Tax hike not likely to harm tourism sector: TEAM

Tourists arriving at Velana Airport | Photo: Raajjemv

Malé, Maldives – Tourism Employees Association of Maldives (TEAM) has said that the increase in TGST from 12 per cent to 16 per cent will not harm the tourism sector.

Responding to a statement issued by the Maldives Association of Travel Agents and Tour Operators (MATATO) yesterday, TEAM said it could not believe the claim that the tax hike would cost tourism businesses USD 50 million in the first half of next year.

According to MATATO, the tax hike will increase cancellations of bookings in the first three months and have a major impact on the operation of tourism service providers. Matato also estimated that revenue from tourism facilities would decline and service charges paid to employees would be reduced by about MVR 2,000 per person.

TEAM said the tax increase alone is unlikely to bring about such changes, because there had been no such change in bookings during the previous tax increase.

TEAM believes the change will have some impact on the profitability of tour agents and tourist operators. Although they also began discussing tax regime changes earlier this year with government and tourism stakeholders to mitigate those impacts, but would particularly like to be given a reasonable period before implementing such a change, TEAM said in a statement.

They further added that they believe increasing taxes on businesses is important to increase government revenue, improve the economy, increase employees’ salaries and provide basic services to the people.

The association said the progressive increase in TGST, business profit tax (BPT) and income tax is essential to boost the country’s economy. The association believes that the tax increase should bring about positive changes in the salaries of employees working in various industries.