The New Year has potentially ushered in a new era for the Maldives’ lucrative holiday market as a Tourism Goods and Services Tax today comes into effect placing an additional charge of 3.5 per cent on a host of services supplied by the country’s travel industry.
The new tax is set to be levied on a wide of services; from room rates at resorts, guest houses and liveaboards, to tourist vessel hire and the cost of food and drink, diving schools and domestic transportation.
Speaking this week to the Agence France-Presse (AFP) service, acting Finance Minister Mahmood Razee claimed that the implementation of the new tax represented a government strategy aiming to roll out more direct national funding from Maldivian industries, where operators like resort owners have not previously been required to pay profit or income tax.
“It will gradually be extended to other [business] sectors… to reduce relying on indirect taxes, especially import duties that hurt the poor,” Razee told the AFP.
Mohamed Maleeh Jamal, Secretary General for the Maldives Association of Travel Agents and Tour operators (MATATO), said that as an organisation, it was not against a service tax within the travel market, yet he claimed that concerns existed how the funds would be implemented.
“We as MATATO have concern over the negative impact there may be from the tax on local travel agents in the Maldives, which unlike other travel markets, has no law protecting [domestic] operators,” he told Minivan News. “This can make it hard to be competitive when foreign operators are also working directly with resorts and the industry to obtain strong value.”
Pointing to key travel markets like the UK that have themselves last year instigated amended departure taxes such as an Air Passenger Duty (APD), Jamal said he believed there was international industry concern over the “Maldives becoming a more expensive destination”. He claimd that the taxation developments could hamper the country’s competitiveness against other holiday hotspots.
However, the MATATO Secretary General said that the association did not have issues with the actual figure of 3.5 per cent being added to services in itself and remained positive that MPs would still be able to help try and alleviate some industry concerns over the new tax rates.
“We are hoping we can discuss measures with parliament that will help protect local travel agents,” he said.
With the new rates in place as of today, Jamal said that the industry had already begun working with tax authorities to ensure its members and the wider travel industry understood how to deal with the new system.
“Some of our [travel] agencies have not quite been clear on how the tax works,” he said. “It takes time to become familiarised with such a new system.”
In looking back, 2010 had be seen as providing a positive turnaround in visitor figures.
Official statistics from the Ministry of Tourism, Arts and Culture released in November reported year-on-year visitor growth of 21.8 for the first ten months of the year.
Between January to October 2010, the official ministry figures showed that 63.3 percent of visitors to the Maldives came from European markets. Asia Pacific territories contributed 32.3 percent of overall travel demand to the country during the same period.
Publication of the figures followed a period of turbulence for the tourism industry towards the end of the year generated by media coverage of a video recording of a ‘false wedding’ conducted at the Vilu Reef Resort and Spa. Footage leaked onto video sharing sites like Youtube depicted some staff members mocking a Swiss couple in the local dialect of Dhivehi during a vow renewal ceremony being leaked online. The incident garnered both local and international coverage.
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Maldives tourist agency,,,be carefull you don't price yourself out of the market,a few super-rich will not compensate for the average holiday maker..People can now go to Sri Lanka all-inclusive for under 1/2 what you pay in the Maldives..Holiday hot-spots come and go,just watch you don't go!!
"He claimd that the taxation developments could hamper the country’s competitiveness against other holiday hotspots."
Either 99% of the country continue to live in the Middle Ages, or the vast riches extracted by the tourism industry need to flow into the local economy. The only way that can happen is through direct taxation.
The current tax level is ridiculously low compared to "other hotspots".
It is alright to charge taxes if there is quality of the service whether it is food and beverage or any other. Already many local restaurants have two different menus - a local one and one for the tourists. Tourists are like wet sponges - squeeze them dry. Squeeze them until they don't want to come to Maldives anymore. Now I can see where the idea for the new slogan comes.
Can someone in Minivan do a piece on the alleged denial of service attacks on the Dhiraagu server, and the possible links to Dhiraagu and Wataniya setting up proxy servers to prevent VoIP services in Maldives?
Thanks! WP
Dhiraagu is an advertiser of minivan. And it's unlikely that minivan will criticize that company. It's not as minivan as you think. It has to be either pro government (from Paul) or something appearing liberal. Can it write about the banned websites? Stopped parties? This is democracy.
my foreign friends keep talking about Maldives being too expensive now because of the tax and anyway the revenue from tax will go to politicians and not the general public.
I do not agree to their first point BUT i agree to their second point.
First point being Maldives is overpriced because of 3.5% GST. i think resorts had a good run for a very long long time making millions without having to pay any tax except the stupid $8 bed tax. now they actually have to share their fat profits with the real owners of the islands (Maldivians). If they think 3.5% will make the prices too high, perhaps its time to cut down the mark-up the resorts put on their cost prices.
NOw its our (all citizens) responsibility to make sure the money is well spent on development projects, education, health care and recreation and environment protection + general scientific enquiry:)
Maleeh Jamal doesnt know anything about tax. He is just another pawn under name of secretary general of MATATO. How can he predict impact of GST while he does not have proper exposure to the industry. All he got was few months at MTPB which is not really a marketing department but a facilitator to the industry. So we suggest him to read, read and read.
The industry is toying with us by making us believe that finally the benefits of this money machine will be reaped by its owners- dhivehin.
It'll be a 'pinky day in hell before the wealth of this country is appropriated to its people. We will settle for nothing short of 40% of all profits done by a select few families at the expense of the vast majority.
The day is not far off. The emancipation of its people from the clutches of these oligarchs and their hold on our inheritance birth right(The Maldives) is far off.
For now though evil prevails.
Great work by MATATO. They are doing a wonderful job. What Maleeh is saying perfectly right.
Geri you might not know him well.
Maleeh is the only Maldivian who holds a Masters in the tourism field from United States of America. He is few of the people who has years work at Maldives Tourism Board and tourism Ministry.
I have been carefully following the stand of MATATO on tax. They are raising very valid concerns. Their role is very important for the survival of travel agents. we need more brains like him to make travel industry of Maldives Maldivian