The Maldives government has introduced an amendment to raise the Tourism Goods and Services Tax (TGST) from 16% to 17%, along with a proposal to double the green tax, marking another step in its efforts to increase revenue amidst rising financial pressures. The green tax will increase from $6 to $12 per person per night for resort guests and from $3 to $6 for guesthouses with fewer than 50 rooms. Children under two will be exempt from the green tax.

The TGST increase is set to take effect in June 2025, while the green tax hike will start in January 2025. This comes as the Maldives faces challenges such as dwindling foreign reserves and the need to meet heavy foreign debt repayments. The International Monetary Fund (IMF) has recommended measures to cut state expenditure and generate revenue, prompting this amendment.

As the ruling party holds a supermajority in parliament, it is expected that the proposed amendments will pass smoothly, allowing the government to take advantage of the expanding tourism sector to bolster economic growth and tackle its financial concerns. The previous government increased the TGST from 12% to 16% in January 2023, and this latest hike follows the same approach to leverage tourism for fiscal stability.