The state is entering into formal discussions to increase the Tourism Goods and Services Tax (TGST) and Goods and Services Tax (GST) rates in light of the global economic crisis.

The Ministry of Finance had announced that the state was holding several discussions with stakeholders to assess and solicit opinions and comments on the planned decision. According to the ministry, the discussions will contribute to the medium-term budget strategy.

Although the ministry disclosed discussions of the planned rate hike for TGST and GGST, the ministry did not specify the nature of the rate hikes or the date of implementation.

The ministry announced that all comments and opinions from stakeholders will be taken into account before moving forward with a possible decision.

The president of the Association of Travel Agencies and Tour Operators of the Maldives (MATATO), Abdulla Giyas, who took part in one of these discussions, said that the ministry proposed to increase both the TGST and the GST from January 2023.

The proposed increase includes an increase in the TGST from 12% to 16% and the GST from 6% to 8%.

Giyas said it is very important to give the tourism sector at least a year to prepare for such a change. He also highlighted the impact of the decision on guesthouses and safari boats.

Giyas said the association was trying to investigate and compile information on potential damages in light of hikes in tax rates on the tourism sector.

The Goods and Services Tax (GST) was first implemented in 2011 through the Maldives Tax Act.

Initially, the state levied TGST at a rate of 3.5%, which increased to 6% in 2012, after which the tax rate was further increased to a rate of 12% in 2014.

On the other hand, the GST started at 3%, which was increased to 6% and remained unchanged.