Increasing TGST to 15 percent will not affect tourism: MMA

Central bank Maldives Monetary Authority (MMA) has said that the tourism sector will not be affected by the imposition of TGST of 15 percent on the sector.

The International Monetary Fund (IMF) mission that visited Maldives recently advised the government to raise TGST to 15 percent to increase government income. This revision was presented to the parliament by the Finance Ministry along with the budget.

Speaking at the Parliament Budget Committee, MMA Governor Fazeel Najeeb said that the IMF had also advised to increase TGST to 15 percent, and that this advice was based on thorough research.

“I don’t think it would be a problem if tourists are asked to pay tax of 15 percent. IMF said that it would not affect the number of tourist arrivals,” Fazeeel said. “Some countries impose 25 or 30 percent tax. A hotel we recently stayed at in Mumbai took tax in addition to GST. So I don’t think it’d be a problem for tourists.”

He said that tax should be imposed in a manner that does not make it a burden for the citizens of the country, and that most countries increase taxes from the tourism sector for this reason.

“There won’t be any serious problems associated with imposing such taxes on tourism, and the burden will be lifted from citizens. That’s why high taxes are taken from tourism. Countries like Seychelles, Mauritius also impose higher taxes on tourism than Maldives,” he said.

The Budget Committee is not in favour of increasing TGST. Most members propose to abolish bed tax and increase TGST to 12 percent.

In response to Faazeel, Committee Chairman and Maamigili MP Gasim Ibrahim said that foreign groups do not always give the best advice, as some foreign groups earlier said that tourism cannot be developed in the Maldives.

“People who spent two or three days here can’t know how tourism functions here. They can’t have done proper research. We have to be aware that there are groups working with international organisations to destroy tourism in the Maldives. We have to be careful,” he said.