GST bill would tax foreign tourism sales from October. MIRA has not shown how it will collect them

A resort room sold from Malé carries 17 per cent tourism GST. The same room, the same night, the same guest, sold by a tour operator in Frankfurt carries none on the operator's own margin. The Eighth Amendment to the Goods and Services Tax Act, now before the People's Majlis, would close that gap from 1 October. The principle behind it is orthodox and long overdue. The date is the problem.

The bill was submitted by Kulhudhuffushi North MP Mohamed Dawood of the governing People's National Congress and taken up for preliminary debate on 17 August. It would apply the destination principle to tourism supplies: tax follows where a service is consumed, not where the seller is incorporated. Offshore booking platforms, foreign tour operators and overseas travel agents selling Maldivian accommodation, food, transport, excursions and charter trips would register with the Maldives Inland Revenue Authority and account for GST at 17 per cent.

The cost estimate published with the bill puts the yield at MVR 1,608.5 million a year — MVR 1,309.2 million from foreign tour operators and MVR 299.3 million from overseas travel agents — against MVR 2.8 million in set-up cost and MVR 5.1 million a year to run. That is roughly MVR 204 of revenue for every rufiyaa of cost in the first year, and MVR 315 a year thereafter — if the money arrives, and if the set-up figure holds.

Whether it arrives depends on machinery that has not been shown to exist. MIRA's published online payment channels run entirely on domestic instruments, and MIRA does not publish whether it will accept an international payment from a company with no Maldivian bank account. The Maldives has no registration threshold for tourism suppliers, so the bill as described would sweep in every small foreign agent alongside Booking Holdings and TUI. And the OECD's implementation guidance, written for revenue authorities building non-resident registration regimes of this kind, recommends six to twelve months between adoption and entry into force. The bill allows about six weeks from submission.

The base the amendment is being bolted onto

Tourism GST is the single largest thing the Maldivian state collects. In 2025 it raised MVR 10,975.3 million — 26.9 per cent of all government revenue and grants, and 37.6 per cent of tax revenue, on GMM’s calculation from the Ministry of Finance monthly fiscal series. MIRA's 2025 annual report records the same figure on its own cash basis, and notes that the tourism sector supplied 66.8 per cent of all GST revenue.

The series shows a tax base that has more than doubled since before the pandemic, driven by volume and by two rate increases rather than by any widening of what is taxed. TGST stood at 12 per cent from November 2014, rose to 16 per cent on 1 January 2023, and to 17 per cent on 1 July 2025 under the Seventh Amendment.

Sources: Ministry of Finance, Monthly Fiscal Developments series (Table 2, Revenue Details), data cut-off 22 July 2026; MIRA Annual Report 2025. Shares and changes are the authors calculations; the 2026 figure covers January to June and its change is measured against the same half of 2025, not year-on-year. The Ministry notes that 2024 and 2025 figures may still move as reconciliation continues. MIRA's cash-basis totals differ slightly from the Ministry's series.

Two features of this series matter for the amendment. First, growth has come almost entirely from rate rises and arrival volume — the 2023 jump of 32.5 per cent follows the move to 16 per cent, and the 2025 jump of 15.2 per cent straddles the move to 17. There is no remaining headroom of the same kind: a fourth increase in twelve years would test the destination's price position rather than its tax design. Second, the base is narrow by construction. It reaches the price a Maldivian establishment charges, and stops there.

That matters because most Maldivian holidays are not sold by Maldivian establishments. The Ministry of Tourism's own Maldives Visitor Survey 2025 found that about 65 per cent of resort guests used an international travel agency or tour operator to book their accommodation, against 18 per cent who booked directly with the resort — channel usage rather than market share, since respondents could give more than one answer, but a clear picture of where the transaction begins. Estimated travel receipts reached USD 5.571 billion in 2025, up 16.4 per cent on 2024, on the Maldives Monetary Authority series.

What the amendment would actually tax

This is the part most of the coverage has skipped, and it changes the analysis. On the description circulating in tax practice, the amendment does not apply 17 per cent to the price the guest pays the foreign seller. It applies 17 per cent to that payment minus the underlying cost of the service — the intermediary's margin — and denies input tax deduction against it.

