The Maldives Inland Revenue Authority (MIRA) has forwarded a case to the Prosecutor General’s Office seeking the prosecution of two companies over allegations of intentional tax evasion linked to large-scale PCR testing services provided during the Covid-19 pandemic.
The request concerns Pioneer Maldives Pvt Ltd and Island Health Solutions Pvt Ltd, which were among the leading providers of PCR testing services in the Maldives during the period of highest demand. MIRA initiated an investigation after identifying that the taxable income declared in Income Tax Returns submitted by the two companies was significantly lower than expected given the scale of services provided.
According to MIRA, the investigation found that Island Health Solutions Pvt Ltd failed to report the full income generated from services provided through its Pearl Medical Center clinic during the 2020, 2021 and 2022 tax years. In addition to PCR testing, the clinic provided other medical services during this period, the income from which was not fully declared.
The investigation also revealed that Pioneer Maldives Pvt Ltd, one of the earliest providers of PCR testing services and a major supplier to both the general public and tourist facilities during 2020 and 2021, did not include the total income generated from these services in its financial statements and Income Tax Returns. MIRA further noted that, in relation to the unusually high income generated in 2021, the company deducted invalid amounts recorded as cost of sales and administrative expenses with the intent of reducing its tax liability.
MIRA stated that taxable income amounting to MVR 31.9 million was omitted from the Income Tax Returns submitted by Island Health Solutions Pvt Ltd for the 2020 to 2022 tax years. In the case of Pioneer Maldives Pvt Ltd, taxable income amounting to MVR 102.7 million was omitted for the 2020 and 2021 tax years. Following audits, Island Health Solutions Pvt Ltd has been ordered to pay MVR 4.3 million in additional taxes, while Pioneer Maldives Pvt Ltd has been ordered to pay MVR 23.7 million.
In addition to the two companies, MIRA has requested the prosecution of Dr. Ikilil Sharif, a director of both companies who is alleged to have played a leading role in the matter, as well as Dr. Ali Abdulla Latheef, a director of Island Health Solutions Pvt Ltd. The authority has also sought the prosecution of Ali Fayaz, who prepared the financial statements and tax returns for both companies, on allegations that he knowingly prepared documents containing incorrect information.
MIRA cited Section 64 of the Tax Administration Act, which makes it an offence to knowingly act with the intent of evading tax or to assist a taxpayer in committing such an offence. The authority said action will be taken against parties involved in tax-related offences, fraud or deceit in line with its Tax Crime Mitigation Strategy.
MIRA has also advised members of the public to report suspected tax-related crimes, fraud or deceit through the whistleblowing function on its website.
