MIRA files first GST-related court case

The Maldives Inland Revenue Authority (MIRA) has filed the first case related to the Goods and Services Tax (GST) with the civil court.

The case was filed on September 13 before being formally registered with the court last Saturday, September 27.

MIRA are claiming US$2,606.86 (MVR40,132) from DeMal Pvt Ltd for Tourism Goods and Services Tax (T-GST) and the fines incurred for non-payment.

T-GST was first introduced in September 2010 before being subsumed by Goods and Services Tax Act one year later.

GST currently imposes a 6 percent tax on non-tax goods and services in the country. T-GST is currently taxed at 6 percent but will be raised to 8 percent on January 1 2013.

The combined GST revenue stream has accounted for nearly 35 percent of MIRA’s income this year – over US$69million (MVR1.7billion).

Director General of MIRA’s revenue service Fathihullah Jameel was unavailable for comment at the time of press.

MIRA’s Commissioner General of Taxation Yazeed Mohamed last week lamented the inability of the authority to collect certain fees owed to the government, accusing the tourism ministry of being a major part of the problem.

Yazeed singled out the issue of tourism land rent as a major source of unclaimed revenue, arguing that MIRA could only pursue the cases through the courts.

“If rent is not paid we have to take it up in court. That is to obtain payments not paid for a certain period. Then it is used as an excuse. From that point on they get a free license to stay without making payments. Once a case is filed in court, it can go up to two years without a single payment,” Yazeed told Haveeru.

MIRA’s website shows that the authority is actively pursuing nearly US$17million (MVR261.8million) in fees and fines, with 85 percent of listed cases relating to land rents.

The biggest cases currently being pursued, in terms of revenue being claimed, involve the operators of Six Senses Laamu and Mehudufushi Island Resort, from whom MIRA is claiming US$3.1million (MVR47.7million) and US$3.2million (MVR49.2million), respectively.

The Medhufushi Island Resort case is also among those which have been registered with the court for the longest time. The case was first registered in July 2011 and has seen five hearings, according to MIRA’s site.

Another longstanding and significant case is that concerning the operators of Filitheyo Island Resort, who are being pursued for around US$2million (MVR30.8million) in a case first registered in June 2011 which is said to have had three hearings.

MIRA’s monthly figures show that tourism land rent for the year so far is only three quarters of that collected by the same point on 2011.

The tourism ministry hit back at this criticism earlier this week, with State Minister Mizna Shareef telling Minivan News that MIRA was also empowered to collect rent.

“It is very unfair and inappropriate for MIRA to make these statements,” said Mizna, who argued that the authority had been pressuring the tourism ministry to suspend operating licenses for late-payers without considering the wider implications for the industry as a whole.

“There has to be balance – the industry must be protected while rents are collected,” she continued.

Tourism is by far the largest industry in the country, contributing over 70 percent of GDP via associated industries and 90 percent of all foreign exchange receipts.

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