Ministry of Finance has stated that the bill to increase taxes will be proposed before the start of the next Parliament session.
The finance ministry plans to hike the Goods and Services Tax (GST) and Tourism Goods and Services Tax (TGST) to increase state revenue. The ministry stated that the government decided to implement tax hikes in response to changes in the global market and in accordance with the current economic situation, which threatens to become worse if no measures are taken. As such, the government will be decreasing expenditure and implementing a variety of measures to increase state revenue, including increasing TGST from 12% to 16% and GST will be increased from 6% to 8%.
Furthermore, the government is in discussions to wait six months for taxpayers to prepare for the changes. The finance ministry noted that the tax rate in the Maldives is lower than in other small developing countries. The ministry stated that the state revenue would only reach MVR 30 billion by 2025 if the policies are not changed immediately and that the government would be forced to propose a increased budget in 2023 if spending is not decreased. It stated that these amounts would be a financially unfeasible response to the changes in the global market and economy.
