Tag: MIRA

MIRA “will not back down” over unpaid resort rents: Commissioner General of Taxation

The Maldives Inland Revenue Authority (MIRA) “will not back down” or hesitate to take legal measures against resorts with outstanding rents and fines.

Commissioner General of Taxation Yazeed Mohamed told newspaper Haveeru today that “even if the Tourism Ministry does not take measures, MIRA will fulfill its legal responsibilities.”

MIRA is currently pursuing cases at the Civil Court against a number of tourist facilities to recover unpaid rents.

The Tourism Ministry last week warned 10 resorts with outstanding rents and fines to settle at least 25 percent of debts to the state by Wednesday this week, or face revoking or withholding of operating licenses.

Following deliberations by the cabinet, the ministry gave a 90-day notice as “a last warning” on July 12 for the tourist facilities to pay the overdue amounts in full.

However according to a press statement issued by the ministry yesterday, the government has decided not to enforce the threat of revoking licenses after the resorts appealed for leniency, citing global economic turmoil and difficulties in paying large sums in a short period.

According to the press statement, the decision was made after the tourist businesses provided a schedule for making the payments in installments over a course of time. Neither the proposed deadline nor the length of the extension was specified in the statement.

Commissioner General Yazeed meanwhile revealed that only three out of the 10 resorts had paid 25 percent of the outstanding rent and fines as of yesterday. The three resorts that complied after the Tourism Ministry’s “last warning” were Park Hyatt, Six Senses Laamu and Huvadhumafushi.

Haveeru reports that resorts with unpaid rent and fines include those owned by Maldivian Democratic Party (MDP) MP Ahmed Hamza and Economic Advisor to the President Ali Shiyam. Other resorts on the list include Zitali Resort and Spa, owned by Hamza’s brother Moosa Shiyam; Giraavaru Tourist Resort, owned by Abdul Rauf, M. Sun Rose; and resorts owned by Yacht Tours, whose chairman and former MP Abdulla Jabir is a candidate for the post of MDP chairperson.

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Some 8,600 businesses registered at MIRA

Some 8,600 businesses have registered at the Maldives Inland Revenue Authority (MIRA) ahead of the introduction of business profit taxes, which came into effect today.

Newspaper Haveeru reports that MIRA has decided on the advice of the Attorney General’s Office (AGO) to consider the first tax year to begin on July 18, 2011 and end on December 31, 2011. The Business Profit Tax Act stated that taxation would begin six months after the legislation was ratified, with the deadline falling on July 18.

Commissioner General of Taxation Yazeed Mohamed explained that the first tax payment would be due before January 31, 2012. Businesses would have the option of paying taxes in full or in installments.

Businesses making an annual profit in excess of Rf500,000 would be required to pay 15 percent of profits above that amount as taxes.

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MIRA concedes profit tax challenges following door-to-door push

The Maldives Inland Revenue Authority (MIRA) has taken a door-to-door approach in trying to prepare Maldivian enterprises for the introduction of a new Business Profit Tax (BPT) that comes into effect on July 18.  MIRA says informing and registering every national enterprise in the country under the scheme will be a considerable challenge.

The BPT is to be charged to all businesses operating in the Maldives,that makes a profit  of more then Rf500,000 (US $32,425).  The tax will be a first for companies operating in the Maldives, a country that launched a similar 3.5 percent Tourism Goods and Services Tax on all travel industry income as of January 1 this year.

Business owners and industry representatives, while said to generally welcome direct revenue in the country, have called for a gradual introduction of financial reforms like the BPT, which are being sought by the government to balance national budget deficits and protect smaller enterprises.

Under the present BPT system,  businesses that make a profit of more than Rf500,000 (US$32,425) will be asked to pay 15 percent of their earnings to the state.  This sum will effectively rule out small businesses operated by individuals and places  like corner shops that mainly caters to the local residents from having to pay BPT.

Moomina Abdul Sattar, 49, who runs a small tailor service, is one such businesswoman.

“I don’t have to pay the BPT tax; it is applicable only for those who make a profit of more than Mrf 30,000 (US $ 1945) a month,” she said.

Sattar added that she had previously attended an information session held by MIRA and was not therefore concerned about the tax as it does not affect her operations.

“My income per month is around Mrf 15,000 (US $ 973), from this I have to pay the salary of my three tailors,” she said.

Nonetheless, Sattar added that she still wasn’t aware that registration of her business was required by MIRA, even after attending the meeting.

For other businesses in the country, beyond the registration process itself, BPT is still expected to provide a significant challenge, at least in the short-term.

“We are not fully ready for BPT, but we are taking it positively,” said Ibrahim Hameez, Managing Director of Ryan Pvt Ltd. A design consultancy firm, Ryan has about 40 employees and would be seen as a medium and growing business.

“A lot of things that affect businesses were introduced this year, pension scheme, BPT, Income tax,” he said.

Hameez added that it was the timing of the introduction of taxes that posed a problem. “If we had known one year in advance, it would have been better. At the end of last year, we had not foreseen and planned for all these expenses in our cash flow for this year.”

The BPT Act was published in the government Gazette on 18th January, with the tax to come into effect 6 months from the date of publication.

Despite the problem of timing Hameez believes taxation is a good thing.  “BPT is going to be tough to adjust to, but we can and we will.”

