Maldives will lose market with Green Tax, guesthouse body warns

Imposing Green Tax on guesthouses, in addition to their current taxes, will hike guesthouse rates as to render them incapable of competing with the budget rates of regional countries and thus lose their market, warned the Guest House Association of Maldives on Monday.

The association’s grievance comes in the wake of the state-lobbied amendment for the Tourism Act to charge a Green Tax of USD 3 from guesthouses, which had been subsequently approved by the parliament’s Economic Affairs Committee. The tax was proposed to come into effect this October. Green Tax is currently charged from tourists in resorts, hotels and safaris.

In a press release, the association stated that the average rate for guesthouses across the Maldives is USD 50. Noting their current taxes of Goods and Services Tax (GST), Business Profit Tax (BPT) and withholding tax, in addition to water and electricity bills, land rent and employees’ remuneration, the association said that the net profit for guesthouses is relatively low. As such, the association warned of the dangers of the guesthouse industry coming to an abrupt halt, should the government impose another law to extort more taxes from guesthouses’ low profits.

The association further noted that guesthouse owners would be forced to pay the Green Tax from their own pockets for the next year, in light of the bookings and tax-inclusive agreements they had already made with agents for the whole year.

The press release also warned that the losses suffered due to Green Tax will affect all tourism-related areas as the guesthouse industry is interwoven with the livelihoods of residents living in islands dependent on small and medium businesses.

Guest House Association asserted that state revenue from current taxes will hike significantly should the guesthouse industry be allowed to proceed without further volatility, since the additional guesthouses to be opened this season will double their bed capacity. According to the association, the talks of imposing Green Tax on guesthouses has already negatively impacted new projects in the works.

Hence, the association urged the government to scrap Green tax for guesthouses “due to the negative repercussions it may have on the state and public.”