The 17% levy was introduced on 1 October, effectively limiting how much money foreign travel firms can make selling the island nation. Agents, operators and industry bodies said they had been given little time to prepare, while some claimed it could impact the destination's commercial viability.

However, the Maldivian government has now published an amendment to the Goods and Services Act, removing the charge on inbound tourism products supplied by foreign operators with no fixed establishment in the Maldives.

It also confirmed refunds would be issued for any goods and services tax collected under this rule since 1 October. However, the amendment bill has not been passed yet.

Luke Petherbridge, Director of Public Affairs at Abta, welcomed the legislation, highlighting how Abta had worked with other trade bodies to "seek a solution". He confirmed Abta would continue to follow up with the Maldivian government.

"We will push for updated guidance so that any remaining obligations, such as working with local partners to ensure compliance with anti-avoidance mechanisms, can be properly understood," Petherbridge added.

A 'sensible and positive' outcome

Advantage Travel Partnership Chief Executive Julia Lo Bue-Said, speaking on behalf of the UK Outbound Travel lobby group, called the move "a sensible and positive" outcome for "all involved".

"It is a powerful reminder of what our industry can accomplish when we address these issues collectively and constructively," she explained. "It also underlines the value of tourism to destinations for which the UK is a key source market.”

Gary Lewis, Chief Executive of The Travel Network Group, added: "This is a positive and welcome development for our members, many of whom have spent recent weeks dealing with the uncertainty created by the introduction of GST earlier this month.

"The proposed repeal should remove a significant administrative burden for overseas travel businesses selling Maldives holidays."

Questions around the refund process

However, Lewis said some questions remained: "The legislation raised complex questions around tax liability, pricing, invoicing, contractual obligations and compliance, leaving businesses to make important decisions with limited clarity and very little time to adapt".

He said there was yet no clarity on how refunds would be secured. "Businesses will be looking for clear guidance on the refund process," he continued. "We welcome the Maldivian government's willingness to listen to industry concerns and take a pragmatic approach."