Business of all sizes

As part of the act’s requirements, businesses of all sizes, including small and medium enterpises have to be registered with MIRA. This is a first for the Maldives, where small businesses run from home have generally not had to register themselves in the country.  

MIRA says they are having great success in their door to door campaign to spread awareness.

“The response from the public has exceeded our expectations, people are very cooperative and even fill up the forms for registration on the spot most of the time” said Fathimath Rasheeda, Director of Tax Payer Education and Facilities for MIRA.

 Landlords had also previously been exempt from having to register their operations or interests.  It is these type of earners that Rasheeda has said have been the target audience for its door-to-door campaign.

“As a society we don’t tend to think that renting places, giving tuition, or selling sliced arecanuts are doing businesses,” she said.

Until this month, individuals or partnerships running small businesses like making short eats or cakes from their homes had only been required to get permission from the Ministry of Health to operate.  Similarly, anyone renting accommodation, no matter the size, had not been required to register their property unless the place in question was to be used as a shop.

“Even a person renting out one room for Mrf 2000 (US $130) or teaching a small Quran class should register. But we will be taxing only those who earn more than 500,000 (US $ 32425) annually as profit,” said Rasheeda.

 

Challenges and Penalties

Alongside businesses, MIRA also has its own concerns over such a large scale operation being conducted for the first time.

“This is a big challenge for us also, as this is the first time a lot of businesses in Maldives would be registered,” she said.

MIRA’s 70 staff will be participating in an awareness campaign set for next Saturday. While next week the campaign will be taken to the islands.

“Due to lack of resources we cannot cover all the islands, but the city and island councils have been very helpful and have helped register the businesses in the islands,” Rasheeda added.

Among the challenges faced by MIRA will be taxing businesses that had never before declared their revenues publicly.

In addressing this potential difficulty, Rasheeda added that the BPT would operate like taxation systems in most other countries, where “individuals and businesses have to declare on their own the profits they make.”

The audit department of MIRA is expected to conduct a risk analysis to prioritize the first businesses it will audit to ensure the system is being adhered to.

“We hope to audit all the businesses within a five year period.  Those businesses and individuals eligible to pay taxes will be asked to file a tax return annually,” Rasheeda added.

The penalties for enterprises omitting or filing false tax returns will include fines of up to Rf100,000 (US$6,485), six months to two years of house arrest and imprisonment or banishment, as per the BPT act.  Rasheeda added that “if businesses or individuals fail to pay their taxes, aside from the wide ranging penalties, we can also seize their property in order to get the amount owed to the authority.”

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Tourism Ministry threatens to revoke resort licenses over payments

The Ministry of Tourism, Arts and Culture is threatening to suspend the operating licenses of a number of resort and hospitality properties unless they pay outstanding government charges and related fines before July 20, Haveeru has reported.

The Nasandhura Palace Hotel and 10 resort properties in the country reportedly owe a combined total of US$16million to the Maldives Inland Revenue Authority (MIRA), with failure to pay these individual debts expected to lead to a revocation of operating licenses under the Lease Rent Regulation.

Any enterprises that fail to pay these state charges before the 90 day deadline passes on July 20 will be able to have their licenses reinstated once any outstanding government debts are met, according to tourism officials cited by the paper.

Galaxy Enterprises, which rents the Nasandhura Palace Hotel, is facing legal action by the MIRA, who filed a case at the Civil Court this week over claims it is owed some US$265,000 by the company.

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“Issues with amounts paid” says Taxation Commissioner of GMR payments

GMR Male International Airport will be subject to a tax audit, according to reports in local newspaper Haveeru, with the Maldives Inland Revenue Authority (MIRA) contesting the airport service charge and oil re-export royalties paid to the government did not match expected amounts.

Commissioner General of Taxation, Yazeed Mohamed, told Haveeru that MIRA was acquiring necessary documents from the Immigration Department, Customs and the Maldives Airport Company.

“We are authorised, under the law, to procure documents and conduct tax audits. We looked into the speculations and found that there are some issues with the amounts paid,” he told Haveeru.

A GMR spokesperson meanwhile told Haveeru that both charges were calculated based on information stored in the company’s departure databases: “We’d welcome all those who like to pay a visit and check the information. We haven’t committed any act of deception,” the official was quoted as saying.

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Nominations for MIRA open at President’s Office

Nominations for the Board of Directors for the newly formed Maldives Inland Revenue Authority (MIRA) and its Commissioner General and Deputy Commissioner General of Taxation will open today at the President’s Office.

Applications for nomination will be open until 5 April 2010.

According to Article 4(d) of the Tax Administration Act, the Board of Directors of MIRA will comprise of seven members. Both the members of the board and the Commissioner General and Deputy Commissioner General of Taxation will be appointed by President Mohamed Nasheed and must be approved by the People’s Majlis.

Nomination forms are available at the President’s Office or through their website.

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President ratifies Tax Administration Bill

President Mohamed Nasheed has ratified the Tax Administration Bill on 18 March.

The bill was passed in Parliament on 8 March 2010, and has now been published in the government gazette.

The Act establishs an independent legal entity know was the Maldives Inland Revenue Authority (MIRA).

MIRA will implement laws and policies on taxation and will also be responsible for collecting taxes payable to the State.

There will be a board of directors appointed within 60 days of the establishment of MIRA. They will be responsible for formulating the policies of MIRA.

There will also be a Tax Appeal Tribunal which will oversee tax-related cases. The tribunal must be established within 90 days of the ratification of the bill.

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