Indian, Russian Tour Operators Raise Concerns Over New Tax

The Indian Association of Tour Operators (IATO), India's premier body for tour operators, and the Russian Union of Travel Industry (RST) have expressed concerns regarding the proposed changes to the Goods and Services Tax (GST) within the Maldivian tourism sector.

In a letter addressed to the Maldives' Minister of Tourism, Mohamed Ameen, IATO President Ravi Gosain expressed concerns regarding these changes, warning that they could have adverse effects on international tourism.

IATO has highlighted that under the new amendments set to take effect in October 2026, taxes will be levied on foreign tour operators and agents who sell Maldivian tourism services, even if they are not registered in the country. The association stated that requiring these parties to pay taxes on their commissions and margins would drive up the cost of Maldivian holiday packages, posing a significant challenge to the tourism industry.

The letter stated that requiring foreign companies with no physical office or business presence in the Maldives to register with the local tax authorities and complete tax compliance procedures imposes a significant administrative burden. IATO also highlighted that adequate consultations were not held with Indian tour operators or key international tourism stakeholders prior to the introduction of such a major regulatory change.

IATO has called on the government to review this decision and engage in consultations with relevant stakeholders. The association also requested that the implementation of these changes be deferred by at least one year. This request aims to mitigate potential financial losses resulting from sudden price hikes, noting that a significant number of bookings have already been secured for the 2026-2027 tourism season.

Furthermore, the International Association of Travel Outbound Operators (IATO) has requested detailed clarification on the specific sectors subject to taxation under this law, as well as the established procedures for tax calculation and registration. The association also emphasized the importance of clarifying the tax trigger point—specifically, whether the tax will be applied based on the booking date, the payment date, or the tourist's actual travel date.

With a membership exceeding 2,000, IATO plays a pivotal role in bringing tourists to the Maldives from India and various global markets. The association highlighted that the Maldives remains a highly popular destination among Indian travelers, emphasizing the importance of shaping tax policies that do not hinder businesses to maintain this close relationship. Expressing readiness for further discussions with the Ministry on the matter, IATO has called for an urgent resolution to the issue.

In a letter addressed to the Maldives' Minister of Tourism, Ibrahim Faisal, the Russian Union of Travel Industry (RST)—which represents over 3,000 Russian companies—stated that the imposition of a 17 percent GST on the commissions of Russian tour operators and agents under the new regulations effective October 1, 2026, is unacceptable.

In a letter signed by the RST President, the organization highlighted that requiring foreign companies not registered in the Maldives to pay taxes under the recent amendments to the GST Act is practically unfeasible. The association noted that Russian companies already purchase Maldivian services at rates inclusive of all existing local taxes. Therefore, mandating additional tax payments to the Maldives for internal business transactions conducted within Russia would constitute double taxation on the same service.

Furthermore, the Russian Union of Travel Industry (RST) highlighted several administrative challenges in implementing this tax. The union noted in its letter that the Maldives Inland Revenue Authority (MIRA) lacks any legal framework or access to internal Russian financial documents required to verify the revenue and profit details of Russian companies. The union also warned that the new tax would negatively impact the mandatory reporting requirements for tour operators under Russian law, as well as their required contributions to the "Personal Liability Fund."

According to Russia’s tourism industry, holiday packages for the 2026 and 2027 winter seasons have already been priced, with several bookings already finalized. The Russian Tourism Union (RST) warned that a sudden tax hike would lead to significant financial losses for Russian companies. Given that Russia is a key source market for Maldivian tourism, the RST has urged the Maldivian government to either exempt Russian companies' profits and agent commissions from the GST scope or postpone the implementation until a practical legal solution is established.