Since the tax was initially introduced, the Government has updated the types of establishments as well as set different rates accordingly since 2015, with the most recent changes to the Green Tax being introduced in 2024 and set to take effect starting in 2025.
PSM News
The Maldives has begun tallying the country's total earnings and tourist arrivals as the year draws to a close. In a recent report, the Finance Ministry disclosed that MVR 88.91 million was collected as Green Tax from tourists during the first nine months of 2024, highlighting the significant contribution of tourism and Green Tax to the nation’s economy. Green Tax, which is a tax payable by tourists who stay in tourist resorts, integrated tourism resorts, resort hotels, tourist hotels, hotels, guesthouses, tourist vessels and other such establishments was first introduced in the Maldives on 1st November 2015. Although the tax was introduced in 2015, the Government only started charging Green Tax from tourists staying in guesthouses on 1st October 2016, and integrated tourist resorts, resort hotels, hotels and other similar establishments from 1st January 2023 onwards.
Since the tax was initially introduced, the Government has updated the types of establishments as well as set different rates accordingly since 2015, with the most recent changes to the Green Tax being introduced in 2024 and set to take effect starting in 2025.
Prior to the changes that will be brought in 2025, the green tax rates are as follows:
The above-mentioned Green Tax charges for establishments were set from 1st January 2023 until 31st December 2024, bringing in MVR 88.91 million within the past 9 months of the year. The Finance Ministry further revealed that out of the MVR 88.91 million, a total of MVR 4.79 million was received as Green Tax from guesthouses, MVR 2.11 million from tourist hotels, and MVR 1.25 million was received from safaris. With this revenue generated for the economy, the Finance Ministry revealed that a total of MVR 57.65 million of the Green Tax funds received were spent on environmental projects, including projects related to erosion, waste management, and drainage - which are some of the environmental causes that the Maldives has been working towards in its efforts to address and mitigate the impacts of climate change.
Further detailing the expenditure, the ministry stated that MVR 38.8 million was spent on a project that worked on resolving erosion in Shaviyani Atoll Komandoo. This goes to show that the Green Tax funds have been instrumental in financing critical projects aimed at protecting the islands from erosion, improving waste management systems to reduce environmental pollution, and enhancing drainage infrastructure to combat flooding. Such investments not only safeguard the environment but also support the Maldives’ reputation as a leading ecotourism destination—an appeal that is likely to attract more environmentally conscious travellers eager to explore its natural beauty and commitment to sustainability. This increase in tourist arrivals would, in turn, generate higher Green Tax revenue, creating a positive feedback loop where these funds can be reinvested into further environmental initiatives.
Green Tax is likely to have a bigger impact next year, leading to the funding of more sustainably driven projects as the Government introduced the new rates for the tax which is set to take place from 1st January 2025.
The updated rates are as follows:
Although the changes set to take effect on January 1, 2025, will double the Green Tax that travellers to the Maldives will have to pay, the Government anticipates a significant revenue impact of MVR 963.6 million for the year. This substantial increase in Green Tax revenue is expected to bring several positive outcomes, particularly during a time when the Maldives is grappling with economic challenges.
The additional funds will enable the government to expand its environmental initiatives, such as combating coastal erosion, improving waste management, and enhancing drainage systems, which are vital for the country’s resilience against climate change. Moreover, this increased revenue can be allocated to other sustainable development projects, ensuring long-term benefits for both the ecosystem and the local population. In addition to the increased funding for projects that the country is in need of, the increased taxes also provide much-needed fiscal relief, by helping the government fund critical infrastructure projects, reduce reliance on external borrowing, and invest in initiatives that drive growth and create jobs.
