The Maldives is a top travel destination for tourists drawn to its stunning beaches, luxurious resorts, and clear waters. As a way to sustain its booming tourism sector and protect its fragile ecosystem, the Maldives imposes specific taxes on tourists: the Tourism Goods and Services Tax (TGST) and the Green Tax. Understanding these taxes can help visitors better plan their budget and understand the role they play in supporting sustainable tourism. Here, we’ll break down the details of each tax, their rates, and the total additional costs visitors can expect during their stay.
What is the Tourism Goods and Services Tax (TGST)?
- Overview of TGST The Tourism Goods and Services Tax (TGST) is a tax applied to the goods and services used specifically in the tourism sector, including hotels, resorts, restaurants, and other tourist services. First implemented in 2011, the TGST was introduced as a means to generate revenue from the tourism industry, which makes up about 40% of the Maldives’ GDP. This tax allows the government to reinvest into tourism-related infrastructure, enhance public services, and promote sustainable tourism practices.
- TGST Rate and Applicability As of recent adjustments, the TGST rate is set at 16%, which is higher than the standard GST rate for goods and services within the local economy. TGST is charged on various tourism services, including accommodation, food, beverages, excursions, diving, and other recreational activities. This tax is calculated as a percentage of the total bill for these services, and guests will find the TGST amount added to their final expenses.
For example, if a couple spends $200 on a dining experience at a resort, an additional 12% TGST ($32) will be applied, making the total cost $232. Similarly, for a $1,000 hotel booking, the TGST amount would be $160, bringing the total cost to $1,160.
- How TGST Revenue is Used The revenue generated from TGST is channeled toward infrastructure development, maintaining high standards in tourism, public amenities, and ensuring safety for tourists. Additionally, these funds are used to support training programs within the hospitality industry, helping local Maldivians gain skills and employment opportunities in tourism.
What is the Green Tax?
- Purpose of the Green Tax The Maldives is particularly vulnerable to environmental issues such as coral bleaching, waste management challenges, and the rising sea levels attributed to climate change. Introduced in 2016, the Green Tax is an environmental tax designed to support initiatives that reduce the environmental impact of tourism. This tax funds projects aimed at managing waste sustainably, protecting the country’s reefs and marine ecosystems, and promoting renewable energy.
- Green Tax Rate and Collection The Green Tax is a fixed-rate tax collected from tourists staying at resorts, guesthouses, and liveaboards. Unlike the TGST, the Green Tax is a set amount per person per night: $6 per night for guests staying at resorts, hotels, and liveaboards.
$3 per night for those staying at guesthouses, which are generally less expensive and popular among budget travelers.
For instance, a couple staying five nights at a resort would pay an additional $60 in Green Tax ($6 per person per night, totaling $12 per night).
- Allocation of Green Tax Revenue The revenue from the Green Tax is dedicated to environmental preservation, waste management, and renewable energy projects. These initiatives are crucial in helping the Maldives remain a sustainable travel destination by minimizing the environmental impact of tourism and preserving the islands’ unique ecosystems.
Total Cost for Tourists: How Much to Pay?
When planning a trip to the Maldives, it’s helpful to consider the combined costs of the TGST and Green Tax to get a clearer picture of the overall budget.
- Estimating TGST Costs The TGST applies a 12% surcharge on a wide range of tourism-related services. For a mid-range to high-end stay, a couple may expect the following approximate expenses, including TGST: Accommodation: For a resort stay costing $300 per night, the TGST would be $48 per night.
Dining and Beverages: For daily food and drink expenses of around $100 per person, the TGST would add $32 per day.
Excursions and Activities: For an excursion costing $200 per person, the TGST would be $32 per excursion.
This brings the total added TGST for an estimated daily expenditure of $600 (for both accommodation and expenses) to around $96 per day.
- Estimating Green Tax Costs The Green Tax is calculated per person per night, and for a typical 5-night stay at a resort, a couple would pay: $60 for five nights at $6 per person per night (for a total of $12 per night for two people).
- Sample Calculation for a 5-Night Stay Here’s a sample breakdown for a couple staying five nights at a resort, with estimated expenses on dining, excursions, and activities: Accommodation: $300 per night × 5 nights = $1,500
TGST on Accommodation: $1,500 × 16% = $240
Dining and Beverages: $200 per day × 5 days = $1,000
TGST on Dining and Beverages: $1,000 × 16% = $160
Activities and Excursions: $200 per person × 2 people × 2 excursions = $800
TGST on Activities: $800 × 16% = $128
Green Tax: $6 per person per night × 2 people × 5 nights = $60
Total Additional Tax Costs for 5 Nights:
TGST Total: $240 + $160 + $128 = $528
Green Tax Total: $60
Combined TGST and Green Tax: $528 + $60 = $588In this example, the couple would pay an additional $588 in taxes for their 5-night stay.
Why Are These Taxes Important?
These taxes play an essential role in maintaining the Maldives as an environmentally sustainable destination while supporting its economic growth. The TGST revenue is reinvested into the tourism infrastructure, improving the quality of services available to visitors, while the Green Tax specifically aids in conserving the natural environment that draws tourists to the islands in the first place.
Final Thoughts
For travelers, the TGST and Green Tax are essential expenses that not only contribute to an enjoyable stay but also support the Maldives’ environmental and economic sustainability. Although these additional charges raise the overall cost of vacationing in the Maldives, they ensure that tourism remains a sustainable activity that protects the islands’ natural beauty for future visitors. By understanding these taxes, visitors can budget more accurately and take pride in knowing that their contributions support the Maldives’ efforts to balance tourism with environmental responsibility.
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