The Chinese government considers the Dalai Lama a "splittist" for promoting autonomy in Tibet and the decision to allow the visit to go ahead could risk undermining a recent thaw in relations between the mainland and Taipei since Ma took office.
Beijing is also known to react angrily to any government allowing the Tibetan leader to visit.
Last year, the Dalai Lama said that he wanted to visit Taiwan in an interview with a local newspaper in Dharamsala, home to the Tibetan government-in-exile.
But at the time, Ma said the timing was not right for such a visit.
A spokesman for Ma's office attempted to play down the political significance of the visit when asked if it would impact ties with Beijing.
|China considers the Dalai Lama a "splittist" for promoting Tibetan autonomy [Reuters]
"The visit is based on humanitarian and religious considerations which should not hurt cross-strait ties," Wang Yu-chi told the AFP news agency.
China claims self-governing Taiwan as part of its territory, although the two split amid civil war in 1949.
Victor Gao, director of China's National Association of International Studies, a think-tank affiliated with the Chinese government, told Al Jazeera that the Dalai Lama "continues to play both spiritual and political roles".
He said that while the proposed visit to Taiwan was for spiritual purposes, the Dalai Lama has "been consistently undermining China's sovereignty and territorial integrity."
"We also need to make it known that he himself is a Chinese national, and would be welcomed back if he chose to give up his activities," Gao said.
Over the past 12 years, the Dalai Lama has made three visits to the island which is home to a large exiled Tibetan community and millions of Buddhists.
The Dalai Lama made his first trip to Taiwan in 1997 and visited the island again in 2001, triggering strong condemnation from China.
On Wednesday a spokesman for the Dalai Lama in Dharamsala said he had accepted the invitation to visit Taiwan.