GST strengthens even as Middle East conflict hits Maldives tourism

Goods and Services Tax (GST) revenue rose nine percent to MVR 8.6 billion.

According to the Finance Ministry, the government has collected MVR 19.1 billion so far this year, out of the estimated MVR 40.4 billion in the annual budget. Of this, MVR 14.8 billion was generated from various taxes.

GST remains the largest contributor to tax revenue. Collections increased by MVR 708 million compared to the same period last year. GST comprises Tourism GST (TGST) and General GST (GGST).

TGST revenue rose to MVR 6.02 billion, while GGST collections increased to MVR 2.5 billion from MVR 2.2 billion in the same period last year.

The TGST rate was raised from 16 percent to 17 percent in July last year. The state budget forecasts TGST revenue of MVR 11.5 billion this year, based on an estimated 2.5 million tourist arrivals.

However, tourist arrivals have fallen sharply since the war in the Middle East began on February 28. Tourism Ministry data shows arrivals in March dropped 20.7 percent compared to the same month last year, while April saw a 24.4 percent decline.

Arrivals began to stabilise after those two months, with May recording a smaller decline of 1.7 percent compared to last year.

Meanwhile, global oil prices have surged due to the conflict, and transport disruptions have pushed up commodity prices in the import‑dependent Maldives.