The Eighth Amendment to the Goods and Services Tax Act (Law No. 10/2011) has now been ratified and published in the Government Gazette, marking an important step towards introducing the destination principle into the Maldivian GST system.

The changes are particularly significant for the tourism sector. Offshore booking platforms, foreign tour operators and travel agents selling Maldives tourism products could, for the first time, be required to register and account for Tourism GST (GST) in the Maldives.

The amendment follows a principle increasingly adopted in modern consumption tax systems: tax should generally arise where consumption takes place, rather than solely based on where the supplier is established.

Bringing Offshore Tourism Sales into the GST Net

Tourism provides a clear example of the issue the amendment seeks to address.

A Maldives resort may sell accommodation to an overseas tour operator at a wholesale price. The tour operator may then sell the same accommodation or holiday package to the tourist at a higher price.

Under the existing framework, GST is collected on the amount charged by the Maldivian resort. However, the additional value generated by the offshore intermediary may remain outside the Maldivian GST system.

The amendment seeks to bring this offshore component of the tourism value chain within the GST net.

Central to the amendment is a new concept of an “inbound tourism product”, broadly covering accommodation, food, transportation and other tourism-related activities operated in the Maldives.

Where an inbound tourism product is supplied by a person without a permanent place of business in the Maldives, the supply would be treated as a tourism good or service and brought within the GST regime.

This could directly affect:

• foreign tour operators selling Maldives holiday packages;
• overseas travel agents selling Maldives accommodation and tourism products; and
• offshore booking platforms facilitating or selling Maldives tourism products.

Related agency and booking services connected with inbound tourism products are also brought within the framework.

GST on the Offshore Margin

An important feature of the new regime is that GST would not simply be imposed again on the full value of the tourism product.

Instead, the taxable value would broadly be determined using a margin-based approach.

The total consideration received for the inbound tourism product would be reduced by the amount payable to a GST-registered supplier in connection with the product and the GST chargeable on the supply.

For example, if a foreign tour operator purchases a Maldives tourism product from a GST-registered local supplier and subsequently sells it to a tourist at a higher price, the mechanism would effectively seek to tax the additional value retained by the offshore operator.

This is significant because it targets the part of the Maldives tourism value chain that has historically remained outside the domestic GST base while avoiding taxation of the same underlying value twice.

A foreign supplier without a permanent place of business in the Maldives would, however, not be entitled to claim input tax against its output tax liability under this arrangement.

New Place of Supply Rules

The Amendment also introduces new rules for determining when goods and services are regarded as supplied in the Maldives.

For goods, the supply would generally be regarded as taking place in the Maldives where transportation begins in the Maldives or, where transportation is not involved, where the goods are made available in the Maldives.

For services, the general rule is that the supply would be regarded as taking place in the Maldives where it is made from or through a place of business situated in the Maldives.

The rules are extended in certain circumstances where the customer is not registered for GST in the Maldives. This includes services performed in the Maldives, services connected with immovable property situated in the Maldives and, importantly, inbound tourism products and related agency or booking services.

These provisions establish the legislative foundation for destination-based taxation by determining the circumstances in which a supply has sufficient connection with the Maldives to fall within the domestic GST system.

Offshore Suppliers Would Need to Register

The changes also introduce GST registration obligations for foreign suppliers of inbound tourism products.

A person without a permanent place of business in the Maldives supplying an inbound tourism product would be treated as carrying on a taxable activity and would be required to register with the Maldives Inland Revenue Authority (MIRA).

This is one of the more significant aspects of the reform. A business would no longer necessarily require an office, employees or other conventional physical presence in the Maldives before becoming subject to Maldivian GST obligations.

Instead, the connection would arise from the supply of a tourism product consumed in the Maldives.

What Does This Mean for Tourism Businesses?

Although the new registration obligation is primarily directed at offshore businesses, the implications extend to Maldivian resorts, hotels, travel agencies and other tourism operators dealing with foreign intermediaries.

Businesses should review their distribution arrangements and understand whether their foreign counterparties operate as agents or principals, how commissions and margins are structured, and how pricing and tax obligations are addressed in existing agreements.

The new rules could also affect commercial negotiations. Foreign operators becoming subject to GST may seek to reconsider margins, pricing arrangements or contractual terms with Maldivian suppliers.

Effective implementation will therefore require clear guidance from MIRA, particularly on registration, filing and payment procedures for foreign businesses, valuation, foreign currency transactions and the documentation required to support the margin calculation.

A Broader Shift in the GST Framework

The Eighth Amendment extends beyond offshore tourism.

It also introduces broader changes relating to GST registration and deregistration, time of supply, record keeping, the definition of tourism goods and services, chartering of tourist vessels and certain GST exemptions.

Nevertheless, the introduction of destination-based taxation for inbound tourism is likely to be its most consequential change.

In our earlier article on destination-based GST, we highlighted the increasing difficulty of applying a tax system designed around the physical location of businesses to an economy where transactions are increasingly conducted across borders.

The Eighth Amendment represents the first significant legislative response to that issue.

Rather than introducing destination-based taxation across all cross-border transactions at once, the Government appears to be taking a phased approach, starting with tourism, the sector with the greatest economic significance.

What Happens Next?

The provisions relating to inbound tourism products will take effect from 1 October 2026.

The implementation period is therefore potentially short, particularly for foreign businesses that may be required to register for Maldivian GST for the first time.

Affected businesses should start reviewing their existing arrangements, including any potential GST registration requirements, contractual terms, pricing structures and reporting obligations.

More broadly, the amendment marks an important shift in how GST applies to cross-border transactions in the Maldives. The focus is moving from where the supplier is located to where the goods or services are consumed.

For inbound tourism, this means that even if a tour operator, travel agent or booking platform is based overseas, the value it earns from tourism products consumed in the Maldives may still fall within the Maldivian GST system.