That is a materially different instrument from the one Australia built, and it is worth being precise about the difference. Australia taxes the full price. The Maldives bill, as described, taxes the spread.

More sellers paying the same tax is a fair description of the Australian model. The Maldives bill is doing something narrower and harder: taxing a number that sits inside a foreign company's books.

Taxing a margin has one obvious attraction — it avoids double-counting the resort's own taxed room revenue — and one severe drawback. Half of it is not observable from the Maldives. The cost leg is often visible — where a room was bought from a Maldivian destination management company, that sale is itself declared to MIRA. The resale price is not: what a guest paid a tour operator in Milan sits inside a foreign company's books, and without it the margin cannot be tested. Reaching it requires either the seller's cooperation or a treaty instrument for obtaining the information. Hotelier Maldives has raised this and two related questions, and they remain unanswered on the public record.

Where the MVR 1.6 billion has to come from

No derivation of the revenue estimate has been published. It can, however, be reverse-engineered, and the result is a useful test of plausibility.

At 17 per cent, MVR 1,608.5 million implies an annual taxable base of roughly MVR 9,462 million — about USD 614 million at the pegged rate of MVR 15.42. Set against 2025 travel receipts of USD 5.571 billion, that is an assertion that offshore intermediary margin on Maldivian holidays runs at about 11 per cent of everything the destination earns. Split as the bill splits it, foreign tour operators are assumed to book roughly USD 499 million of margin a year and overseas travel agents roughly USD 114 million.

Those are not absurd numbers on their face: intermediary margins on long-haul package travel are commonly discussed in the trade in the region of a fifth of the net rate, though GMM has found no published Maldives-specific measurement. But they are not modest either, and they assume the great majority of that margin is booked offshore rather than by Maldivian destination management companies already inside the GST net. The projection is equivalent to adding 14.7 per cent to the entire 2025 tourism GST take. A figure of that consequence should carry its workings.

Implied bases are GMM calculations, dividing the published projections by the 17 per cent rate and converting at the pegged MVR 15.42 to the US dollar. They assume the whole yield is charged at the tourism rate on a margin base, which is how the amendment has been described but not how it has been officially explained.

The foreign currency dimension

Tourism-sector GST returns must be prepared and paid in United States dollars. If the amendment works, MVR 1,608.5 million is roughly USD 104 million of new dollar receipts flowing to the state each year, from a source that currently never touches the Maldivian banking system at all.

That is not a marginal consideration. Official reserve assets stood at USD 638.0 million at the end of July 2026, down 7.1 per cent from USD 686.8 million a month earlier. A full year of the projected yield would be equivalent to about 16 per cent of that stock — an annual flow set against a point-in-time balance, so an indication of scale rather than a ratio.

It is also the one thing the existing foreign exchange framework cannot reach. The Foreign Currency Regulation (2024/R-91), in force since 1 October 2024, requires Category A tourist establishments to convert USD 500 per tourist and Category B USD 25 per tourist through the domestic banking system. That obligation falls on the Maldivian operator, and bites on the net rate it receives. The offshore margin — the difference between what the guest paid and what the resort was paid — sits outside the perimeter entirely. A GST charge on it, payable to MIRA in dollars, is the only instrument currently proposed that would capture any of it.

What happened where this has been done before

The destination principle is not experimental. It is the OECD standard, and the practical question is not whether it works but which design choices determine whether it works. Six jurisdictions are instructive, and the most instructive is the one closest to the Maldives in structure.

Australia: the closest analogue, on a different base

Until 1 July 2019, offshore sellers of Australian commercial accommodation were not required to count those sales towards their GST turnover — a rule written in 2005, before online booking mattered. From that date they were. The threshold is the ordinary one, AUD 75,000 of turnover, and offshore sellers must use standard GST registration rather than the simplified route open to other non-residents. Crucially, GST applies to the full sale price, not the margin.

Two details from the Australian experience bear directly on the Maldives bill. The first is that the obligation attaches only where the offshore seller acts as principal — where it buys the room and resells it — and not where it acts as an intermediary for the hotel. The Accommodation Association of Australia told its members at the time to read their OTA contracts on precisely that point. The same principal-versus-agency distinction is the one the Maldives bill has not yet drawn in public.

