Tourism Employees Association of Maldives (TEAM) countered the condemnation statement released by the Maldives Association of Travel Agents and Tour Operators (MATATO) regarding the amendment ratified to the Goods and Services Act of the Maldives.
MATATO stated that the abrupt change of legislature will become a burden on existing bookings, cancellations, operators and properties and cost the tourism industry which accounts for 74 percent of gross national income, USD 50 million (MVR 771 million) in losses within the first financial quarter of 2023.
The tax bill proposed by the government aimed to raise Goods and Services Tax (GST) and Tourism Goods and Services Tax (TGST) rates from 6 percent and 12 percent to 8 percent and 16 percent, respectively, effective January 2023.
In a statement, TEAM contradicted MATATO’s claims from yesterday, stating that booking cancellations will not be a direct result of the increased taxes.
Since service charge is calculated after deducting GST from overall price, MATATO claimed that employees dependent on the service charge acquired within the industry will lose an average of MVR 2000 per month as a direct result of the GST increase. However, TEAM asserted that without booking cancellations, service charge will not be affected by just tax alteration.
TEAM argued that bookings had not been affected by the initial increase in taxes in 2015, however, the profitability of tour operators and tourist operators may be affected by the tax hike.
TEAM insisted that the tax increment will positively influence the salary structures of various industries and that their organization did not intend to become an obstacle to such policies implemented by the government.
Voicing their support for the raised GST, TEAM stated that progressively raising the TGST, Business Profit Tax (BPT) and Income Taxes is essential for economic development of the nation.
The amendment to the Goods and Services Tax Act proposed by the Member of Parliament for the Ihavandhoo constituency, Mohamed Shifau, on behalf of the government was approved, with a consensus of 55 MPs voting yes, to raise levied taxes, and ratified by the president on November 12, 2022.
TEAM also stood for the tax raise during the parliamentary discussions prior to approval of the amendment by the parliament.