Equal Treatment Requires Fair and Proportionate Rules

Over the past few days, I have had several discussions with people in the Maldivian tourism industry about the proposed taxation of foreign tour operators and travel agents.

These conversations have highlighted an important difference in how the new tax is being understood.

I was repeatedly told that foreign operators should simply accept the new tax because Maldivian operators have been paying TGST on their commissions for years. I was even told that foreign operators had been “escaping it for too long”.

I would therefore like to clarify one important point.

Foreign tour operators have not been “escaping” Maldivian GST. There was no Maldivian GST liability on our foreign margins under the existing legislation. A new tax obligation is now being created by amending the law. Not being subject to a tax is not the same as avoiding or escaping a tax.

But there is a broader issue.

When I explained that a small independent foreign tour operator cannot simply be compared with large international distribution businesses, multinational OTAs, bed banks or major tour operators, the response was essentially that every tour operator should be treated equally.

I fully support the principle of fair treatment.

However, equal treatment does not mean pretending that fundamentally different business models are identical.

A large international tourism business handling substantial volumes of Maldivian tourism sales is not economically comparable to a small independent foreign tour operator purchasing Maldivian accommodation through a licensed Maldivian DMC.

An OTA is not the same as a boutique tour operator.

A multinational bed bank is not the same as a small travel agency.

A company handling substantial volumes of Maldivian tourism business internationally is not the same as a small independent foreign company providing personalised services to its clients in its home country.

These businesses have different structures, different margins, different operating costs and completely different levels of economic power.

Recognising those differences is not asking for preferential treatment. It is asking for proportional and sensible regulation.

There is another important distinction that continues to be overlooked.

A foreign tour operator’s margin is not simply a commission generated by a Maldivian hotel room.

The resort stay is consumed in the Maldives, and TGST is already accounted for on that Maldivian supply.

But the foreign tour operator's margin also pays for services performed outside the Maldives: marketing, travel consultation, destination advice, preparation of tailor-made offers and itineraries, booking administration, client communication, payment processing, contractual responsibility, consumer protection, accounting, technology, customer support and after-sales service.

Only after all these costs have been paid does the company make a profit.

Therefore, saying that if a foreign tour operator makes USD 100, the Maldives simply takes USD 17 and the operator still has USD 83 left does not reflect the economic reality of a small travel business.

The USD 100 is not profit.

And this brings us back to one of the fundamental questions raised by this petition:

What exactly is the service being taxed, and where is that particular service actually being provided and consumed?

A hotel or resort night is clearly consumed in the Maldives.

But travel consultation provided in Europe, marketing carried out in Europe, preparation of an itinerary in Europe, communication with a European client, contractual responsibility assumed by a European tour operator and consumer protection provided under European law are not automatically services consumed in the Maldives simply because one component of the holiday takes place there.

This distinction deserves serious consideration before such a broad tax obligation is imposed on thousands of foreign travel businesses.

During these discussions, I was also told that if foreign operators are unhappy with the new rules, they can simply stop selling the Maldives and that the industry will work with those who are willing to accept them.

Of course, the Maldives has the sovereign right to determine its own tax policy.

But foreign tour operators and travel agents have exactly the same right to question that policy, to explain its consequences, to ask for reasonable thresholds, exemptions and clear B2B rules, and ultimately to decide whether continuing to actively promote and sell the destination remains commercially viable.

Raising these concerns does not damage the Maldives.

Open discussion about the possible consequences of new legislation is a normal and necessary part of any major policy change, particularly when that legislation directly affects thousands of international businesses that have promoted and sold the destination for many years.

This petition is not asking the Maldives to abandon its right to taxation.

It is asking for clarity, proportionality and recognition of fundamentally different business models, including appropriate consideration for small independent foreign tour operators and travel agents working through licensed Maldivian DMCs.

Because international tourism is a partnership.

And good partnerships require both sides to listen to each other.