New tax to be introduced based on travel class of passengers

Economic Committee of the Parliament has given the green light to the bill submitted to introduce a new tax to be taken based on travel class.

The Committee has also decided to revise the rates of Airport Development Fee (ADB) which is currently charged, also based on travel class.

The bill was proposed by North Fuvahmulah MP Mohamed Rasheed in December 2019 – whereas the Committee completed their findings on the bill and submitted their report to the floor on June 14.

When the bill was proposed two and a half years ago, the plan was to cease the collection of Airport Service Charge and introduce a ‘Departure Tax’ to be collected based on travel class instead. A suggestion was also made to revise the rates of ADB similarly.

However, the initial timeline proposed in the bill to begin implementing the changes has now passed. Subsequently, the Committee has decided to follow a new timeline which was proposed by the Finance Ministry.

Under this timeline, the collection of Airport Service Charge will cease at the end of this year after which the collection of Departure Tax will begin in January of next year.

Departure Tax will be collected from all international outbound travelers from Maldives – including foreigners and locals. It will be categorized into four in which locals and foreigners will be charged the same in all categories except for in Economy Class.

Departure Tax

Departure Tax will only be exempt to persons who have diplomatic immunity, transit passengers and children under the age of two.

ADF will be charged at the current rates until the end of this year as well. Starting from January 2022, the fee will be collected from all international outbound travelers from the Maldives as stated below.

Airport Development Fee

The bill also stipulates that it is the responsibility of the airline a passenger is traveling from to collect both Departure Tax and ADF in adherence to guidelines which will be set forth by the Maldives Inland Revenue Authority.

While the Committee has submitted their report to the floor, the matter has not been put on the agenda yet. 

The bill will only come to effect when it is passed by the parliament and receives ratification from the President.

When the bill comes to effect, regulations that need to be formulated under the bill must be done so within three months’ time.