The second is the framing. Australian Treasury's explanatory material grounded the change in competitive neutrality — ensuring identical GST treatment of an Australian hotel room whether bought through an Australian or an offshore supplier — rather than in revenue. Tourism Accommodation Australia welcomed it as levelling the playing field, and the Australian Taxation Office described it as removing a competitive advantage offshore sellers had held. GMM has found no published measurement of an effect on Australian inbound demand either way.

New Zealand: making the platform the taxpayer

From 1 April 2024 New Zealand made online marketplaces the deemed supplier for 'listed services', including short-stay and visitor accommodation, collecting 15 per cent GST on the booking. Where the underlying host is not GST-registered, the platform passes back a flat-rate credit of 8.5 per cent and remits 6.5 per cent to Inland Revenue. This solves the problem the Maldives faces from the other end: instead of chasing many small sellers, the state deals with a handful of platforms and lets the flat rate approximate the input tax the small host cannot claim.

Singapore: thresholds and a belonging test

Singapore's Overseas Vendor Registration regime took digital services from 1 January 2020 and extended to non-digital remote services and low-value goods from 1 January 2023. Registration bites only above two thresholds together — SGD 1 million of global turnover and SGD 100,000 of business-to-consumer supplies into Singapore — and a vendor establishes where a customer belongs using two pieces of non-conflicting evidence from payment, residence and access proxies. Both features are absent from the Maldives bill as described.

The European Union: the scale answer, and an unresolved one

The EU's One Stop Shop and Import One Stop Shop collected more than EUR 33 billion in 2024, a 26 per cent increase on 2023 and nearly EUR 88 billion cumulatively since mid-2021, from over 170,000 registered traders. The Commission does not break the figures out by trader location, so they establish that a cheap registration route attracts take-up at scale rather than that non-resident sellers specifically comply. It is still the largest body of evidence available.

Travel is the EU's own unfinished business. The Tour Operators Margin Scheme taxes the operator's margin rather than the full price — the same base the Maldives bill proposes — but taxes it where the operator is established, not where the holiday happens. Non-EU operators sit outside it awkwardly, and the European Commission is expected to bring forward a reform proposal in the fourth quarter of 2026 that includes taxing non-EU operators on their margins. The Maldives would, on the current timetable, arrive at that destination first.

Malaysia: the tourism-dependent cautionary case

The most useful comparator is the least cited. Malaysia extended its Tourism Tax to digital platform service providers with effect from 1 January 2023, explicitly covering foreign platforms booking Malaysian accommodation, with registration through the MyTTx portal and a flat RM10 per room per night and no threshold.

It then could not make it work on schedule. A three-month grace period for platforms that do not receive payment directly from the traveller, granted for January to March 2023, was extended to 31 December 2025 — and only replaced by a public ruling effective 1 December 2025. Three years elapsed between the nominal start date and operative collection from the platforms the measure was aimed at.

The documented obstacles are mechanical. Malaysian tourism tax can be paid only in ringgit; the domestic electronic route requires a Malaysian bank account, leaving foreign platforms with telegraphic transfer, and the guide makes platforms bear their own banking charges. The Customs Department has not stated why the deferrals were granted, so the connection is inference rather than record — but it is the same obstacle the Maldives is about to walk into, in a harder form.

Thailand, by contrast, built its non-resident e-services VAT around an online portal, a THB 1.8 million threshold and no input VAT recovery — close to the OECD template. GMM has found no record of comparable deferrals there, though absence of a record is not proof of a smooth implementation.

New Zealand's platform-level threshold is the ordinary GST registration threshold and is included for comparison rather than as a special rule for listed services. Thailand's commencement date is the date its e-services VAT took effect and is included because the article cites its threshold; its regime covers digital services rather than accommodation booking. The Maldivian tax base is as described in tax-practice reporting and has not been officially confirmed.

What it did to the tourism sectors

No comparator jurisdiction publishes an isolated measurement of what these regimes did to inbound demand, and GMM has found no evidence that any of them produced a contraction. That is an absence of contrary evidence, not a positive finding, and it should be read as such.

