Tourism Law may change again: Thirteenth Amendment

The Government has proposed an amendment to the Tourism Act, which is currently being debated in Parliament. The bill has successfully passed the committee stage without any amendments, and it is highly probable that it will be approved in the next parliamentary session and sent to the President for ratification in the next week.

The proposed amendment focuses on lease extensions for islands leased for establishment of tourist resorts, potentially allowing lessees to extend their leases at a reduced cost.

If this proposed amendment is adopted, it will become the thirteenth amendment to the Tourism Act.

Key Highlights of the New Tourism Amendment Bill

Lease Extension Fee (50 years)

The current law is found in the Tenth Amendment to the Tourism Act. The said amendment provides lessees with lesss than 50 years of lease with an option of a reduced lease extension fee of US$100,000 (for each year of extension) if they are able to clear it by 26 December 2022. If not, the applicable lease extension fee would be US$200,000.

Though the deadline of 26 December 2022 has expired, the proposed amendment, if passsed, will allow lessees to pay US$100,000 as lease extension fee. The catch is that the full payment must be done within 6 months from the amendment being adopted. Otherwise, the lessee will not be eligible for the reduced fee but for the undiscounted figure of US$200,000.

Lease Extension Fee (99 years)

 Currently, any lease extensions sought for 99 years are subject to a fee of US$10,000,000.

 However, under the proposed amendment, if the lessee opts to pay for the fee for extension of lease within the first 6 months from the adoption of the amendment, the lessee will be eligible to pay a discounted fee of US$5,000,000. If not, the fee will be doubled back to the original fee of US$10,000,000.

To summarise, once the amendment gets adopted, the lessees will get a window of 6 months to make use of the reduced fees regardless of not having a resort in operation and without having to clear its deferred lease rent and interest. Those with existing 50 year leases can simply pay US$5,000,000 to extend their lease to 99 years while those less than 50 years can simply pay US$100,000 (per year of extension) without having to pay double following the expiry of the window.

It is crucial for resort owners and operators to stay informed about the progress of this bill and proactively assess its potential impact on their long-term business plans.

*Please click this link to get an overview of the changes that have been made to the lease extension provisions

Nasheed & Co is closely following developments in Maldives tourism law and is available to assist clients with navigating the legal landscape. Contact us if you need any assitance.