Pursuant to the sixth amendment to the Goods and Services Tax Act, the rate of Tourism Goods and Services Tax (TGST) and GST (Goods and Services Tax) will increase to 16% and 8% respectively, from 1 January 2023.
According to a circular publicised by the Maldives Inland Revenue Authority (MIRA), TGST and GST must be charged at the new rates if the “time of supply” of a transaction occurs on or after 1 January 2023.
“Time of supply” refers to the time at which a tax invoice, receipt, credit note or debit note is issued, or the time at which full or partial payment is made for a transaction — whichever comes earlier. A tax receipt or invoice must be issued within 3 days for all goods supplied, once the goods are either removed from the place of supply or made available to the recipient, and within 3 days for all services supplied, once the service has been completed.
Therefore, if a registered person supplies goods and services on a 24-hour basis, the rate of GST applicable to the value of supplies made before 00:00 hours on 1 January 2023 is 12% and 6% for the tourism sector and general sector, respectively. The rate of GST applicable to the value of supplies made on or after 00:00 hours on 1 January 2023 is 16% and 8% for the tourism sector and general sector, respectively.
If either payment made or invoice is issued before 31 December 2022 then the TGST would be 12%. However, if resorts deviates from its normal practice of issuing invoice and collecting payment just to reduce tax, purpose of the transaction would be considered as to reduce tax and treat under anti avoidance clause.
