The Maldivian government has recently announced significant tax amendments that will impact the tourism sector starting in 2025. As the Maldives remains a top destination for travelers worldwide, these updates are designed to align with sustainable tourism efforts while supporting the country’s economic framework. This article outlines the key changes to inform travel companies, tourism operators, and stakeholders, ensuring everyone can adjust their operations accordingly.
1. Seventh Amendment to the Goods and Services Tax Act (Law No. 20/2024)
Effective July 1, 2025, the Tourism Goods and Services Tax (TGST) rate will increase from 16% to 17%. This adjustment is a part of the Seventh Amendment to the Goods and Services Tax Act and will directly affect pricing on tourism services and products across the Maldives.
For the tourism industry, this TGST increase highlights the need for proactive pricing strategies to absorb the additional 1% cost without significantly impacting guest demand. Hotels, resorts, and tour operators should prepare for this adjustment well in advance, considering how to best manage costs while maintaining competitive offerings.
2. Fourteenth Amendment to the Tourism Act (Law No. 21/2024)
Beginning January 1, 2025, the Green Tax will also see an increase, doubling the current amount:
Resorts – from USD 6 to USD 12 per person per night;
Hotels (Hotels and Guesthouses with a room capacity 50 and over) from USD 6 to USD 12 per person per night; and
Hotels and Guesthouses (with 49 rooms and under) – USD 3 to USD 6 per person per night.
This rise reflects the Maldivian government’s commitment to promoting environmental sustainability and funding projects aimed at preserving the islands’ delicate ecosystem.
One important note within this amendment is the exemption for children under the age of two from the Green Tax. This adjustment aims to ease the financial impact on families traveling with infants, offering an incentive for family-friendly tourism in the Maldives.
Implications for Tourism Operators and Travelers
These changes have implications for travel companies, hotels, and other service providers who should take proactive steps to update pricing models and communicate these adjustments clearly to clients. Key considerations include:
- Incorporating Tax Changes into Pricing Packages: For all bookings made in advance, travel companies may need to clarify if prices will adjust post-July 2025 due to the new tax rates. This will help avoid misunderstandings and ensure smooth transactions with travelers.
- Updating Booking and Billing Systems: Systems should be updated to reflect the new TGST and Green Tax rates for accurate billing starting in 2025.
- Communication with Guests: Guests may have questions regarding these increases, especially those concerned about environmental conservation efforts. Highlighting the sustainability initiatives funded by the Green Tax can help travelers understand its importance and value.
Why the Tax Amendments?
The Maldives’ tax amendments reflect the country’s commitment to environmental sustainability, economic growth, and fiscal responsibility. The Green Tax, specifically, supports environmental preservation efforts, a cause that resonates with travelers who prioritize sustainable destinations. By increasing tax revenues, the Maldives can continue investing in infrastructure and programs that protect its natural beauty, benefitting the tourism industry long-term.
Communicating These Changes
For travel companies, keeping clients informed is essential. Communication through social media, email marketing, and direct updates will ensure that partners and travelers understand these changes before they take effect. By emphasizing the Maldives’ dedication to sustainable tourism, these updates can be positioned positively, helping to attract environmentally conscious travelers.
Final Thoughts
The Maldives tax amendment changes are designed to balance tourism growth with environmental sustainability. As these adjustments approach, travel companies and tourism operators have an opportunity to align their services with the Maldives’ mission to protect its natural beauty while continuing to offer world-class experiences. By staying proactive and transparent, the tourism sector can navigate these changes smoothly, ensuring that the Maldives remains a leading destination for years to come.
