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Malé, Maldives –The Maldives is moving to reverse a controversial 17% tourism tax on overseas travel agents, tour operators and booking platforms, less than a month after introducing it. The government-backed repeal bill advanced to parliamentary committee review on October 26, following objections from international travel associations and the Maldives’ own tourism industry.
The proposed reversal could ease administrative burdens on businesses selling Maldives holidays worldwide, but it also raises questions about the government’s tax strategy and lost revenue. While international organizations, including WTAAA, welcomed the move, the policy change reflects broader industry pressure rather than an achievement attributable to any single association.
Why the Maldives Is Reversing Course
The original legislation, effective October 1, required overseas businesses without a fixed establishment in the Maldives to register for and account for tourism GST on qualifying services.
The requirements raised concerns about compliance costs, overlapping tax obligations, and complications for smaller travel agencies operating across international borders.
The Maldives Association of Travel Agents and Tour Operators (MATATO) was among the domestic organizations challenging the measures, warning that they could discourage international partners from promoting the destination.
International opposition also came from ABTA in Britain, ASTA in the United States, ATIA in Australia, ECTAA in Europe and the World Travel Agents Association Alliance (WTAAA), among others.
Brussels-based WTAAA Executive Director Otto de Vries welcomed the proposed repeal, saying the objection was not to the Maldives’ right to tax tourism, but to requiring foreign businesses to comply with tax obligations across multiple jurisdictions.
The coordinated objections appear to have contributed to the government’s reassessment, although there is insufficient evidence to attribute the reversal to any single organization.
A Costly Reversal for the Government
According to financial estimates accompanying the proposed legislation, the Maldives could forgo approximately MVR 1.61 billion in anticipated tax revenue.
The repeal bill also proposes stronger anti-tax-avoidance powers, indicating that the government is not abandoning efforts to protect tourism-related tax revenue.
The legislation would provide refunds for GST collected under the offshore-supplier rules since October 1, although the practical refund procedures remain unclear.
What Happens Next?
On October 26, all 43 participating members of Parliament voted to accept the bill for consideration. It has now entered committee review.
The repeal is not yet law. Parliamentary approval, presidential ratification and official publication are still required.
For overseas travel businesses, the development offers the prospect of regulatory relief. For the Maldives, it illustrates the challenge of balancing tourism tax collection with the international distribution networks that help bring visitors to the islands.
The broader lesson extends beyond the Maldives: tourism taxation increasingly requires consultation across borders, particularly when national legislation affects travel businesses operating worldwide.
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