Taxing foreign travel agents will not resolve concerns of local businesses: MATATO

The Maldives Association of Travel Agents and Tour Operators (MATATO) has expressed concern regarding proposed tax reforms targeting foreign travel agents.

In a statement released Wednesday, MATATO emphasized that while the association supports a fair taxation system, the proposed amendment fails to address the concerns of Maldivian travel agents and tour operators, offering no substantial benefits or protections for local businesses.

The primary concern highlighted by MATATO is that the Maldives Inland Revenue Authority (MIRA) failed to consult with the association or local travel agents before introducing these significant changes. MATATO maintains that it is crucial to hold consultations prior to passing legislation that could disrupt the established relationships between Maldivian tourism businesses and thousands of international tour operators.

MATATO stated that the Maldives' tourism business framework is highly complex, with local agents operating within extensive networks of international tour operators, wholesalers, and bed banks across various global markets. The association warned that if selling the Maldives becomes an administrative burden, international partners are likely to shift their business to competing destinations. The association further noted that such a shift would result in the most significant financial impact being felt by the country's small and medium-sized enterprises (SMEs).

Under the proposed framework, foreign companies supplying tourism products to the Maldives are required to register with the Maldives Inland Revenue Authority (MIRA), even if they do not maintain a permanent establishment within the country. The Maldives Association of Travel Agents and Tour Operators (MATATO) stated that requiring all foreign agents operating through local travel companies to register would be exceptionally difficult to implement and enforce in practice.

MATATO stated that while imposing additional taxes and registration requirements on foreign operators might seem like an automatic advantage for local agents, this may not necessarily be the case in reality.

The Maldives Association of Travel Agents and Tour Operators (MATATO) has highlighted that the implementation deadline of October 1, 2026, for these reforms provides an exceptionally short notice period. The association noted that many businesses have already finalized contracts and pricing for the upcoming tourism seasons, with resort agreements signed, brochures printed, and holiday packages already distributed.

MATATO stated that implementing these changes after commercial agreements have already been finalized could result in additional costs for foreign operators, local suppliers, and tourists alike. Consequently, the association has requested that the government provide an adequate transition period and ensure that existing contracts are protected.

The People's Majlis has passed an amendment bill proposed by Mohamed Dawood, Member of Parliament for the Kulhudhuffushi North constituency, to reform the taxation system for goods and services. The amendment ends the previous exemption that limited GST collection to businesses registered only in the Maldives, effectively expanding the tax base to include all goods and services provided within the country.