Maldives Inland Revenue Authority (MIRA) has been rendered helpless in collecting green tax in light of a recent Tourism Act amendment.
Intervention on the revenue authority’s mandate of collecting green tax rose from a provision in the amendment, stating the date of effect.
According to the 11th amendment of the Tourist Act passed by Parliament on June 30, and ratified by the Maldivian President on July 3, cites the date of effect for collecting green tax in accordance to the amendment is January 1, 2023.
This means the tax authority mandated in collecting green tax revenue, MIRA, that has been claiming said revenue since November 1, 2015 since the tax become first implemented, will now no longer be able to levy it on tourism properties until the following year.
The amendment went through in efforts to incorporate guesthouse properties under green tax. Changes brought to the Act now give inclusivity of tourist resorts, hotels, tourist vessels and boutique hotels in excess of 50 rooms situated in residential islands.
According to the taxation regulations, tourist properties must pay green tax at a rate of USD6.00 per tourist per day – for the duration they spend at the properties.
Meanwhile, MIRA reports learning of the legal ramifications placed by the new amendment, due to which the authority lodged requests at the Ministry of Tourism for revision.
In the meantime, the authority is expected to honor the changes of the Tourism Act.
MIRA is also expected to instruct relevant bodies about the next course of action following the hindrances rising due to the amendment.
Local law firm, S&A Lawyers identify the amendment as a barricade on MIRA’s enforceability of collecting green tax from tourism properties until the date of effect comes to pass.
“Green tax collected during the period, is a legal breach in accordance with Section 35 (g) and (h) of the act,” the firm said in a statement.
MIRA reported collecting a cumulative total of MVR547 million in green tax as of June 2022.
Moreover, Maldives government stand to lose an estimated MVR600 million in revenue should the Tourism Act’s provision remain unrevised.