Maldives Association of Travel Agents and Tour Operators (MATATO) has expressed concern over amendments to the Tourism Goods and Services Tax (TGST) Act affecting online booking platforms, foreign tour operators and overseas travel agents.
In a statement yesterday, the association said it supports a fair and equitable tax system but believes the reform, in its current form, does not adequately address the concerns of domestic travel agents and tour operators.
MATATO said the amendment provides no meaningful benefits or protection for Maldivian businesses.
The association’s main concern is that the Maldives Inland Revenue Authority (MIRA) did not adequately consult MATATO or local travel agents before introducing the changes.
Industry consultation should be an integral part of the process, MATATO said, particularly as the amendments will fundamentally affect the relationship between Maldivian tourism businesses and thousands of foreign tour operators, wholesalers, retailers and travel agencies.
MATATO said the tourism distribution system is complex, with Maldivian agents working with a wide network of foreign tour operators, wholesalers, sub-agents, bed banks and retailers across different markets. Many of these companies sell tourism products in multiple countries and have limited business in the Maldives, it said.
Parliament passed amendments to the tax law on Sunday to impose TGST on booking platforms, tour operators and travel agents.
Under the amendments, foreign tourism service providers without a permanent office or facility in the Maldives will be required to register with MIRA.
MATATO said enforcing the requirement would be extremely difficult and that Maldivian travel agents could not be made responsible for monitoring, familiarizing themselves with or ensuring that foreign operators pay their taxes.
The association also warned that additional taxes and mandatory registration of foreign operators would not automatically benefit domestic travel agents.
Foreign operators are an important source of business for local travel agents, MATATO said. If selling Maldives holidays becomes more administratively burdensome or commercially unviable, foreign partners could reduce their Maldives inventory and shift business to larger global platforms.
MATATO said foreign operators could instead enter direct agreements with hotel groups or move their business to competing destinations.
The association also criticised the speed at which the amendment was introduced and passed, saying travel agents and affected businesses were not given sufficient time to prepare.
The amendment is scheduled to take effect on 1 October.
MATATO said most of the upcoming tourism season had already been contracted, priced and sold. Resort agreements have been signed, brochures printed, packages distributed and bookings confirmed, it said.
As a result, applying significant tax changes to transactions that have already been completed could ultimately increase costs for tourists, the association warned.
