The Maldives Ministry of Finance estimates the revenue raised from income tax, which is readying for implementation, will reach MVR680 million.
During a press meeting held on Tuesday morning, the Ministry’s Tax Policy Consultant Mr Arushad Jameel mentioned, income tax which will become implemented in 2020 will be levied on at least 6,000 individuals with Maldivian citizenship.
The aim, as per the Ministry will be increasing the revenue of the Maldives state.
“Business Profit Tax is already levied, and with the implementation of income tax, the taxation system will reach a full cycle. The main aim of levying income tax is to reduce the gap between the rich and poor. This gap can be reduced by expending it on public welfare,” Mr Jameel said.
According to the bill on income tax, government proposed on levying the taxation on persons with a monthly income above MVR40,000. While the state’s bill has proposed the minimum amount, under the government’s ‘Agenda 19’ pledge, income tax was proposed to be levied upon persons with a monthly income above MVR60,000.
The IMF had, earlier, advised the Maldives government to levy taxation on people with monthly income above MVR10,833.
“We made the decision based on available data. If the income tax is collected for income of above MVR40,000 that it will amount to MVR480,000 on an annual term which is close to the BPT collection as well. For instance, if the monthly income is MVR50,000 then the income tax is levied on the extra MVR10,000 which is above the threshold. Which is relatively a small amount,” Mr Jameel explained.
Furthermore, he also explained that the International Monetary Fund’s (IMF) recommendation came based on their collected data, and their suggestion was levying a dual income taxation. However, Maldives state decided proceeding with a progressive taxation rate.
Based on this, taxation will be levied upon individuals who hold state minister designations and above if they are employed in the public sector.
It is also disclosed that the income tax will first be introduced on the public sector before proceeding on to private sector.