04 November 2014

The rate of goods and services tax (GST) on tourism services in the Maldives increased to 12 percent from November 1, 2014.

The change was introduced through the First Amendment to the GST Act (Law Number 6/2014). As a result of the change, persons who are required to file GST returns quarterly must comply with special reporting requirements.

In addition, in a last minute amendment published on October 27, 2014, authorities in the Maldives intend to further amend the GST Act to provide that the rate only applies to goods and services supplied exclusively to tourists. Goods and services subject to the change listed as tourism services in the law include supplies by shops, diving schools, spas, water sports facilities, and other such facilities in tourist resorts, tourist hotels, guest houses, picnic islands, tourist vessels, and yacht marinas authorized by the Tourism Ministry.

Alongside the rate increase, the Maldives has also revoked the Tourism Tax a USD8 per night charge on accommodation also from November 1, through the Fifth Amendment to the Maldives Tourism Act (Law Number 5/2014) of February 6, 2014.

The last minute amendment also adds to the list of tourism services supplies of goods and services to tourists by domestic air transportation service providers. It clarifies also that the term "tourists" refers to persons entering the Maldives under a tourist visa issued under the Maldives Immigration Act.

The increase is part of a package of measures intended to generate higher revenues for the islands. The rate on tourism services was 3.5 percent from December 31, 2011, when the GST regime was first introduced; 6 percent from January 1, 2012; and 8 percent from January 1, 2013. Other measures to broaden the GST base have included the introduction of GST on telecom services since May 1, 2014. From this date, GST was also imposed, also at a rate of six percent, to sales of immovable property. The leasing of immovable property remains exempt.

Originally posted here:

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