The International Monetary Fund (IMF) has stated that it is best to increase GST and TGST in the Maldives in 2024, and that tax increases should be made in that year after the current inflation situation stabilizes.
According to a report published by the IMF on raising GST in the Maldives, it is not advisable to increase taxes at a time when prices of commodities in the international market are rising. The report was prepared by the IMF based on data given as of March 2022.
The IMF said that the GST should be increased in different phases and that when changes are brought to GST, it should be checked to see if the economy has returned to the pre-COVID-19 situation and the prices of commodities have been controlled at the same time.
While prices of goods are also on the rise in the Maldives, the IMF also recommends to steer clear of talks about tax hikes, as every talk of a tax hike is another contributor in the rise in the value of goods.
When asked why the government decided to increase GST next year, Finance Minister Ibrahim Ameer said the economic situation has changed since the report was prepared and that the Russia-Ukraine conflict has had a negative impact since then. He said that the report was also prepared upon request from the government.
The IMF noted that GST levied in the Maldives is very small compared to other countries in the world. It was recommended to increase GST to 8 percent and 10 percent in the future. IMF further suggested to increase TGST from 12 per cent to 14 per cent, and then from 14 per cent to 15 per cent in the medium term. However, the Group recommends that all of these changes be brought in phases.
