Majlis committee recommends changes to tourism taxes and resort lease extensions

A People’s Majlis committee has recommended revising the Maldives Tourism Act and tax legislation in order to realise President Abdulla Yameen’s revenue raising measures as proposed in the 2014 state budget.

The committee has recommended collecting resort lease extension fees upfront over a two-year period, reintroducing the discontinued US$8 bed tax until November 30, and hiking Tourism Goods and Services Tax [T-GST] from 8 to 12 percent from November 1.

Further recommendations include increasing the airport departure charge from US$18 to US$25, and levying a 6 percent tax on telecommunications.

The revisions will be debated at an extraordinary parliamentary sitting scheduled for February 3.

Opposition Maldivian Democratic Party (MDP) MP Abdul Ghafoor Moosa has said the party will not support the revisions, claiming they amounted to an estimated 40 percent tax on the tourism industry.

“This will be a huge burden on the tourism industry. Instead of over taxing our most productive sector, the government needs to raise revenue through other sources,” he said.

MVR3.4 billion needed

Meanwhile, Finance Minister Abdulla Jihad said the revisions are not sufficient to raise the expected MVR 3.4 billion (US$224 million). The amount accounts for 18 percent of the MVR17.95 billion budget passed for this year.

The government had initially proposed collecting resort lease extension fees all at once within this year, collecting bed tax for 12 months, and raising T-GST in July.

The parliament committee revised the government’s proposals after a meeting with the Maldives Association of Tourism Industries (MATI) in which the organisation opposed continuation of the bed tax alongside an increase in T-GST.

According to the Maldives Tourism Act, bed tax must be abolished within three years of the introduction of T-GST. Bed tax was discontinued on December 31, 2012.

Committee Chair and Jumhooree Party Leader MP Gasim Ibrahim said if the new revision was passed, the bed tax and T-GST hike would only overlap in the month of November.

“This is because we may not be able to collect bed tax for January,” he said.

MATI Secretary General Ahmed Nazeer has also questioned the practicality of collecting resort lease extensions in a lump sum.

Speaking at the subcommittee on Tuesday, Nazeer said that only 17 out of the more than one hundred resorts had paid lease extension fees upfront when given the opportunity to do so under President Mohamed Nasheed’s administration.

He pointed out that Nasheed’s policy had been invalidated through the courts at the time. Moreover, resort owners had amended their lease agreements to pay lease extension fees in installments during Dr Mohamed Waheed Hassan’s administration, and revising agreements for a third time may present legal challenges, he said.

Meanwhile, MATI board member Solah Shihab has said resort owners might not have the cash at hand to pay lease extension fees upfront.

The government has also recommended revising import duties and leasing an additional 12 islands for resort development to raise money, though these measures have not yet been discussed.


6 thoughts on “Majlis committee recommends changes to tourism taxes and resort lease extensions”

  1. We need increase TGST this year but this can not continue for ever.

    We need to see beyond today and must see though the future.

    Taxes should not also out of hand and business community must know how tax regime is going to be like at least for 5 years period. Since this has direct impact on their business plans, Government should not look at the TGST increase as a tool to match the deficit in the budget.

    Government and Parliament must learn to reduce the expenses to meet with the income and have a balance budget for the country.

  2. Maldives budget for 2015:

    - TGST: 150%
    - Bed tax: 100%
    - Airport departure tax: 75%
    - Import duty: 50% on everything.

    Yeah, as Yameen predicted, there will be a budget surplus in 2016. Well done.

  3. The problem here in the Maldives is that we want to live a lifestyle of the rich Gulf countries. All government offices are high rise air-conditioned buildings, since our officials and civil servants cannot work otherwise. The energy bill alone for these things is enormous. They have to drive expensive cars and there's the environmental impact and energy costs too. Latest fashion accessories are a must too. But we don't earn anything to justify any of this. We keep begging and borrowing to keep up our exorbitant lifestyle. Jameel is begging the Qataris to hand out $$ to fuel this lifestyle. Guess what they'll say to it? They are too polite to say "p*** off" to his face.

  4. Yes, hero. Keep increasing the taxes. See if the whiteskins ever bother visiting again!

  5. kill the goose that lays the golden egg..already we are facing competition from Mauritius & Seychelles...slowly we will make ourselves unaffordable for vacations and one by one all these fancy resorts will vanish...then what...
    How long will we keep living off our rich cousins..
    Something needs to be done to make ourselves self sufficient..
    What about setting up of some industry on one of the islands...long term employment & prosperity..that is what the government should be looking at...

  6. Japan, China and American have given us millions of dollars in free aid. How much money have the rich Gulf countries given us? Jameel is begging them. He'll get some dates for free, maybe? The rest, will be expensive loans, if the Arabs think it's worth it. So much for Islamic brotherhood. The truth is that this country has developed as a result of Japanese, Chinese and other "Kaafir" aid!


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