The mechanism usually advanced for why it would not — that the charge falls on the traveller, applies uniformly across competing sellers, and leaves the platform's own economics untouched — is weaker in the Maldivian case than in the Australian one. On a margin base with no input credit, the charge lands on the intermediary's spread rather than arriving visibly on the customer's invoice. Whether it is absorbed, passed forward to the guest or pushed back onto the resort's net rate is an open commercial question, and it is the question the industry will actually be asking.

The effect worth measuring, then, is not arrivals but relative price. Here the scale needs stating honestly: because the resort's own supply already bears 17 per cent, the untaxed element is the intermediary's spread alone. On the bill's implied margin base, closing it is worth roughly 1.9 per cent of what the guest pays, on GMM’s calculation — not 17 per cent. That is a real competitive correction for a Maldivian guesthouse or DMC selling the identical night, and a smaller one than the headline rate suggests. It is also an argument the reporting of the bill has not carried, the framing having been almost entirely fiscal.

What has to be in place by 1 October

The IMF's June 2022 technical assistance report on the Maldivian GST found, on the summary published with it, that the Act's place of supply rules had become inadequate to current business models and a growing digital economy, and recommended modernising them. Four years later the policy has arrived. The administration has not.

On the policy, the government has long agreed. In August 2024 the Finance Ministry said it would amend the GST Act by mid-2025 to apply the destination principle, naming tourism leakage and the markups taken by online travel agents as the target. That deadline passed without a bill. The measure has now arrived more than a year late — and with a commencement date six weeks after submission. Why the deadline slipped has not been explained publicly. Whatever the cause, the compression now falls on the businesses that have to comply rather than on the timetable.

The bill's own answer to much of what follows should be put first. On the reporting of it, registration and collection are to begin only once the necessary administrative and payment arrangements have been established with MIRA. GMM has not seen that clause and cannot confirm its wording. If it operates as reported, 1 October is the date an obligation attaches rather than the date money moves, and the timetable criticism below is materially softened — the question becomes when MIRA expects those arrangements to exist, which no one has stated. If it does not, the commencement date is a hard one, and the list below is a list of things that will not be in place.

The OECD's VAT Digital Toolkit for Asia-Pacific — written for revenue authorities building non-resident registration regimes — sets out what a workable one requires. Measured against it, the following are not refinements. They are the difference between a tax that is collected and a line in a revenue forecast.

1. A registration route that does not require a Maldivian company

GST registration today runs on MIRA-105, with MIRA-117 alongside it where the applicant is not already registered for income tax. These forms assume a Maldivian taxpayer identity. A non-resident regime needs a separate, online, English-language registration that requires no local incorporation, no local address, no fiscal representative and no physical documents — the OECD's explicit recommendation. Nothing of the kind has been announced.

2. Payment rails a foreign company can actually use

This is the binding constraint, and it is a matter of public record. MIRA's online payment channels are MIRAconnect and VaaruPay. Rufiyaa payments accept Bank of Maldives debit and credit cards, F'isa pay, Dhiraagu pay and Ooredoo m-faisaa. Dollar payments accept a Bank of Maldives MasterCard business debit card and F'isa pay. Every one of those instruments requires a Maldivian banking relationship.

A tour operator in Munich or an OTA in Amsterdam has none of them and will not open one for a tax bill. The OECD's guidance is unambiguous: accept electronic payment without requiring a domestic bank account. Malaysia's platform tourism tax slipped by three years with that constraint unresolved. MIRA may well accept an international wire; it does not say so anywhere a prospective registrant would look. Unless it publishes a route by which a non-resident can pay in dollars, the obligation arrives without a disclosed means of discharge — which, six weeks out, is a defect in itself.

3. A registration threshold

The Maldives has no turnover threshold for tourism suppliers: the obligation to register attaches to the supply itself. Applied offshore without modification, that puts a two-person agency in Chennai selling four packages a year in the same position as Expedia. Australia set AUD 75,000; Singapore SGD 1 million globally with SGD 100,000 locally; Thailand THB 1.8 million. A threshold is not a concession — it is what keeps the register small enough for MIRA to administer and the compliance burden proportionate enough for sellers to accept.

