The Maldives appears to be backing down from a controversial 17% tax on foreign travel companies after an industry backlash threatened to hit the destination just as its crucial winter season gets underway.
Local media reported that the government is reportedly postponing the Tourism Goods and Services Tax (TGST) on overseas travel agencies, tour operators and offshore booking platforms until April 1, 2027.
The archipelago plans to apply its existing GST to tourism services sold by foreign companies without a permanent establishment in the country.
The reported climbdown follows intense lobbying from the European travel industrywhich warned that imposing the tax from October 1 could have pushed up the cost of Maldives vacations at exactly the wrong time.
The Association of British Travel Agents ABTAFrance SETO or Germany’s travel association DRV had appealed directly to Maldivian President Mohamed Muizzuarguing that the measure was introduced without adequate consultation with the international travel trade.
Maldivian media reported that Tourism and Civil Aviation Minister Mohamed Ameen announced the delay during a national tourism event attended by senior officials and industry representatives.
But there is a catch: Male has yet to officially confirm the postponement.
That leaves overseas travel businesses in limbo, particularly because the legislation formally came into force on October 1.
“We understand the Maldives tourism minister has said that implementation of the new tax on overseas travel businesses will be postponed,” said Susan Deer, ABTA’s director of industry relations.
ABTA is now seeking formal confirmation and clarification on what happens next.
European tour operators associations’ concerns go beyond the size of the tax. It has questioned why international travel companies were given so little warning and sought clarification over exactly how the measure would affect travel agents.
The Maldives is already selling itself as a premium escape, where accommodation, flights and transfers can quickly add up to thousands of dollars. Adding another 17% cost to the travel trade would force overseas sellers to raise pricessqueeze margins or reconsider how aggressively they market the destination.
That risk is particularly serious during the winter season, when demand for Indian Ocean sun is at its strongest.
The Maldives welcomed a record 2.25 million visitors in 2025, according to Ameen, and reached one million arrivals earlier than expected this year.
But visitor numbers also make the tax gamble harder to justify if higher costs begin to undermine demand. Especially as the government is preparing for Visit Maldives Year 2027 and promoting how welcoming is the archipelago to the world. A rather contradictory message…
Source: travelmole.com
