INTERNATIONAL TRAVEL TRADE APPEAL FOR THE FAIR IMPLEMENTATION OF THE MALDIVES DESTINATION PRINCIPLE

To the Government of the Republic of Maldives, the Maldives Inland Revenue Authority (MIRA), the Ministry of Finance and Planning and the People’s Majlis

The Maldives is one of the world's most successful tourism destinations. That success has been built not only by resorts and tourism businesses within the Maldives, but also by thousands of tour operators, travel agents and tourism professionals around the world who have promoted and sold the destination for decades.

We, the undersigned members and partners of the international travel industry, respectfully call upon the Government of the Maldives to ensure that the implementation of the Destination Principle under the Goods and Services Tax framework does not result in Maldivian Tourism Goods and Services Tax (TGST) being imposed on commissions, margins and service income earned by foreign tour operators and travel agents through business activities performed outside the Maldives.

WE SUPPORT FAIR TAXATION

We fully recognise and respect the sovereign right of the Maldives to levy TGST on tourism services supplied and consumed within the Maldives.

Our concern is not the taxation of Maldivian tourism services.

Our concern is the taxation of the foreign travel trade's own commission, margin or service income generated through business activities performed outside the Maldives and subject to taxation under the laws of the business's home jurisdiction.

A foreign tour operator or travel agent does much more than simply resell a hotel room.

We invest in destination marketing, websites, advertising, customer acquisition, consultations, itinerary design, sales, payment processing, administration, consumer protection, financial guarantees, customer support and after-sales service.

We employ people, operate businesses, assume commercial risks and fulfil tax obligations in our respective countries.

The commission or margin generated by this work is remuneration for services performed by the foreign travel business.

The fact that the client's eventual holiday takes place in the Maldives should not automatically transform the value created by those overseas business activities into a tourism service supplied in the Maldives.

PROTECT THE B2B TOURISM DISTRIBUTION NETWORK

We are particularly concerned about traditional B2B distribution involving licensed Maldivian Destination Management Companies (DMCs), travel agencies and other registered local tourism businesses.

Thousands of foreign tour operators and travel agents work with Maldivian DMCs because these local companies provide contracting, reservations, transfers, local assistance, destination expertise and valuable commercial support.

Maldivian tourism services within this supply chain are already contracted and subject to taxation within the Maldives.

Under the proposed framework, the foreign distributor's margin or commission may then become subject to an additional 17% TGST liability under the special regime applicable to foreign suppliers.

This means that the proposed Destination Principle does not merely affect large global online booking platforms. It may directly affect traditional international B2B distribution and the foreign businesses that have sold the Maldives through local partners for many years.

Requiring foreign B2B distributors to register separately for Maldivian TGST in relation to their overseas distribution margin would create additional administrative and financial burdens across the international tourism supply chain.

It could also unintentionally harm Maldivian DMCs and travel agencies.

If working with Maldivian tourism partners creates additional foreign tax registration, reporting and compliance obligations, overseas businesses may reconsider their distribution structures or shift business towards other destinations or sales channels.

A regulation intended to increase revenue for the Maldives should not inadvertently weaken Maldivian tourism businesses or their international distribution networks.

SMALL TRAVEL BUSINESSES ARE NOT MULTINATIONAL BOOKING PLATFORMS

The international travel industry is extraordinarily diverse.

A small specialist travel agency or boutique tour operator cannot reasonably be treated in the same way as a multinational online booking platform processing billions of dollars in transactions.

Many smaller travel companies sell the Maldives because of specialist knowledge, long-term relationships and genuine commitment to the destination.

For these businesses, the administrative cost of tax registration, accounting, reporting and compliance in another jurisdiction can be disproportionate to the amount of Maldives business they generate.

A proportionate registration threshold is therefore essential.

Without one, even small overseas businesses with limited Maldives turnover could face foreign registration and compliance obligations that are commercially disproportionate to their activities.

If compliance becomes too complicated or commercially unattractive, some businesses may simply reduce or stop selling the destination.

Travellers have a choice.

And so do the travel professionals who advise them where to go.

WHAT WE ARE ASKING FOR

We respectfully request that the implementation of the Maldives Destination Principle include the following protections:

1. Protection of foreign travel trade commissions and margins

Commission, markup, margin or service income earned by a foreign tour operator or travel agent through business activities performed outside the Maldives should not be subject to Maldivian TGST merely because the underlying journey includes tourism services consumed in the Maldives.

2. A clear B2B exemption or carve-out

Foreign tour operators and travel agents purchasing Maldivian tourism services through licensed and appropriately tax-registered Maldivian DMCs, travel agencies or other local tourism businesses should not be required to register separately for TGST in respect of their foreign distribution margin.

This would preserve the existing B2B tourism distribution network while ensuring that Maldivian tourism services remain properly taxed within the Maldives.

3. A reasonable and proportionate registration threshold

Small and medium-sized foreign travel businesses should not face the same registration and compliance requirements as major multinational booking platforms and large international tourism corporations.

Any registration threshold should reflect the scale of the foreign business's Maldives-related activities and ensure that compliance obligations remain proportionate.

4. No compliance liability for Maldivian DMCs and travel agencies

Maldivian DMCs and travel agencies should not be responsible for policing, guaranteeing or enforcing the tax registration and compliance of thousands of independent overseas business partners.

Nor should local businesses be placed in a position where they must disclose commercially sensitive information beyond what is reasonably necessary for legitimate tax administration.

5. Protection for existing contracts and bookings

Commercial agreements, prices and bookings concluded before implementation should be protected.

Tourism contracts and selling prices are frequently agreed many months in advance. Businesses should therefore be given a reasonable transitional period to adapt systems, contracts, pricing and accounting procedures before any new obligations become effective.

6. Meaningful consultation with the Maldivian and international tourism industry

Before full implementation, the Government and MIRA should consult Maldivian tourism businesses, DMCs, travel associations and representatives of the international travel trade.

The objective should be a framework that achieves legitimate fiscal objectives without unnecessarily damaging the tourism distribution system that brings visitors and foreign currency to the Maldives.

INTERNATIONAL TRAVEL PARTNERS ARE PART OF THE MALDIVES SUCCESS STORY

For decades, travel agents and tour operators around the world have invested their own money, knowledge, time and reputation in selling the Maldives.

We introduce travellers to the destination.

We explain the differences between its islands and resorts.

We create demand.

We bring first-time visitors.

We bring them back.

We support new resorts and established properties.

We promote the Maldives when demand is strong and when it is weak.

And we stand beside our clients when circumstances become difficult.

International tourism distribution should therefore be regarded as a partner in the continued success of the Maldives, not simply as another source of taxation.

This appeal is not an attempt to avoid legitimate Maldivian taxes.

We support the Maldives' right to tax tourism services supplied and consumed within its jurisdiction.

We do not support the taxation of foreign travel trade commissions and margins generated through business activities performed outside the Maldives and subject to taxation under the laws of the business's home jurisdiction.

We ask the Government of the Maldives, MIRA and People’s Majlis to implement the Destination Principle in a way that protects fair taxation, international B2B distribution, Maldivian DMCs and travel agencies, and the thousands of overseas travel businesses that continue to bring visitors to the country.

The Maldives has built its tourism industry through international partnership.

Let us protect that partnership.

THE WORLD IS BIG. LET US KEEP CHOOSING THE MALDIVES!

Signed by international tour operators, travel agents, tourism companies, tourism professionals and supporters of a fair, proportionate and sustainable Maldives tourism industry.