Parliament passes tax hike bills; no changes to proposed rates

The Parliament on Thursday voted to pass three bills submitted by the government to increase multiple taxes, without making any changes to the proposed rates.

The government has submitted three bills to increase taxes next year. This includes legislature seeking to double the Green Tax, one to increase the Tourism Goods and Services Tax (GST) Act, and one to increase the Airport Departure Tax and Airport Development Fee.

The Parliament took floor votes on the bills on Thursday afternoon, a day after they were passed by the Whole House Committee.

The bill to amend the Good and Services Tax Act seeks to increase the TGST from 16 percent to 17 percent.

The bill passed with a majority vote of 70-8.

The change in TGST is set to take effect on June 1, 2025.

The Tourism Act currently prescribes a Green Tax of USD 3 per night for guesthouses with less than 50 rooms. The new bill seeks to double the Green Tax for guesthouses from USD 3 to USD 6, and from USD 6 to USD 12 for resorts and city hotels.

During the committee review, the main opposition Maldivian Democratic Party (MDP) submitted an amendment seeking to exempt guesthouses with less than 25 rooms from the tax hike. But the amendment was rejected by the committee.

The bill passed the floor vote with a majority vote of 71-8.

The changes in Green Tax are set to take effect on January 1, 2025, and is expected to result in an additional injection of MVR 963.6 million in tax revenue.

The third bill, one to amend the Airport Taxes and Fees Act will see the Airport Departure Tax and the Airport Development Fee raised from USD 30 to USD 50 for foreign ‘Economy Class’ passengers, from USD 90 to USD 120 for both local and foreign ‘Business Class’ passengers, from USD 90 to USD 240 for ‘First Class’ passengers, and from USD 120 to USD 480 for passengers who travel in private jets.

The bill passed with a majority vote of 71-8.

The changes in airport taxes are set to take effect on December 1, 2025.

The increases in taxes are a key component of new measures planned by the government to boost revenue next year. According to the 2025 budget report, the new measures are expected to generate an additional MVR 4 billion in revenue.