Maldives: increases its GST rates from January 2023

The 6th Amendment to the Maldives Goods and Services Tax Act (Law no. 20/2022) was ratified on 22nd November 2022 increasing the tax rates effective from 1st January 2023. Pursuant to this amendment, General Sector Goods and Service Tax (GGST) will increase from 6% to 8% while Tourism Sector Goods and Services (TGST) will increase from 12% to 16%. With this change, government expects to generate USD 63 million from GGST and USD137 million from TGST. The anticipated revenue of over USD 200 million can help government to manage rising debt interest costs and global inflation costs.

To make public aware of these legal and administrative changes, Maldives Inland Revenue Authority (MIRA) has issued circulars and fact sheets to the public. Details on rate changes for general and tourism sector as well as the ‘time of supply’ rules and cut-off times are explained in these documents. Practical examples on determining the time of supply involving rate change periods were included to make it easier for taxpayers to understand and better apply the tax rates.

MIRA initiated a compliance program for the fourth quarter aiming to increase the public awareness and assist taxpayers in implementation. Under this program, staff of MIRA visited business establishments in the greater Male’ area and met with the local business to inform them about the changes ahead of time. Additional flyers were also dispatched and information on the businesses were collected as well. MIRA further plans to visit different islands and atolls to give information sessions and do on-site visits to ensure that the businesses are bringing the necessary changes to their systems.

·        Goods and Services Tax Act is available at:

https://www.mira.gov.mv/TaxLegislation/GST_Act_Consolidated_English_20221122.pdf

·        GST Rate Change Fact Sheet is available at:

 https://www.mira.gov.mv/forms/gst-rate-changes-fact-sheet-english_20221207.pdf