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Income Tax will not cause inflation: Finance Ministry

Tax Policy Consultant of Ministry of Finance Arshad Jaleel has said the introduction of income tax will not cause inflation.

Speaking on a programme aired on PSM News, the consultant said Maldives is introducing income tax at a smaller scale and the tax amounts are low, compared to other countries that levy a tax on income. He further said the ministry has also greatly analysed the impacts of imposing income tax on the people and the economy.

The tax policy consultant said the introduction tax would not follow suit the situation Maldives faced with the introduction of Goods and Services Tax (GST) and Business Profit Tax (BPT) as businesses are expected to operate without changes after the introduction of income tax. He also said the system needs to be implemented and evaluated to better the system as no amount of simulation and anticipation shall generate the actuality.

The State Budget for 2020 included USD 45 million in tax revenues anticipating tax from individuals who earn a monthly income of USD 2,595.

The State Budget for 2020 estimates a revenue of USD 1.95 billion from revenue sources that include income tax, lease of islands for resort development, selling foreign employment quota, and increasing work permit fee.