MALDIVIAN tourism authorities are planning to increase the goods and services tax (GST) on tourism in the coming weeks, a development that would adversely impact hotels and tour operators, say industry insiders.
A bill was presented in the Maldives parliament last week proposing an increase in tourism GST from eight per cent currently to 15 per cent, effective immediately. The tax was first introduced in 2011 at 3.5 per cent when the government sought to raise funds for developmental projects. Taxes were raised to six per cent in 2012 and eight per cent earlier this year.
Adam Mohamed, CEO of the state-owned Maldives Marketing & Public Relations Corporation, confirmed the discussions would continue. “I think the tax will be increased to about 12-13 per cent,” he predicted.
“If there is such a move, it would definitely affect hotels and pricing,” Badr-Eddine Rakmi, sales manager for four Angsana and Banyan Tree properties in the Maldives, told TTG Asia e-Daily.
Shafraz Fazley, managing director of Viluxur Holidays, handles a strong flow of inbound Chinese tourists and predicts that such a change would affect the market “fairly extensively”.
Price is now a crucial factor in the Maldives, with some hotels even offering a 50 per cent discount on rooms, he said.
“White sands, beach weddings and the unique beach island concept are now being offered by Seychelles, Bali and Mauritius at much cheaper rates. The Maldives is no longer the only girl on the beach,” he commented.
Tour operators said either they or hotels would have to absorb any tax increase as contracts have already been finalised for the coming winter season.
Mohamed Ali, general secretary of the Maldivian Association of Yacht Agents, said tax increments should be spaced out rather than introduced without warning and pointed out that the tax hike would likely hit price-sensitive markets like France and the UK.
