Maldives to tax tourism from 2011

The Maldives will introduce a 35-percent tax on all tourism-related services from Saturday, the Indian Ocean atoll nation's acting finance minister said Thursday.

 

 

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 January 1.

"It will gradually be extended to other sectors... to reduce relying on indirect taxes, especially import duties that hurt the poor," the minister, Muhmood Razee, told AFP by telephone from Male, 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 percent of GDP in 2011, from the current figure of around 26.5 percent.