The Government of the Maldives has submitted amendments to increase Goods and Services Tax (GST) and Tourism Goods and Services Tax (TGST) in effort to increase state revenue.
The government is preparing to submit 30 bills to parliament in the last session of the year. Among those, Amendments to Tourism Act of the Maldives, Tax Amendment Bill and the Judiciary Amendment Bill has now been submitted.
Through the Tax Amendment Bill, the government has planned to hike the Goods and Services Tax (GST) and Tourism Goods and Services Tax (TGST) to increase state revenue. The Ministry of Finance has stated the government decided to implement tax hikes in response to changes in the global market and in accordance with the current economic situation, which threatens to become worse if no measures are taken. As such, the government will be decreasing expenditure and implementing a variety of measures to increase state revenue, including increasing TGST from 12% to 16% and increasing GST from 6% to 8%. The changes are proposed to be implemented in January 2023.
Furthermore, the finance ministry has highlighted the rate of global inflation is much higher than the worth of the Sukuk bonds the government sold as part of efforts to reduce budget deficit and debt in response to the COVID-19 pandemic. He added that government expenditure should be controlled despite the increase in tourist arrivals.