DRV and ECTAA call for a postponement of the introduction of the margin tax in the Maldives
From November 1st, foreign tour operators, OTA platforms and travel agencies are entering the Maldives' tourism GST system, about which we were writing. The problem for the industry is not just the 17% tax, but the deadline of just one month to adapt arrangements already contracted and sold.
Maldives On 31 August they ratified amendments to the Goods and Services Tax Act extending the tax liability to foreign companies that sell destination-related tourist products. The new regime covers accommodation, food and drink, transport and other tourist activities, as well as related booking and intermediary services. For this category, the Tourism Goods and Services Tax (TGST) of 17% will apply from 1 October.
Tax is calculated on the margin, not on the entire booking
For foreign companies without a permanent establishment in the Maldives, the tax base is generally calculated from the difference between the amount charged to the customer and the amount paid to the registered local supplier. In other words, this primarily involves the taxation of the margin or commission of the foreign distributor, rather than the total value of the hotel or package tour.
KPMG warned as early as the legislative procedure that for affected tour operators and OTA platforms there is no usual minimum turnover threshold for registration. The final law also mandates registration for tourism service providers in this category, while they are not allowed to deduct input tax.
DRV and ECTAA: The deadline is impractical for the already sold winter season
The German Travel Association DRV is therefore asking the Maldivian government for a postponement and a transitional period. DRV President Albin Loidl warns that tour operators define prices and contracts months in advance, while numerous arrangements for the winter season have already been sold. Additional costs for package holidays cannot often simply be passed on to the traveller.
DRV, together with ECTAA, is also warning about unresolved operational issues: registration, the calculation of the tax margin in complex distribution chains, and the treatment of cancellations, refunds, and subsequent corrections.
The problem is not limited to the German market
The German reaction is particularly loud because it is one of the Maldives' largest European markets. In 2025, the destination recorded 167,822 German guests, 6.71 per cent more than the previous year.
However, the new rules are equally relevant to Tour operator from the region who contract and sell the Maldives in their own name. For them, how the contractual chain is set up and where the margin is generated will be crucial. Precisely for this reason, the short period between the publication of the law and its application is a greater operational problem than the tax rate itself.
