The Maldives Association of Travel Agents and Tour Operators (MATATO) has strongly opposed the Ministry of Finance’s proposed amendments to the Goods and Services Tax (GST) Act, which aim to shift GST payment to a “destination-based” basis, describing the amendments as unrealistic and likely to adversely affect an already challenging tourism industry.
MATATO has expressed concern that the Ministry of Finance may have misrepresented the operation of the Tourism GST, especially with regard to payments from foreign tour operators. The association stresses that the proposed amendments could create major confusion for international partners and give them another reason to reconsider marketing the Maldives as a tourist destination.
“These changes will only add to the difficulties facing an already challenging season for the Maldives tourism sector. We simply cannot afford it and it is not realistic,” a MATATO spokesman said.
A Finance Ministry press release cited the need to address “tourism leakage”, the flow of tourism revenue out of the Maldives, as the main reason for the proposed changes, but MATATO argues that the focus should instead be on addressing unregistered accommodation and the loss of revenue caused by unregistered accommodation, which amounts to more than one million nights a year.
Furthermore, MATATO points out that countries such as Sri Lanka, Australia, Canada and Singapore do not apply GST based on the “destination principle”, challenging the Treasury’s assertion that this approach is standard international practice.
“Rather than implementing changes that could stop foreign agents from selling the Maldives, the government should focus on enforcing regulations on unregistered accommodation, which is where the real revenue leakage is happening,” Matato said.
MATATO has urged the Ministry of Finance to reconsider the proposed amendments and engage in a more informed dialogue with industry stakeholders to ensure that any changes to the GST law are practical and beneficial for the Maldives’ tourism sector.
