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TGST Update

TGST Rate to Increase from 01 July 2025

What Tourism Sector Businesses Need to Know

25/06/2025
TGST Update
TGST Rate to Increase from 01 July 2025

Are you ready for the upcoming change to the Tourism Goods and Services Tax (TGST)? 
Starting 1 July 2025, the TGST rate will increase from 16% to 17%. This change, ratified on 5 November 2024 as part of the Seventh Amendment to the Goods and Services Tax Act (Law No. 10/2011), will impact all businesses in the tourism sector. Here’s everything you need to know to stay compliant and prepared.

What’s Changing?

From 1 July 2025, the TGST rate will increase from 16% to 17%. All tourism sector businesses must ensure they apply the new rate from the effective date. 

Understanding "Time of Supply"

The time of supply determines the date on which the goods or service is supplied, to determine which rate to apply. It is generally the earlier of:

  • the date of the tax invoice, or
  • the date of payment for the supply.

If the time of supply occurs on or after 1 July 2025, the new 17% TGST rate must be applied, regardless of when the service is actually delivered. This concept is critical for ensuring compliance, so make sure your team understands how it works.

What you should do now

To prepare for the TGST rate increase, take the following steps:

  • Update all pricing systems to reflect the new 17% TGST rate
  • Revise POS, billing, accounting, and booking platforms to ensure accuracy
  • Ensure all prices displayed to customers are inclusive of the new rate starting from 1 July
  • Train your team on applying the correct TGST rate based on the time of supply

For More Guidance:

MIRA has published a fact sheet with detailed guidance and examples.

MIRA fact sheet

Examples to Help You Understand

Here are some scenarios to illustrate how the new TGST rate will apply:

  1. Example 1 – New Rate Applies:
    A guest stays at your resort from 27 June to 3 July 2025. You issue the tax invoice on 3 July 2025 and receive payment afterwards.
    17% TGST applies, as the time of supply (invoice date) is after the rate change.

  2. Example 2 – Old Rate Applies:
    A guest makes a booking on 30 April 2025 for a stay in August 2025, and the invoice is also issued on 30 April.
    16% TGST applies, as the time of supply is 30 April 2025.

  3. Example 3 – Payment Received in Advance:
    You receive full payment on 15 May 2025 for a stay in September 2025.
    16% TGST applies, since the time of supply (payment date) is before 1 July.

  4. Example 4 – Old Rate Can Still Apply (Non-24-hour Business):
    On 1 July 2025 at 01:15 AM, Restaurant issues a tax invoice for a meal consumed on 30 June night and receives payment later.
    The Restaurant can consider the time of supply as 30 June 2025 and apply 16% TGST.
     
  5. Example 5 – New Rate Must Apply (24-hour Business):
    Using the same scenario as Example 4, if the Restaurant operates on a 24-hour basis, it must apply the new rate from 00:00 hours of 1 July 2025.
    17% TGST applies, since the time of supply is triggered on or after 00:00 hours, and 24-hour businesses must follow this cut-off strictly.

By taking these steps and understanding the time of supply rules, your business can ensure a smooth transition to the new TGST rate. Staying proactive will help you avoid compliance issues and maintain customer trust during this change.