Muizzu claims that laws are enacted following thorough research; however, what we are actually witnessing is passage of legislation without adequate study: Shareef

The Chairman of Cyryx College, Ahmed Shareef, has stated that despite President Dr. Mohamed Muizzu’s assertions that laws are enacted following thorough research, the reality observed is the passage of legislation without adequate deliberation.

Speaking during RaajjeTV’s "Dollar Debate," Shareef stated that the officials responsible for drafting the legislative amendments to tax overseas travel agents and online platforms lacked a proper understanding of the industry's complexities.

Shareef noted that international travel agents are already selling packages inclusive of TGST and other service charges. However, he highlighted a significant flaw in the recent amendment to the Goods and Services Tax Act, stating that, as currently drafted, the bill would exempt foreign tour operators and online platforms from the obligation to pay these taxes.

According to the law, the recent amendments specify that inbound tourism services are taxable. Inbound tourism refers to services provided to tourists arriving from abroad, such as the operations managed by travel agencies. Consequently, any services acquired by a tourist after their arrival are subject to tax. This remains consistent with the previous GST framework, which stipulates that all inbound tourism services are taxable.

Ahmed Shareef

Highlighting that "outbound" refers to the process of sending a country's citizens to other destinations, Shareef noted that the majority of foreign travel agents primarily provide outbound services. He further explained that when individuals are sent to another country, they are dispatched in accordance with established regulations and after the payment of relevant taxes.

Shareef stated that the drafters of the bill failed to distinguish between inbound and outbound services, noting that the legislation is currently structured in a way that imposes taxes on inbound service providers.

For instance, if a guesthouse room is sold for $100, that total includes 17% TGST, the Green Tax, and service charges. After deducting these, online travel agencies take their commission—for example, 12% for some platforms or as high as 25% for Expedia. It remains unclear whether the proposed TGST will be levied on the total amount or just the commission portion; this is a point that requires further clarification.

Ahmed Shareef, Chairman of Cyryx College

Furthermore, Shareef noted that while the law was amended to require 40 percent of dollar earnings to be converted through private banks, there is no legal obligation for these banks to facilitate telegraphic transfers (TT) for the resorts. He highlighted that this creates a significant imbalance in the system.

President Muizzu has ratified amendments to the Foreign Exchange Act, mandating resorts to convert 40 percent of their foreign currency earnings into local banks. In response, the Maldives Association of Tourism Industry (MATI) has stated that such a requirement imposes an unsustainable burden on the resort industry.