President Ibrahim Mohamed Solih has ratified the amendment bill to increase the tax rates from January 2023.
The Parliament of the Maldives passed the government-proposed amendment bill to increase the tax rates from January 2023 with 55 votes in favour and 26 votes against. The Bill on Amendment to the Goods and Services Tax Act was passed to increase the Goods and Services Tax (GST) and Tourism Goods and Services Tax (TGST) in an effort to increase state revenue. The government approved the amendment bill to increase TGST from 12% to 16% and increase Goods and Services Tax (GST) from 6% to 8%. The government expects to generate USD63 million from GST and USD136 million from TGST by next year. Therefore, the tax changes are expected to generate total revenue of USD195 million.
Ministry of Finance said difficulties will increase in the future if steps are not taken to improve the financial situation of the state. Therefore, the ministry decided to take measures to increase revenue and reduce government expenditure, strengthen government-owned companies and reduce their dependence on the state budget. The government has also included cost reductions in its current projects.
The World Bank has welcomed the tax changes and will support the government in implementing economic reforms. The country has been taxing goods and services since 2008.