Taxation is not the first thing that crosses one's mind when thinking about the Maldives. This archipelagic nation of 1,200 coral islands, located in the Indian Ocean near the southeastern edge of the Arabian Sea, is one of the world's premier luxury destinations. Nonetheless, in 2011, the Maldives introduced GST, aiming to increase state income, reduce heavy reliance on import duties, and secure funds to develop public services such as social security, education, and healthcare.

For a decade and a half, the Maldives has been updating its GST regime, raising the applicable GST rates, and introducing new rules and requirements. Among those is the mandatory registration for non-resident digital service providers once they meet a certain criterion.

Maldives GST System at a Glance

In 2011, the Maldives introduced GST rates for two categories: 3.5% for tourism goods and services and 3.5% for general goods and services. GST rates for both categories were increased in 2012 to 6%. In 2013, the government of the Maldives increased the tourism goods and services GST rate to 8%, leaving the general GST rate unchanged. In 2014, the Maldives once again increased the tourism GST rate, this time by 4%, setting the applicable rate at 12%.

Both GST rates remained unchanged until 2023, when the general GST rate was increased to 8%, and the tourism GST rate increased to 16%. In July 2025, the government once again raised the tourism sector rate to 17%, leaving the general sector rate unchanged.

The Maldives tourism GST rate applies to a broad range of products and services provided to tourists by businesses operating within the country's tourism industry. More specifically, supplies that fall under the scope of this rate are those connected to the tourism sector and provided by businesses licensed or authorized to serve visitors.

Some notable examples include supplies made by tourism establishments that are authorized by the Ministry of Tourism, such as resorts, hotels, guesthouses, picnic islands, yacht marinas, and similar facilities. The 17% GST rate also applies to services offered by businesses located within these establishments, such as diving schools, spas, water sports centers, and retail shops. An exemption is provided for shops and cafés that serve only the employees of the establishment.

Digital Services Under Maldives GST

While many countries typically had to amend their national VAT or GST rules and regulations to explicitly include or address digital services, the Maldives took a slightly different approach. Given that they introduced GST rather recently, the government simply imposed a general GST rate on all goods and services other than those subject to the tourism GST rate. By default, there are no specific rules and regulations for digital services.

In practice, this means that non-resident digital service providers must register for GST once they exceed the registration threshold. What is important for non-resident digital service providers is to distinguish B2B from B2C transactions, as different rules apply.

B2B vs B2C Transactions

For B2B transactions, non-resident digital service providers are generally not required to register for GST. Instead, the Maldivian business customer must account for the tax under the reverse charge mechanism by self-assessing the applicable general GST or tourism GST on the payment made to the foreign supplier.

In contrast, for B2C transactions, the responsibility shifts to the non-resident supplier. A foreign digital supplier must register for GST once its taxable revenue from Maldivian customers exceeds the registration threshold.

GST Registration and Other Compliance Requirements

The GST registration threshold in the Maldives is MVR 1 million (approximately USD 64,700). Businesses making taxable sales must register if they have exceeded this threshold in the last 12 months or if they expect to exceed it in the next 12 months. After registration, GST-registered businesses must charge, collect, and remit 8% GST in accordance with the Maldives' general GST rules.

Businesses with average monthly taxable supplies of less than MVR 1 million are generally required to file GST returns every three months. Businesses with monthly taxable supplies of MVR 1 million or more must file returns monthly. Notably, GST-registered businesses must submit GST returns for all taxable periods, even when no sales were made. If there are any errors in the GST return, businesses have 12 months from the due date for filing to amend it.

Additionally, GST-registered businesses must issue tax invoices when customers request and maintain sufficient accounting and transaction records. Online businesses registered for GST must also display their Taxpayer Identification Number (TIN) and the GST registration logo on their online platform, as required by the GST Regulations.

Businesses should maintain comprehensive documentation supporting customer location, invoices, contracts, payment records, and transaction histories. These records are essential for demonstrating the correct GST treatment during a tax audit.

Key Takeaways

The Maldives applies GST to taxable goods and services supplied in the country under a broad legislative framework rather than through a dedicated digital services tax. Non-resident providers of digital services should carefully assess whether their supplies fall within the scope of the GST Act and whether the registration threshold has been exceeded.

Once registered, businesses must comply with ongoing obligations, including charging the correct GST rate, maintaining appropriate records, filing GST returns on time, and remitting tax to the Maldives Inland Revenue Authority (MIRA). Given the increasing focus by tax authorities worldwide on cross-border digital taxation, proactive compliance can significantly reduce tax risks and administrative burdens for international digital service providers.