Maldives to tax tourism from today

Saturday, 1 January 2011 00:41 - - {{hitsCtrl.values.hits}}

Colombo (AFP): The Maldives will introduce a 3.5 per cent tax on all tourism-related services from today (Saturday), the Indian Ocean atoll nation’s Acting Finance Minister said.

Hotel owners do not pay any income or profit tax in the Maldives, but the new goods and services tax (GST) will apply to the entire tourism sector from 1 January. “It will gradually be extended to other sectors... to reduce relying on indirect taxes, especially import duties that hurt the poor,” Minister Muhmood Razee, told AFP by telephone from Malé, the capital.

Home to 330,000 Sunni Muslims, the Maldives islands are a magnet for high-spending tourists.

The Maldives had received 750,000 holiday-makers in the year to December and the authorities hope the number will exceed 770,000 in 2011.

Tourism accounts for nearly two-thirds of the Maldives’ economy of over a billion dollars, with the rest coming from fish exports.

Razee said the additional income will be vital to attempts to reduce the country’s budget deficit to 16.0 per cent of GDP in 2011, from the current figure of around 26.5 per cent.