procedure
An amendment to Section 8-1 of the act establishes a mechanism for refunding airport service charges, departure taxes, and airport development fees from MIRA, that were collected in excess or from unauthorized parties, provided that the amount is returned to the original payer.
Preparing for Upcoming Tax Changes
The amendments to the GST Act, Maldives Tourism Act, and Airport Taxes and Fees Act, which result in higher tax rates and fees impact the pricing strategies, operational planning, and compliance processes for tourism businesses. It's crucial to prepare for these changes to ensure a smooth transition and continued compliance.
Our team of advisors at Crowe is available to discuss these upcoming changes and ensure the business is well-prepared and informed for a successful transition to the new tax structure.