The Ministry of Finance has announced that the proposed tax hikes presented in Parliament today are expected to generate an additional MVR 2.7 billion in state revenue.
A significant portion of this income, MVR 1.5 billion, will come from increased Airport Development Fees and Departure Taxes. The new amendments will raise taxes on all passengers, except Maldivians traveling in economy class. For business class travelers, the fee will double to USD 120, while those flying first class will be charged USD 240. Passengers on private jets will see their fees soar to USD 480.
The green tax will also be increased by 100%, with the Ministry estimating that this will add MVR 964 million to state revenue.
The Finance Ministry projects raising the Tourism Goods and Services Tax (TGST) by 1% will generate an extra MVR 202 million annually. Altogether, 40% of the additional revenue from these tax hikes will come from the tourism sector.
If these proposals are approved without amendments, the Ministry anticipates that state revenue will increase by 2% of GDP.
Implementation Timeline:
- Airport Development Fee and Departure Tax: Effective from 1st December 2024
- Green Tax: Effective from 1st January 2025
- TGST: Effective from 1st June 2025
The government emphasized that these tax reforms aim to minimize the impact on the public, while simultaneously introducing measures to reduce state expenses. A detailed timeline for cost-reduction measures will be announced soon. The major reforms, including targeted subsidies, are scheduled to begin next year, despite initial plans for implementation in 2024.
