Businesses in the tourism industry will suffer up to USD 50 million in losses in the first quarter of 2023 due to the government's decision to increase the Tourism Goods and Services Tax (TGST) from 12 percent to 16 percent, the Maldives Association of Travel Agents & Tour Operators (MATATO) has stated.
In a statement released last Thursday, MATATO claimed that the tax hike will result in cancellations of bookings in the first three months of 2023, which will affect the operations of various tourism related services. They said that the service charge paid to employees may decrease by up to MVR 2,000 due to the decrease in sales.
MATATO further said they were concerned about the steps initiated by government to manage the country's economy.
"As tourism accounts for 74 percent of the country's gross national income, this step will affect small and medium enterprises the most," MATATO said in their statement.
MATATO called the government to reverse the tax increase. They added that foreign tour operators were also lobbying with the Maldives government to reconsider the tax hike.
The association went on to express concern about the government making decisions that affect the tourism industry without consulting those involved in the sector.