Maldives taxation system is based on self-assessment, whereby taxpayers are responsible for accurately reporting and calculating their tax liabilities. The Maldives Inland Revenue Authority (MIRA) oversees tax administration and enforcement, ensuring taxpayers comply with tax laws and make timely and full payment of taxes, fees and other dues. Here is an overview of tax filing and payment procedures, and the tax audit process.
Online Tax Filing and Payment
All tax filing and payment services are conducted through MIRAconnect, an online platform developed by MIRA. MIRAconnect serves as a centralized system for taxpayers to fulfill their obligations by submitting required documents and settling dues within specified deadlines.
Under the Tax Administration Act, failure to meet filing deadlines can result in:
- A fine of 0.5% of the amount of tax payable for the taxable period
- An additional fine of up to MVR 50 for each day of delay from the required filing date
Failure to pay tax by the required deadline is deemed an offense and will result in:
- A fine of 0.05% per day of the outstanding amount from the due date of payment
Tax Audits
Tax audits are conducted by MIRA to assess taxpayers’ compliance with tax laws. The audit process typically involves the following stages.
- Compliance and risk management
Cases for audits are determined based on a set of risk assessment criteria including information received from third parties, specific industries, particular issues for certain groups of taxpayers, and specific geographic locations.
- Commencement of audit
Taxpayers are notified of an audit by way of an audit notice, which is sent to their registered email address. The audit notice specifies the audit period, a preliminary list of documents to be examined, and other necessary information regarding the audit.
Audit notice is typically issued within 2 years from the date required for filing if the tax return is filed on or before the due date, or the date of filing the return or amended return if filed after the due date. MIRA may issue a notice of audit within 3 years in cases involving fraud, tax evasion, or suspicion thereof. If a tax return is not filed, notice of audit may be given at any time.
The audit process involves an initial interview to inform the taxpayer about the audit’s timeline and scope. Subsequently, a visit to the business premises is conducted, and document requests are sent via email. MIRA may also require the taxpayer to comply with specific requests within a stipulated time frame, which will not be less than 30 days.
- Finalization of audit
By law, MIRA has a maximum of 2 years from the date of the audit notice to assess any additional tax. MIRA can request an extension of the period for up to 3 years from the Tax Appeal Tribunal if there is reasonable cause to believe that the audit cannot be completed within 2 years.
Once the audit is finalized, a Notice of Tax Assessment (NOTA) is issued to the taxpayer along with the audit report. Any additional tax assessed should be paid within 30 days of receiving the NOTA.
- Objection by the taxpayer
Taxpayers have the right to object within 30 days of receiving the NOTA using the MIRA 903 form. The objection is reviewed by the Objection Division of MIRA, and a decision is communicated within 120 days of the objection via an Objection Review Report.
If MIRA fails to decide within 120 days, the decision is deemed final in the taxpayer’s favor.
- Appeal
Taxpayers may lodge an appeal with the Tax Appeal Tribunal within 60 days from the date of the Objection Review Report, after paying an amount not less than 25% of the tax in dispute.