Maldives will raise taxes in tourism. Following this, hotels will also become more expensive

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Association of Tour Operators 24 November 2022 11:46

The Maldivian authorities have decided to raise tax rates in the tourism sector. We asked tour operators how this measure will affect the cost of accommodation in local hotels.

THE TAX RATE IN TOURISM WILL INCREASE BY 4%

Against the background of the growth of the incoming tourist flow (at the beginning of November – more than 1.3 million tourists, which is more than in the whole of 2021) The Parliament of the Republic of Maldives supported the Government's proposal to increase the tax rate on goods and services for tourism (TGST) from 12% to 16%, as well as the general goods and services tax (GST) from 6% to 8%. 

On Tuesday, November 22, the head of the country Ibrahim Mohamed Solih has ratified these amendments to the tax legislation, which will come into force on January 1, 2023. In accordance with the tax rate of 16%, Maldivian resorts, hotels, guest houses, host and transport companies will have to revise their pricing policy.

The Association of Maldivian Travel Agencies and Tour Operators (MATATO) called the decision of the authorities "hasty" and "sudden". According to the association, the tourism industry accounts for 74% of the total income of the Maldives, and if taxes in tourism are increased at the beginning of next year, the sector will suffer greatly.  "The tax will be higher than that of the competing countries and there is a possibility of losing some markets," MATATO warns.

WHAT WILL CHANGE IN THE MALDIVES FOR RUSSIAN TOURISTS

However, Russian tour operators, who have already received information about tax increases from Maldivian partners, are not inclined to dramatize the situation. Firstly, according to experts of the tour operator companies PAC Group and PAX, the contract prices will remain the same. However, hotels in the Maldives will still reconsider seasonal special offers: discounts on SPO will become less.

Secondly, as representatives of the Russian Express tour operator reported, according to previously confirmed applications, hotels promised not to raise prices in connection with the announced tax increase.

Experts of ANEX Tour and ICS Travel Group note that the likely rise in the cost of living in the Maldives is unlikely to be very painful for tourists, since this direction belongs to the high-budget.

"A 4% price change is unlikely to have any effect on demand, especially in the season," the Russian Express summarizes.


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