Several tourism service providers, properties, and operators have paid relevant tax in advance during January to reduce the tax payable at the hiked Tourism Goods and Services Tax (TGST) rates.
Tax revenue fell 21% from the projections in February, according to the Maldives Inland Revenue Authority (MIRA). The primary reason for this drop is the advance payment of TGST in January, which was expected in February.
Maldives government received MVR1.72 billion in taxes in February, which is about 50% lower than the tax income received in January.
Tax revenue received in January was 70% higher than projections. Tax revenue stood at MVR3.4 billion during the month, which is the highest revenue collected by MIRA in a single month.
Moreover, there was a marginal increment in tax revenues during January, and the expected revenue in February was not realized as tourism service providers paid taxes on a “time-of-supply” basis at the previous lower TGST rates.
MIRA has facilitated a mechanism to pay TGST and GGST by invoicing in advance as soon as they receive bookings. This allowed several businesses to pay taxes in advance.
In January 2023, TGST and GGST were paid for the month of December 2022 at the previous GST rates.
Maldives government increased TGST rate from 12% to 16% and GGST from 6% to 8%, effective from January this year.