IMF commends the decision to raise taxes


IMF team in Maldives during a press conference (Photo / Mihaaru)

The International Monetary Fund (IMF) has welcomed the government’s decision to increase taxes next year.

After the conclusion of a one-week visit to Maldives last month, IMF issued a report on Tuesday, saying the government’s decision to increase GST on tourism and domestic sectors was a commendable step. The IMF said the GST hike next year would help the country see more benefits and help the economy recover.

IMF noted that a swift implementation of the authorities’ intention to reform subsidies and reduce the dependence of SOEs on the central government’ budget would help reduce fiscal vulnerabilities.

The government is working to increase GST and TGST from January 1 next year as part of its plans to increase government revenue. GST will be increased from 6 per cent to 8 per cent and TGST from 12 per cent to 16 per cent.

The increase in GST on tourism and general goods will bring in an additional Rs 2.5 billion in revenue. The government estimates that TGST and GST will generate an additional MVR 3 billion. That would bring the state’s tax revenue to MVR 6 billion.