Parliament Passes Bill to Amend Tourism Act, Revises Lease Extension Fees

The Maldivian Parliament passed a crucial amendment to the Tourism Act yesterday, reducing lease extension fees for islands and land plots designated for resort development. The amendment, introduced by MP Abdulla Rasheed of Dhangethi constituency on behalf of the government, was approved unanimously with 76 votes in favour.

Under the existing law, extending a lease incurs a fee of $200,000 per additional year, alongside a substantial one-time extension fee of $10 million.

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The newly passed amendment introduces a more favourable payment structure for those who act promptly. If payment is made within six months of the amendment’s enactment, the extension fee will be halved. Specifically, lessees will be required to pay $100,000 per additional year and a one-time fee of $5 million. Should payment be delayed beyond the six-month period, the original rates will apply, with $200,000 per year and a $10 million lump sum.

Key Changes Proposed in the Amendment:

• Lease Extension Fees: Under the existing law, extending a lease for up to 50 years requires payment of $100,000 per additional year if settled within two years. If payment is delayed beyond two years, the fee doubles to $200,000 per year, with a lump sum of $5 million due.
  
• New Amendment Terms: The proposed amendment reduces the payment duration to six months. Under the new terms, the fee for extending a lease will be $100,000 per year if paid within six months. Payments made after six months will revert to the original $200,000 per year.
  
• Extension Fees for Longer Terms: For extensions up to 99 years, the current requirement is a $10 million fee. The amendment proposes a reduced fee of $5 million if paid within six months, with the amount increasing to $10 million if paid after six months.

In summary, the new amendment offers lessees a six-month period to secure reduced fees, regardless of whether their resort is operational or if there are deferred lease rents and interest. Those with existing 50-year leases can extend to 99 years by paying $5 million, while those extending for less than 50 years can benefit from the reduced annual fee of $100,000 if payment is made promptly.

This legislative change is expected to make lease extensions more financially manageable for resort developers and operators, potentially stimulating investment in the tourism sector. The bill will now proceed to the President for ratification before it becomes law.