Government Submits Amendment to Tax Act Introducing Jail Terms for Defaulters

The government has submitted an amendment to the Tax Administration Act to grant broader powers to the Maldives Inland Revenue Authority (MIRA), including the introduction of jail terms for tax defaulters and enhanced mechanisms for tax recovery.

The bill, presented on behalf of the government by Villimalé MP Mohamed Ismail, proposes replacing existing penalties of house arrest with imprisonment for offences under any tax law. Currently, such violations are punishable by house arrest for three months to one year, but the proposed amendment seeks to increase this to imprisonment ranging from three months to two years.

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According to the bill, failure to pay taxes within the specified period will result in a criminal penalty, which currently includes house arrest for up to six months and a fine of MVR 250,000. The amendment proposes allowing imprisonment of up to six months in addition to the fine.

The bill also aims to strengthen enforcement by increasing the financial penalty for delayed payments. It proposes raising the penalty to 0.05 percent of the unpaid amount for each day beyond the due date, and up to 0.1 percent of the total outstanding amount.

Under the proposed changes, appealing to the Tax Appeal Tribunal regarding dues to MIRA will require the appellant to first pay and waive at least 25 percent of the assessed amount.

Additionally, the amendment outlines expanded powers for MIRA to recover outstanding payments. These include the ability to deny services provided by state agencies, take control of land or land rights, inspect bank accounts, collect funds from third parties, and pursue recovery through foreign jurisdictions.

To address longstanding issues related to the delivery of official notices, the bill introduces a provision whereby notices or letters sent to the address or email provided to MIRA will be deemed delivered from the date of dispatch.

Speaking during today’s parliamentary session, MP Mohamed Ismail said the amendment aims to empower MIRA and strengthen its role in enforcing tax compliance. “With this bill, we hope MIRA’s role will be more effective,” he said.

Deputy Speaker and MP for Dhiggaru, Ahmed Nazim, also expressed support for the amendment, stating that although the government had previously shown leniency to those in violation of tax laws, the lack of transparency required stronger enforcement measures.

MP for Hanimaadhoo, Abdul Qafoor Moosa, raised concerns over unresolved tax and corruption-related issues and noted that while MIRA has performed well, stronger legal backing is necessary for justice to be served.

Eydhafushi MP Ahmed Saleem highlighted the scale of unpaid taxes in the country, estimating the total amount at around MVR 15 billion. He added that while many taxpayers fulfil their obligations, there are those who consistently evade payment without consequence. He further noted that tax rates in the Maldives remain lower than in many other countries with established tax systems.

MPs from both the ruling party and the opposition voiced support for the proposed amendment and commended MIRA’s performance.

The original Tax Administration Act came into force in March 2010, marking the formal introduction of a structured tax system in the Maldives. The proposed amendment seeks to reinforce the existing legal framework and improve tax compliance across the country.