Maldives GST Rate Hike for Tourism: Key Changes for 2025

The president of the smallest Asian country, the Maldives, signed amendments to three taxation acts: the Airport Taxes and Fees (ATF) Law, the Maldives Tourism Law, and the Goods and Services Tax (GST) Law. All amendments relating to these three laws are published in the government's Official Gazette.

Impact of GST Amendments

The Maldivian GST Law defines rules for two main sectors: tourism goods and services (tourism sector) and general goods and services (general sector). The seventh amendment to the GST Law mainly impacts the tourism sector by increasing the applicable GST rate, meaning that the 8% GST rate will remain the same for the general sector.

The new GST rate for the tourism sector, 17%, will come into effect on July 1, 2025. The 17% GST rate will apply to goods sold and services provided by shops, diving schools, spas, water sports facilities, and other places established to sell goods and services to tourists.

The current 16% GST rate will remain unchanged until June 30, 2025, when the 17% GST rate comes into effect.

The amendments to GST Law also include exemptions to this rule. Therefore, shops and cafes operating exclusively for the employees of places offering tourist goods and services are exempted from this GST rate. Those shops and cafes authorized by the Ministry of Tourism will be subject to an 8% GST rate defined for the general sector.

Conclusion

This is the second increase in the GST rate for the tourism sector since the GST was introduced in 2011. When introduced, the GST rate for the tourism sector was 12%, and in 2023, it was increased to 16%. In 2023, the GST rate for the general sector was also increased from the initial 6% to 8%; thus, it remains to be seen if the Maldivian government will change that rate in the future.

All businesses operating in the tourism sector in Maldives have more than enough time to prepare for the increase in GST rate and adjust their prices, accounting, and bookkeeping systems.

Source: Inland Revenue Authority - The President ratifies new amendments to three taxation acts, Seventh Amendment to the GST Law, Inland Revenue Authority - Overview