MIRA to take action against businesses that raised prices

Maldives Inland Revenue Authority (MIRA) has warned that it will take action against businesses that have disproportionally increased the price of goods following the changes to tax rate.

Speaking to PSM News, Assistant Commissioner General Ahmed Shareef said MIRA has received complaints that businesses have increased the price of goods after the changes to the tax rate came into effect. He highlighted that the Goods and Services Tax (GST) was increased from 6% to 8%, which wouldn’t have a noticeable impact on prices, but that some businesses have added a further 8% to increase the price of goods. He warned that MIRA will investigate and take action on these businesses.

The implementation of tax hikes has not impacted the price of goods. For example, prices at State Trading Organisation (STO) have been raised by USD0.19-0.97 for some products, while others remain the same. Other contributors to the change in prices include the Russia-Ukraine conflict and the demand for products as more countries ease COVID-19 restrictions.

The price of goods at the Male’ Local Market remains stable, with price hikes for broccoli, capsicum, bell pepper, and some other goods. Lemons, which are not taxed, have seen a noticeable price hike due to issues with importation. Peppers are currently the cheapest.

The sixth amendment to the Goods and Services Tax Act increased the GST from 6% to 8% and Tourism Goods and Services Tax (TGST) from 12% to 16% on January 1. MIRA has been holding information sessions as well as visiting businesses and providing information and assistance regarding the changes to the tax rates.

The tax changes are expected to generate total revenue of USD195 million this year. Ministry of Finance stated that steps have to be taken to improve the financial situation of the state. Therefore, the ministry decided 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 stated that its analysis shows that the fiscal position of the government of the Maldives and the balance of payments has deteriorated due to rising global commodity prices and that urgent tax hikes are a meaningful step to increase revenue.