Maldives Inland Revenue Authority

History

MIRA was established on 2 August 2010 as a separate and independent legal entity. Following the establishment of MIRA, a modern tax system was introduced to the Maldives via the Tourism Goods and Services Tax Act in January 2011 and the Business Profit Tax Act in July 2011. The Tourism Goods and Services Tax Act was replaced by the Goods and Services Tax Act in October 2011.

Laws and regulations administered

MIRA administers a number of laws and regulations. In addition to the administration of tax laws, MIRA also collects a number of fees and levies.

Tourism Goods and Services Tax Act

The Tourism Goods and Services Tax (T-GST) Act came into effect on 1 January 2011. Under the Act, T-GST is charged on the value of goods and services supplied by tourist resorts, tourist hotels, guest houses, picnic islands and tourist vessels, and on certain other services supplied by places providing services to tourists in the Maldives. The tax rate under the Act was 3.5%. The T-GST Act was abolished following the commencement of the Goods and Services Tax Act.

Goods and Services Tax Act

In October 2011, the T-GST regime was repealed and replaced by the Goods and Services Tax (GST) Act. The GST Act came into effect on 2 October 2011, and expanded the tax to all sectors of the economy. The Act imposed a GST at the rate of 3.5% from 2 October 2011 to 31 December 2011 and 6% from 1 January 2012 to 31 December 2012. The GST rate on “tourism goods and services” increased to 8% on 1 January 2013 and to 12% on 1 November 2014.The GST rate on "general" goods and services remain at 6% from 1 January 2012.

Business Profit Tax Act

The Business Profit Tax (BPT) Act came into effect on 18 July 2011. Under the Act, tax is imposed at the rate of 15% on profits exceeding MVR 500,000 (approx. USD 32,425) in a tax year. A lower rate of 5% is applicable to companies resident in the Maldives generating all of their income from outside the Maldives. Further, if any payment specified in Section 6 of the Act is made by a business to a non-resident, a withholding tax at the rate of 10% is imposed on the gross amount of such payment.

Maldives Tourism Act

MIRA enforces two major revenues under The Maldives Tourism Act: • Tourism “Bed” Tax: The bed tax was levied at a flat rate of USD 8 per tourist per night. Tourist establishments are responsible for collecting the tax from each tourist. The bed tax was abolished from 1 December 2014.

Tourism Land Rent

Tourist resorts and hotels (if build on land owned by the Government) are required to pay land rent at the rate of USD 8 per square meter, subject to the caps and floors specified in the Act.

Green Tax

Green tax is a tax payable by tourists who stay in tourist resorts, tourist hotels and tourist vessels. It is also payable by tourists who stay in tourist guesthouses from 1 October 2016 onwards. Green tax is payable at the rate of 6 United States Dollars per day of stay from tourist resorts, tourist hotels and tourist vessels, and 3 United States Dollars per day of stay from tourist guesthouses. Maldivians and resident permit holders are not required to pay Green Tax.

Employment Act

Remittance Tax is a tax imposed on money transferred out of the Maldives by “foreigners employed in the Maldives”. Remittance Tax, which is collected at the rate of 3% of the remitted amount, came into effect on 1 October 2016. It is imposed pursuant to the Fifth Amendment to the Employment Act (Law Number 22/2016), which was ratified by the President on 25 August 2016. “Foreigners employed in the Maldives” refers to “foreigners who have been issued a work visa pursuant to the Maldives Immigration Act (Law Number 1/2007) and foreigners who are not allowed to work in the Maldives without a work visa, even though such visa has not been issued or the visa has expired.”

Bank Profit Tax Act

Banks operating in the Maldives are required to pay 25% of taxable profit as Bank Profit Tax. Banks are exempt from paying Business Profit Tax.

Airport Service Charge Act

Maldivians and foreigners departing abroad from an international airport in the Maldives are required to pay an Airport Service Charge of USD 12 and USD 25 respectively.

Governance structure

Members of the Board of Directors of MIRA are appointed by the President with the approval of the People’s Majlis. The Board is responsible for determining the administrative policies of the MIRA.

The Board consists of 7 members, including the Commissioner General of Taxation and Deputy Commissioner General of Taxation. The term of the Board is 5 years. Members currently serving on the Board are:

1. Mr. Yazeed Mohamed (Commissioner General of Taxation)
2. Mr. Hassan Zareer (Deputy Commissioner General of Taxation)
3. Mr. Ahmed Faiz Mohamed (Board Director)
4. Mr. Hassan Waheed (Board Director)
5. Ms. Aishath Asha Ali Hassan (Board Director)
6. Uz. Faseeh Zahir (Board Director)
7. Ms. Leena Mohamed Zahir Hussain (Board Director)

Performance

In 2011, MIRA collected MVR 4.6 billion in revenue, which is 89% higher than the collection in 2010 (by the former Department of Inland Revenue and MIRA) – the newly introduced taxes explain the increase. In 2012, MIRA collected MVR 7.2 billion (approx. USD 466.9 million), which is an increase of 57% compared to 2011. In 2013, MIRA collected MVR 8.9 billion (approx. USD 580.1 million), which is an increase of 24% compared to 2012.

Table 1 –Total revenue collection from 2010 to 2014 (in MVR billion)