Tag: taxation

LDC transition progress needs upgrading, says Maldives representative to UN

The Maldives Mission to the United Nations in New York has hosted a meeting to discuss the need to assist countries such as the Maldives in graduating from Least Developed Country (LDC) status.

The Maldives was graduated to middle income under the UN’s definitions at the beginning of this year, depriving it of a number of financial concessions and eligibility for some donor aid.

The existing process of transition was underdeveloped, claimed Permanent Representative of the Maldives to the UN Ghafoor Mohamed, particularly the repeal of all special financial and technical assistance.

The Maldives has a profitable tourism industry and a GDP of over US$1 billion, however a generous taxation system and the relative isolation of this industry from the country’s economy – particularly its banking sector – has limited the benefit for ordinary Maldivians. The government has been steadily reforming the taxation of the tourism sector and has recently introduced a tourism goods and services tax and business profit tax.

Sixty delegates from various UN missions attended the meeting.

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Maldives ‘easiest country in which to pay tax’

The Maldives has been crowned ‘the easiest country in which to pay tax’ for the second year running by the World Bank’s Doing Business in 2010 report, ahead of Qatar and Hong Kong.

The report measures the regulatory environment of most of the world’s economies, scoring them on factors such as the ease of starting a business, obtain construction permits, get credit and enforce contracts.

Overall the Maldives was ranked 87th out of 183 countries in the survey, a fall of 16 places on last year largely attributable to the increased difficulty of starting a new business (37th to 49th in 2010) and employ workers (6th to 41st in 2010).

Gaining credit within the country, trading across borders and closing a business continued to be major impediments to private economic development, the report indicated.

“The regulatory environment for businesses can influence how well firms cope with the economic crisis and are able to seize opportunities when recovery begins,” the report said.

Where business regulation is transparent and efficient, it is easier for firms to reorient themselves and for new firms to start up. Efficient court and bankruptcy procedures help ensure that assets can be reallocated quickly. And strong property rights and investor protections can help establish the basis for trust when investors start investing again.”

The World Bank report also revealed that despite possessing a multi-billion dollar tourist industry, the economically-troubled Maldives has the world’s third-lowest total commercial tax rate of 9.1 per cent behind Timor-Leste and Vanuatu.

Two bills on taxation have passed committee stage and are to be put before parliament for a vote, including one on corporate taxation and another on administrative framework structures. Next year’s budget relies heavily on taxation, although the legislation has not yet been passed.

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