Guide · Maldives tax
TGST and service charge: getting the order right on every bill
In the Maldives a tourist establishment adds 10% service charge to the net price first, then 17% TGST on the price including service charge. An all-inclusive price is unwound by dividing by 1.287. Service charge belongs to staff; TGST belongs to MIRA.
| Line | Amount (USD) |
|---|---|
| Net rate | 100.00 |
| Service charge 10% | 10.00 |
| TGST 17% on 110.00 | 18.70 |
| Guest pays | 128.70 |
Why does the order matter?
Because TGST applies to service charge. Charging 17% on 100 and 10% on 100 gives 127, which under-collects tax by 1.70 on every hundred and leaves the return short. Systems that were built for GST-only markets often get this wrong; NeoSuite computes service charge first on every room, F&B and extra line.
How do I quote an inclusive price?
Divide the inclusive price by 1.287 to get the net. MVR 850 all-in is MVR 660.45 net, MVR 66.05 service charge and MVR 123.50 TGST. NeoSuite stores the net and shows the inclusive figure, so a rate quoted to an agent as all-in and a rate quoted net are stored the same way.
Where does the service charge go?
To staff. It is collected as a liability, and at least 99% of it must be distributed to employees monthly; the employer may retain up to 1% for administration. It is not revenue and not a MIRA tax, although it is reported.
Questions on this topic
Is service charge subject to TGST?
Yes. TGST is calculated on the amount including service charge.
Does TGST apply to Green Tax?
No. Green Tax is a separate fixed levy and is not part of the TGST base.
What rate of GST applies to non-tourism sales?
General GST applies to non-tourism goods and services at the general rate; NeoSuite keeps TGST and GST as separate rates per account.