Finance Minister Ibrahim Ameer has announced the ongoing formulation of a new law concerning the goods and services tax (GST) to maintain the state’s revenue. During the presentation of the 2024 budget in parliament, Minister Ameer highlighted the importance of increasing the state’s revenue as a percentage of GDP for fiscal sustainability. To achieve this, the Ministry of Finance has developed a ‘Medium-Term Revenue Strategy’ with technical assistance from the IMF.
The main goal of this strategy is to raise the state’s revenue, measured as a percentage of GDP, to 35% by 2028. This financial augmentation is intended to secure funds for anticipated state expenditures, ensuring fiscal stability. Minister Ameer emphasised the drafting of a new GST law as a pivotal component of the “medium-term revenue strategy,” confirming that the Ministry of Finance has completed the draft.
A key objective of the proposed law is to shift the basis for GST imposition from the “origin principle” to the “destination principle,” allowing the Maldives to levy taxes on digitally provided goods and services. Additionally, the minister outlined the second aspect of the “medium-term revenue strategy,” focusing on enhancing tax-related administrative measures, particularly the “tax enforcement” initiatives of the Maldives Inland Revenue Authority (MIRA) and Customs.
Furthermore, Minister Ameer highlighted the necessity of introducing an “excise tax” regime as the third measure. Currently, ‘excise duty’ in the country operates under the Import and Export Act. The proposed excise tax system will address loopholes, ensuring that even locally produced goods, potentially harmful to health and the environment, are subject to taxation.
The fourth facet involves the introduction of a “property” tax, providing councils with additional revenue sources. Minister Ameer stressed the importance of these changes in augmenting revenue and explained that such adjustments are essential for the country’s economic well-being. He expressed optimism that the strategy would be made publicly available next year, serving as an informative tool for the populace regarding the impending fiscal adjustments.
