- Parliament's Economic Affairs Committee unanimously approved amendments treating intentional failure to file tax returns as tax evasion.
- The maximum prison sentence for intentional tax evasion would double from one year to two years.
- Penalties for late tax payment would double, with the daily charge rising from 0.05 to 0.1 percent.
Individuals who intentionally avoid filing tax returns could face up to two years in prison under an amendment to the Tax Administration Act approved by Parliament’s Economic Affairs Committee.
The committee unanimously approved the bill at its meeting on Tuesday. The amendment was submitted on 5 August last year by PNC MP Mohamed Ismail.
The proposed changes would treat intentionally failing to file a tax return as tax evasion. Providing incorrect information, omitting required details from a return or submitting financial statements proven to be inaccurate would also fall within the definition of tax evasion.
The maximum prison sentence for intentional tax evasion would increase from one year to two years.
Separate penalties are proposed for the offence of failing to submit a tax return. Existing law provides for house arrest of between one and six months, while the amendment would replace this with imprisonment for the same period. Offenders could also be fined up to MVR 50,000.
The bill would also double the penalty for failing to pay tax by the required deadline. The daily charge would increase from 0.05 percent to 0.1 percent of the outstanding amount for each day the payment remains overdue.
The amendment must receive approval from Parliament and be ratified before the revised penalties can take effect.
