The Maldives Inland Revenue Authority (MIRA) has issued a new tax ruling concerning deductions on donations made in money, effective from 1 March 2024. This announcement, made on Sunday, 14 January 2024, clarifies the interpretation of Section 21 of the Income Tax Act.
Under the new ruling, taxpayers who make monetary donations to State institutions or charitable organisations approved by the Commissioner General can deduct these contributions from their taxable income. This provision is a modification of the earlier regulations under Sections 17 and 32 of the Income Tax Act.
The regulation, specifically Section 50 of the Income Tax Regulation (Regulation Number 2020/R-21), stipulates that for a donation to be deductible, it must be made in money to a charitable organisation that is on the approved list as per Section 47(a) of this Regulation at the time of the donation. This list is maintained and approved by the Commissioner General.
This ruling, issued under the authority of Section 84 of the Tax Administration Act (Law Number 3/2010), represents a significant update in the taxation policy relating to charitable donations. It underscores the government’s commitment to encouraging philanthropy while ensuring that tax benefits are systematically regulated.
The impact of this ruling is expected to be considerable, particularly for taxpayers who actively engage in charitable activities. By enabling deductions for monetary donations, it provides an incentive for increased philanthropic contributions, potentially leading to greater support for state institutions and recognized charitable organisations within the Maldives.
With this ruling set to take effect from 1 March 2024, taxpayers are advised to take note of these changes and plan their charitable contributions accordingly. The move is seen as a positive step in fostering a culture of giving and supporting the work of approved charitable organisations across the country.