Maldives GST Hikes in 2023 Yield 7% Revenue Surge, MIRA Annual Report Reveals

The Maldives’ decision to increase Goods and Services Tax (GST) rates in 2023 resulted in a remarkable 7% rise in revenue compared to projections, according to the latest annual report from the Maldives Inland Revenue Authority (MIRA). Last year, MIRA collected over MVR 24.86 billion in taxes, marking its highest revenue collection to date.

The amendments made under the sixth revision to the Goods and Services Tax Act resulted in the General Sector GST (GGST) rising from 6% to 8% and the Tourism Sector GST (TGST) from 12% to 16%. These changes aimed to enhance national revenue and tackle economic challenges.

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The decision to raise the GST rates was approved on November 22, 2022, and communicated to the public and businesses through various channels. MIRA issued circulars and fact sheets and organized information sessions to ensure taxpayers were informed and prepared for the transition. Businesses were advised to update their systems and pricing structures to align with the new rates from January 1, 2023.

According to MIRA, the expected additional revenue from the increased GGST and TGST rates was significant. For the fiscal year 2023, the higher rates were projected to generate a further USD 63 million from the general sector and USD 137 million from the tourism sector, totalling over USD 200 million in extra revenue. This increase in revenue is crucial for managing rising debt interest costs and mitigating the effects of global inflation.

These changes were part of broader fiscal reforms aimed at stabilizing the economy, ensuring revenue streams, and supporting infrastructure development. While the transition to higher GST rates was generally smooth, MIRA reported encountering compliance challenges and worked on extensive outreach programs to guide businesses and ensure cooperation.