Proposed Eighth Amendment to the GST Act Advances the Destination Principle and Introduces New Rules for Inbound Tourism Products
On 15 August 2026, the Government submitted to the People’s Majlis the Bill on Eighth Amendment to the Goods and Services Tax Act. The Bill proposes a number of material changes to the existing GST framework, with a key objective of advancing the implementation of the destination principle and bringing within the scope of Maldivian GST supplies made by foreign tour operators and travel agencies. The Bill also seeks to strengthen the GST regime through a number of structural amendments and technical corrections to the existing provisions of the Act.
Inbound Tourism Products
The Bill introduces a specific GST regime for persons that do not have a permanent place of business in the Maldives but supply inbound tourism products in the Maldives.
An “inbound tourism product” is defined to include accommodation, food, transportation and other tourism-related activities operated in the Maldives. Under the proposed amendments, supplies of such products by persons without a permanent place of business in the Maldives will fall within the tourism sector for GST purposes.
Read together with the new place of supply rules, these provisions are intended to bring within the Maldivian GST framework foreign tour operators, travel agencies and other offshore suppliers that sell or arrange Maldives tourism products, even where they do not maintain a physical presence in the Maldives.
The key features of the proposed regime for inbound tourism products include:
- Valuation on a margin basis: Under the standard rules, GST is charged on the full consideration for a supply, and the supplier recovers the tax it has borne on its own inputs through the input tax deduction. However, under the proposed rules for inbound tourism products, the value of supply is determined by reference to the consideration received or receivable, less the amount payable to the registered person in relation to the underlying tourism product. In effect, GST becomes payable only on the margin or commission earned by the foreign supplier, rather than on the gross amount paid by the traveller.
- No input tax deduction: persons falling within this regime will not be entitled to deduct input tax against the output tax payable on such supplies.
Taken together, the special valuation rules and the restriction on input tax deductions create a distinct GST treatment for foreign suppliers of inbound tourism products, different from the ordinary GST mechanism applicable to other registered persons. Margin-based schemes of this kind are a well-established feature of tour operator taxation in other jurisdictions.
Place of Supply
In line with the move towards the destination principle, the Bill also introduces new rules for determining whether a supply of goods or services takes place in the Maldives.
| Type | Proposed place of supply rule |
| Goods |
|
| Services |
|
These rules are an important part of the proposed shift towards destination based taxation and should be considered together with the rules applicable to foreign suppliers of inbound tourism products.
Definition of Goods
Section 3 currently defines goods broadly as goods sold by a business conducted in the Maldives, carving out money and rights or interests arising under law or contract.
The bill replaces this with a definition confined to tangible movable and immovable property, with two exclusions:
- money; and
- goods transmitted by wire, cable, radio, optical or other electromagnetic systems, or by a similar technical system.
The revised definition is significant as it limits the concept of goods to tangible property. The change however raises the question of how supplies not falling within “tangible movable and immovable property” such as software, licences, rights and digital content will be characterised.
Definition of Tourism Goods and Services
The bill addresses the interpretation arising from Maldives Bay Private Limited v MIRA, in which the Supreme Court held that Tourism Goods and Services Tax can only be levied on goods and services of a tourist establishment generally supplied to the customers of such tourist establishment. Under the proposed provision, a good or service may qualify as a tourism good or service where it is supplied by a person registered with the Ministry of Tourism, without any requirement that the supply must generally be made to the customers of a tourist establishment. The test therefore shifts from who receives the supply to who makes it.
Exemptions
The Bill also proposes to expand the list of exempt supplies under section 20 of the GST Act. The proposed exemptions include:
- Waste management services supplied by a person holding a valid operating licence under the Waste Management Act; and
- Goods or services supplied under qualifying loan or grant-funded projects to a State office, State institution or State-owned enterprise, pursuant to an agreement entered into with a foreign government, foreign financial institution or international organisation, to the extent that the agreement provides for an exemption from tax.
Other Amendments
In addition to the above, the Bill proposes a number of other amendments to the GST framework, including:
- Revisions to the registration and termination of registration provisions;
- Incorporation into the Act the existing three-day time of supply rule currently contained in the GST Regulation;
- Incorporation of rules relating to the chartering of tourist vessels, including the applicable duration and aggregation rules;
- Clarification that records and supporting documents must be retained for five years from the end of the relevant taxable period; and
- The introduction of a specific definition of “State office” for the purposes of the Act.
The Bill further requires any amendments necessary to the existing GST Regulations as a consequence of the Eighth Amendment, as well as any new regulations required to give effect to the Amendment, to be made within 30 days from the date the Amendment comes into force.
Commencement
The Amendment will come into force on the date it is passed, ratified and published in the Government Gazette. The provisions relating to inbound tourism products are the exception: these will apply from 1 October 2026.
If you have any specific questions relating to the proposed Amendment, feel free to contact us at 7783337.
Note: This update is based on the Bill as submitted to the People’s Majlis on 15 August 2026 and reflects our reading of it as introduced. The Bill is not yet law and may change during the parliamentary process. It should not be relied upon as advice on any particular transaction.
