Muizzu’s stance on tax increases shifts, from opposing it to proposing doubling certain taxes
The government's tax increase plan mainly seems to be targeting the tourism sector
Close-up of a person's hand using a calculator
President Dr. Mohamed Muizzu's administration has decided to double taxes to boost government revenue and has sent major changes to the tax structure for approval to the People’s Majlis.
While the incumbent administration has sent the tax increase proposal to the People's Majlis for review, Muizzu spoke against increasing taxes in the past.
Some of the changes to the tax structure proposed by the government include doubling the Airport Development Fee (ADF) and Departure Tax to generate an additional MVR 1.5 billion annually. These changes are set to be implemented from 1 December 2024.
As part of the changes, the tax for passengers traveling in economy class, except for Maldivians, will be increased from USD 30 to USD 50.
The tax for business class travelers will be increased from USD 50 to USD 120.
Further, the tax for first-class passengers will be increased from USD 90 to USD 240.
The fee for private jet passengers will be increased from USD 120 to USD 480.
The government has also decided to increase the Green Tax by 100 percent starting from 1 January 2025.
As such, the Green Tax for guesthouses will be increased from USD three to USD six and for resorts from USD six to USD 12.
With these changes, the Ministry of Finance has estimated an additional annual revenue of MVR 964 million.
In addition to this, the government has decided to increase TGST from 16 percent to 17 percent from 1 June 2025, in a bid to generate an additional MVR 202 million.
The necessary amendments to the laws for increasing taxes have been submitted to the People's Majlis.
If said amendments are passed, the Ministry of Finance estimates that the government will receive an additional USD 2.6 billion annually, which would represent a revenue increase of three percent of GDP.
The government's tax increase plan mainly seems to be targeting the tourism sector, and experts say that the Maldives being perceived as an expensive destination among tourists remains a challenge in efforts to attract more visitors.
The World Bank's "Maldives Development Update" released this ongoing month highlighted that although the average length of stay for tourists in the first quarter of the year remained consistent with the same period last year, the amount spent by visitors during their stay has significantly declined in comparison to previous years.
Despite concerns that the government's decision to double taxes may jeopardize the tourism sector, it is predicted that the People’s Majlis will approve the proposed tax hike, given the incumbent administration's supermajority in parliament.
