Summary
Tourism GST is charged at 17 percent on tourism sector sales and paid in US dollars, against a general GST rate of 8 percent, under the GST Act in force since 2011. In August 2026 the Majlis extended the regime to foreign tour operators, overseas agents and offshore booking platforms, effective 1 October 2026, a measure this publication argues cannot raise the revenue claimed.
Why it matters
TGST is the largest single levy on the Tourism Industry and part of the roughly 45 percent of every resort dollar that goes to the state in hard currency, alongside green tax, land rent and the conversion mandate. Because it is collected in dollars, TGST is also central to the Dollar Shortage debate about what the state does with tourism’s foreign exchange.
Current situation
The GST amendment bill was submitted on 15 August 2026 and passed on 23 August, 54 votes to 2, requiring overseas sellers of Maldives travel to register with MIRA and charge 17 percent TGST from 1 October, six weeks after passage. The government projects MVR 1.6085bn (about USD 104m) in new annual revenue, with no published workings. The critique: GST taxes final consumption, so with input credits the new tax reaches only 17 percent of the offshore margin, not of the sale. Reaching USD 104m implies over USD 600m of taxable offshore margin, and denying the credit would tax the same room twice. OTA commission bookings already bear full retail-price TGST plus a 10 percent non-resident withholding tax on commissions.
Key data
| Indicator | Value | As of | Trend |
|---|---|---|---|
| TGST rate | 17% (paid in USD) | Aug 2026 | Stable |
| General GST rate | 8% | Aug 2026 | Stable |
| Offshore agent bill | Passed 54 to 2 | 23 Aug 2026 | Effective 1 Oct 2026 |
| Projected new revenue | MVR 1.6085bn/yr | Bill estimate, Aug 2026 | Contested, no workings |
| Implied newly taxable value | about MVR 9.46bn/yr | Derived from estimate | Unsubstantiated |
| State take on resort earnings | about 45% of every dollar | 2026 | High |
Drivers
- Fiscal pressure: the Government Fiscal Position shows a deficit and subsidies past their full-year budget.
- The “tourism leakage” claim that only about USD 3.2bn of USD 5.6bn in receipts enters the banking system.
- A six-week implementation runway with no treaty network or extraterritorial enforcement capacity.
Impact
Winter 2026/27 rate sheets were signed months before the bill existed; if it catches supplies from 1 October, the tax lands on contracts already sold. Likely operator responses include repricing the destination, restructuring as agents, unbundling packages or reducing shelf space, each of which erodes the existing TGST base and Tourist Arrivals. The measure raises Tax Risk for the whole distribution chain, including local DMCs inside the wholesale channel.