ABTA has advised agents selling travel to the Maldives to seek financial expertise following the introduction of a new 17% tourism tax, which came into effect today (1 October), despite ongoing lobbying from the UK trade.
Overseas agents and operators have been brought into the country’s Goods and Services tax (GST) for the first time, which applies to accommodation, transport, food and other tourism services, including excursions and wellness activities.
It means that agents and operators – who must register with the Maldives tax authority – will be taxed on their margins or commission.
First announced in August, ABTA said the introduction of the tourism tax with such a short lead time – and the lack of clarity – had created ‘very challenging’ conditions for the trade. It urged its members to look at its own tax advice, as well as to talk to financial experts, in order to comply with the GST.
“We completely understand agents’ concerns – the guidance does reference ‘agency or booking services’ but agents will need to take advice based on what you sell and how you sell it,” Director of Industry Relations Susan Deer told Travel Gossip.
“There is updated information available to ABTA members in the MemberZone, which includes advice to speak to their accountant or a tax expert.
“We’re also reminding members that we have a tax helpline, run by ABTA Partners, where they can get 30-minutes free tax advice.”
As part of ABTA’s continued lobbying efforts, the association has demanded a postponement, as well as an exemption from the tax for disclosed agents (agents who act on behalf of a named tour operator, rather than acting as principal).
However, Susan said ABTA but has not received a satisfactory response to the matters highlighted from the Maldives authorities.
“While we have received acknowledgement from within the Maldives authorities to our earlier letters, we are disappointed not to have received a full response to the issues raised, including the proposal on agents and our recommendation to officially postpone implementation and enforcement,” she said.
“We’re still doing a lot of work behind the scenes, which includes working with other international travel trade associations, but the lack of clarity and tight deadline makes this very challenging for members.”
The Travel Network Group Chief Executive Gary Lewis previously warned that UK sales of Maldives holidays could slump due to the GST, with some agents and operators likely to question the destination’s ‘commercial viability’, and shift focus to alternatives such as the Seychelles, Zanzibar or the Caribbean.
The group is also working with specialist advisors to better understand the implications of the new regime and is encouraging its members to share feedback and real-world examples of how the changes could affect their businesses.
