Minister of Finance Ibrahim Ameer has revealed that the government has drafted a new Goods and Services (GST) law to increase state revenue.
Presenting next year's state budget in Parliament, Minister Ameer said increasing state revenue is important for the state's fiscal sustainability. In this regard, he said that the finance ministry has drafted a Medium-Term Revenue Strategy with the technical assistance of the International Monetary Fund (IMF). The strategy proposes to raise state revenue to 35% of the Gross Domestic Product (GDP) in order to raise funds for expected future expenditures and ensure fiscal sustainability.
Additionally, Minister Ameer said the most important aspect of the strategy is the new GST law. Its purpose would be to change the basis of GST from the origin principle to the destination principle. With this change, the Maldives will have the authority to tax digital goods and services used in the country. He also said the second priority is to strengthen tax-related administrative measures, including tax enforcement measures by the Maldives Inland Revenue Authority (MIRA) and the Maldives Customs Service. As a third priority, the minister stressed the importance of introducing an excise duty system.
Excise duties are currently enforced under the Import-Export Act. However, there is currently no means to levy the excise tax on goods and services made and provided in the Maldives even if they are harmful to public health and the environment. A specific excise duty system would discourage the use of such goods and services in the country.
Furthermore, Minister Ameer said that the fourth priority is the introduction of a property tax for local councils to increase their revenue. He highlighted the importance of implementing the strategy's measures to increase state revenue, expressing hope that the strategy will be published next year.