Tax Authority collects MVR 2.4 billion in unpaid taxes

Taxes have long been recognized as a crucial pillar of the Maldivian economy, serving as a vital source of financial resources for governments to function effectively and provide essential services to their citizens. However, in the wake of the COVID-19 pandemic and the subsequent economic downturn, the importance of taxes has reached unprecedented heights. As the Maldives grapples with an increasing debt situation and the urgent need to generate internal revenues, the role of taxes has become paramount in ensuring economic resilience and sustainable development.

In response to the growing importance of tax revenues, the Maldives Inland Revenue Authority (MIRA) has taken proactive measures to encourage individuals and businesses to fulfil their tax obligations. With the aim of increasing tax compliance, MIRA has embarked on a campaign to raise awareness about unpaid taxes and promote timely payments.

One noteworthy initiative implemented by MIRA involves the annual publication of a list of companies with outstanding tax liabilities. By publicly disclosing the names of businesses that have unpaid taxes, MIRA aimed to foster transparency and accountability, urging these entities to address their tax arrears promptly. This publicizing of names serves as a reminder that fulfilling tax obligations is not only a legal requirement but also a crucial contribution to the nation's economic stability and growth.

In addition to this proactive measure, MIRA has also revealed in their annual report that they had sent 20,295 notices of various types to those who had unpaid taxes as well as 31,577 notices to those who failed to fill tax returns. 

According to the annual report published by MIRA on 31st June 2023, the tax authority revealed that they have recovered MVR 1.5 billion by issuing notices to 8,924 tax evaders, MVR 864.1 million from 2,493 persons during the dues clearance process, phone calls to 162 people reminding them to pay raised MVR 94.4 million, 9 accounts were frozen and MVR 1.8 million recovered as well as 1.2 million recovered from 22 persons throughout the measures that were taken. 

However, MIRA was not harsh on all of the businesses as the authority gave leniency to some businesses that have not been able to repay their taxes for a long time. The annual report outlined that 598 businesses were given the opportunity to repay their pending taxes by instalment method last year. The total amount of money pending by these businesses totals MVR 1.7 billion out of which MVR 849.2 million were recovered. In addition to this, MIRA has also filed around 148 different cases of tax evasion.

As a response to the mounting national debt, the Maldivian government has implemented various strategies to address the issue, including increasing the goods and services tax (GST) and tourism tax, as well as the significant emphasis on recovering unpaid taxes from individuals and businesses. This renewed focus on tax collection is expected to play a vital role in addressing government's growing expenditure, while also holding accountable those who have outstanding tax obligations.