Industry expert says the sudden decision to implement tax hikes has eroded confidence in the Maldivian tourism sector

A tourism industry expert has stated that the sudden decision to hike taxes has eroded investor confidence in the Maldives' tourism sector.

Amidst growing concerns within the tourism sector following abrupt amendments to tax laws, Yoosuf Riffath, the head of Capital Travel and Tours, stated that these changes have triggered unease among resort operators. He noted that the move has hindered potential investments, disrupted existing contractual agreements, and diminished the Maldives' competitiveness in the global market.

Riffath, who has been serving in the tourism sector since 1982, further emphasized that the industry cannot progress amidst such uncertainty and a lack of clear direction.

"What this industry requires is stability, predictable policies for the future, and genuine consultation with industry stakeholders."

Meanwhile, small-scale operators who market and sell Maldivian tourism products abroad have warned the government that the sudden tax hikes may force them to stop selling Maldives holiday packages altogether.

Stakeholders have warned that the short timeframe set for implementing these regulations could result in significant financial losses on existing holiday bookings, potentially forcing smaller operators to stop offering Maldivian travel packages altogether.

Concerns have been raised among tour operators bringing visitors to the Maldives following sudden amendments to the Goods and Services Tax Act, ratified and published on August 31, 2024, which they claim were implemented without adequate consultation. Under these changes, overseas entities providing Maldivian tourism products and booking services will be required to pay a 17 percent Tourism Goods and Services Tax (TGST) effective October 1.

Regarding this matter, ABTA, the United Kingdom’s largest travel association, sent a formal letter to the Minister of Tourism and Aviation, Mohamed Ameen, on August 27, prior to the ratification of the law. The association represents approximately 3,500 consumer brands that collectively generate an annual turnover exceeding £41 billion.

The European Travel Agents' and Tour Operators' Associations (ECTAA) has also shared similar concerns, addressing a formal letter on September 2 to Fathimath Dhiyana, the Maldivian Ambassador to Belgium and the European Union.

ABTA and ECTAA have called for the implementation of these regulations to be deferred until consultations are held with international businesses and detailed guidelines are issued. Furthermore, ECTAA has requested that concessions be provided for travel packages that have already been contracted or sold.

The associations have warned President Muizzu’s administration that implementing these measures without adequate preparation could hinder the marketing and sale of Maldivian tourism products in international markets.

President Muizzu has stated that technical evaluations, research, and international best practices are thoroughly reviewed by relevant teams when proposing legislative amendments. However, associations representing tourism service providers have raised concerns regarding the recent legal changes, citing ambiguities in registration procedures, tax filing, payment processes, booking cancellations, and refund policies. Furthermore, the Maldives Association of Tourism Professionals (MATP) has requested specific details on how bookings made prior to the implementation of the new regulations will be handled.