Maldives Inland Revenue Authority (MIRA) has released its monthly revenue collection for July 2024, revealing a mixed picture of the country’s financial health. The total revenue collection for July stood at MVR 2.93 billion, marking a 17.1% decrease compared to July 2023. This decline is largely attributed to the lack of tax deadline extensions in 2024, which had been granted in 2023 due to the Eid-ul Al’ha holidays. Despite this year-on-year drop, the revenue still exceeded forecasts by 16.4%, driven by several key factors.
The overperformance against the forecast is partly due to the pre-payment of the second interim Bank Income Tax for 2024, initially due in January 2025. Additionally, a 2.4% increase in tourist arrivals in June 2024 compared to the previous year boosted the Tourism Goods and Services Tax (TGST) collection. Moreover, the collection of late payments for Tourism Land Rent and additional dues through enforcement actions also contributed to the higher-than-expected revenue.
In terms of contributions to the total revenue, income tax accounted for 50.07%, followed by GST at 33.33%, and Tourism Land Rent at 3.96%. Meanwhile, the collection of USD revenue amounted to 75.77 million, with TGST contributing 47.38%, income tax 21.87%, and Tourism Land Rent 10.02%.
However, the significant year-on-year decline in total revenue collection raises concerns about the sustainability of the current economic trajectory. While the government has managed to exceed its forecasted revenue, largely due to one-off factors like pre-payments and enforcement collections, the broader trend of declining revenue may indicate underlying challenges in the Maldivian economy.
This economic backdrop calls for careful consideration of future fiscal policies, particularly as the government continues to rely heavily on tourism and related industries for revenue. The data also suggests a need for diversification and more sustainable sources of income to mitigate the risks associated with fluctuations in tourism and other key sectors.
