Committee OK’s abolishing tax on foreign tour agents; raising GST registration threshold to MVR 1.5M

Parliament’s Economic Affairs Committee, on Sunday night, approved amendments to abolish the tax imposed on foreign tour operators and raise the mandatory GST registration threshold to MVR 1.5 million.

During the presentation of the 2025 State Budget, Finance Minister Hassan Zareer announced President Dr. Mohamed Muizzu's decision to increase the GST registration threshold, effective from January 1, 2025. Following the announcement, an amendment to the GST Act, in committee deliberations, was submitted by Feydhoo North MP Ismail Nizar.

Under the proposed amendment, the current requirement for businesses to register for GST when their annual taxable income exceeds MVR 1 million will be raised to MVR 1.5 million. The amendment stipulates that the existing MVR 1 million threshold will remain in effect until the end of this year.

The amendment also allows businesses already registered for GST to apply for deregistration if the total value of goods and services they supplied over the preceding 12 months was less than MVR 750,000, or if their estimated revenue for the next 12 months is expected to fall below that amount.

Committee members unanimously approved the changes after they were seconded by Faresmaathoda MP Ashraf Rasheed. Subsequently, the full bill, incorporating the committee's amendments, was unanimously passed following a proposal by North  Henveiru MP Ahmed Aifan, seconded by Ismail Nizar.

The previous amendment to the GST Act, which introduced taxes on services provided by foreign travel agents and tour operators, was ratified by President Muizzu on August 31. The changes came into effect on the first of last month, despite significant concerns raised by tour operators and international associations.

Major tour operators in key source markets, including Russia and India, had expressed concerns over the tax. Prominent European associations, including France's Les Entreprises du Voyage (EdV) and Syndicat des Entreprises du Tour Operating, as well as Italy's ASTOI Confindustria Viaggi, had also written to the Maldives Inland Revenue Authority (MIRA), highlighting the financial and administrative burdens imposed by the regulation.

In their communications, the organisations urged the government to defer implementation until next year. Following extensive consultations and consideration of concerns raised by tourism industry leaders and travel agents, the President announced the decision to reverse the policy.