4. A deemed-supplier rule, and a published principal-versus-agency test

The bill names three categories of seller. It does not, on the public record, say who is liable when a package moves through several of them — a German operator buying from a Maldivian DMC and selling through a Dutch OTA. New Zealand's answer is to make the platform the taxpayer. Australia's is a principal test that puts the obligation on whoever bought the room. One of these must be chosen and published before commencement, or every affected business will make its own assumption.

5. Rules for apportionment, and evidence for the cost deduction

If the base is the margin, MIRA must define what may be deducted, in what currency, at what exchange rate, and on what evidence — and must be able to test the answer. A mixed package of flights, transfers, accommodation and excursions, only some of it consumed in the Maldives, needs an apportionment rule. Without one, the taxable figure is whatever the taxpayer declares.

6. Reconciliation with the 10 per cent non-resident withholding tax

Commissions paid to non-residents for services provided in the Maldives already attract non-resident withholding tax at 10 per cent, withheld and remitted by the Maldivian payer. If the new charge also reaches that agent's income — which turns on the principal-versus-agency treatment the bill has not published — the same economic sum would carry two Maldivian taxes of different character, with no input credit against the second. GMM infers the overlap from the published scope of the two regimes rather than from any statement about it; MIRA has not addressed the interaction, and the bill needs to say which applies, or that both do and why.

7. Lead time

The OECD recommends six to twelve months between the adoption of a reform of this kind and its entry into force for services, and twelve to eighteen for goods, noting that close alignment with its recommended design can shorten that. The Maldives bill was submitted on 15 August, on Hotelier Maldives' account, with a commencement date of 1 October: about six weeks, of which the parliamentary process will consume most. Foreign sellers have to change contracts, pricing engines, tax determination logic and terms of sale — work that is planned quarters ahead, not weeks.

One further point on timing, from the sequence above rather than from the bill: the Malaysian precedent shows how quickly a nominal start date becomes a rolling grace period once the machinery is not ready. The value of the Maldivian commencement clause depends entirely on MIRA publishing a date by which the arrangements will exist.

8. Enforcement, or the honest absence of it

GMM is not aware of a direct mechanism by which the Maldives could compel a company with no Maldivian assets and no Maldivian presence to pay, and the state's treaty network for assistance in collection appears thin. Indirect levers exist in principle — withholding at the Maldivian counterparty, or conditions attached to licences and contracted allocations — and the bill has not been reported as using any of them. The design question that follows is the one the EU answered by attracting more than 170,000 registrations: make compliance cheaper than the commercial and reputational cost of refusing. Simplicity is not a courtesy here; on the available evidence it is the enforcement strategy.

What remains unknown

• GMM has not obtained the bill as submitted. Everything above rests on the cost estimate published with it and on secondary reporting. The margin base, the absence of a threshold, the treatment of platforms acting as agent rather than principal and the wording of the commencement clause are all unconfirmed.
• Accounts of the submission date differ: Hotelier Maldives records 15 August, other outlets 16 August, with preliminary debate on 17 August.
• No derivation of the MVR 1,608.5 million projection has been published, and neither the Ministry of Finance nor MIRA has set out the taxable base it assumes.
• It is not known whether MIRA has begun building a non-resident registration and payment facility, or what it would cost beyond the MVR 2.8 million set-up figure in the bill's costing.
• The position of the tourism industry bodies, of MIRA, of the Ministry of Finance, of the bill's sponsor and of the affected platforms has not been established, and GMM has not reviewed the record of the 17 August debate.
• No comparator jurisdiction publishes an isolated measurement of what a non-resident registration regime did to its inbound tourism demand, so the finding that none contracted is an absence of contrary evidence rather than a measurement — and none of those regimes taxed a margin, which is what makes the Maldivian case different.

The principle is right and the gap it closes is real. The competitive case for it is the stronger one, and it is the one the government has not made. What has not been shown is the arithmetic behind the revenue figure, or the machinery to collect it by the date the bill names. The most valuable amendment the Majlis could make to this bill is to the calendar — and the most valuable thing the Ministry could publish before then is the workings.