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Personal Income Tax Bill
Chapter 1
Preliminary
Introduction and
1.
(a)
citation
Income Tax”.
(b)
Persons affected by
This Act contains the provisions for the imposition of “Personal
2.
The Act, herein, shall be cited as the “Personal Income Tax Act”.
The provisions in this Act shall apply on the following Persons.
this Act
(a)
Any Person earning an income generated in the Maldives,
whether resident in the Maldives or not; and
(b)
Any Person resident in the Maldives earning an income from
overseas.
Chapter 2
Interpretation
Conceptual basis
3.
Phrases stated in this chapter shall be the main concepts on which the tax
system determined by this Act is based. The purpose of stating the
concepts in this chapter is to maintain the originality of the Act, and to
facilitate the achievement of the objectives of this Act to the fullest. All
provisions of this Act shall be read with due regard to such concepts.
Tax
4.
“Tax” refers to the personal income tax charged under this Act on Persons
specified in Section 2 of this Act. The term “Tax” hereinafter referred to in
this Act shall mean Personal Income Tax.
Taxpayer
5.
“Taxpayer” refers to Persons specified in Section 2 of this Act required to
pay tax in accordance with Section 17 of this Act, and, in phrasing, the
singular shall include the plural and the plural shall include the singular.
Total income
6.
Unless stated otherwise in this Act, “Total income” refers to the total
income earned by a taxpayer during a tax year, based on monthly earnings
from all sources of income.
Taxable income
7.
“Taxable income” refers to the income derived, after deducting expenses
authorised under this Act from the total income of a taxpayer during a tax
year.
Payment of tax
8.
“Payment of tax” refers to the payment, to the MIRA, of the amount
computed by categorising a Person’s taxable income in a tax year into the
5 (Five) categories of income specified in Section 19 of this Act and
applying the relevant rates against such categories.
Tax year
9.
“Tax year” refers to the period from 01 January to the 31 December of
every Gregorian calendar year.
Taxable period
10.
“Taxable period” in relation to a Person required to maintain accounts
under this Act or any other Act refers to the period of 12 (Twelve) months
ending on the end date of that Person’s accounting period, within a tax
year. In relation to others it shall be the tax year.
Resident person
11.
“Resident person” refers to one of the following persons.
(a)
Any Person whose permanent living arrangements are set up in the
Maldives; or
(b)
Any Person living in the Maldives for a continuous or discontinued
period of 183 (Hundred and Eighty Three) days or more, within any
12 (Twelve) month period commencing or ending during a tax year;
or
(c)
Any Person, whose permanent living arrangements are set up in the
Maldives, staying overseas on Maldivian government employment
during a tax year.
Persons not
12.
resident in the
”Person not resident in the Maldives”.
Maldives
Income generated
Any Person not specified in Section 11 of this Act shall be referred to as a
13.
in the Maldives
“Income generated in the Maldives” refers to the income generated in the
Maldives from the sources of income specified in this Act, irrespective of
whether the income was earned by a Person resident in the Maldives or by
a Person not resident in the Maldives.
Income earned
14.
from overseas
“Income earned from overseas” refers to the income earned by a Person
resident in the Maldives, from a source of income specified in this Act,
which was generated in a country other than the Maldives.
Withholding tax
15.
“Withholding tax” refers to:
(a)
Tax paid to the MIRA, by the employer after deducting the amount
withheld from the remuneration, at the rate determined by
reference to the category under which such remuneration is
classified, if the remuneration paid to an employee falls within a
category specified in this Act; and
(b)
Tax paid to the MIRA by the taxpayer after withholding an amount,
at the time of making payment, from the value of a service or grant
of right provided to that taxpayer by a Person not resident in the
Maldives.
Chapter 3
Types of Tax
Types of tax
16.
Two main types of tax shall be charged in pursuance to this Act; personal
income tax charged in accordance with Section 17 of this Act and
withholding tax charged in accordance with Section 62 and Section 63 of
this Act.
Obligation to pay
17.
tax
Obligation to pay
Any Person referred to in Section 2 of this Act shall pay tax in accordance
with this Act on the taxable income earned during a tax year.
18.
(a)
withholding tax
It is obligatory on employers to withhold the relevant amount from
remuneration payable to Persons employed in the Maldives if such
remuneration falls within the categories specified in this Act as
being subject to withholding tax, and pay such amount to the
MIRA in accordance with this Act.
(b)
It is obligatory on Persons specified in Section 2 of this Act to
withhold the relevant amount from payments made to Persons not
resident in the Maldives for services obtained from or rights
granted by such persons, and pay such amount to the MIRA in
accordance with this Act.
Chapter 4
Charging Tax
Tax rate and
19.
income category
The taxpayers’ taxable income shall be categorised into the following 5
(Five) categories and tax shall be charged on it at the rate determined for
each category, in accordance with Section 21 of this Act.
Category
Taxable income
Difference
(Monthly, in
(Monthly, in
Rufiyaa)
Rufiyaa)
Tax rate
First 30,000 of
First
Less than 30,000
income
Between
Next 30,000 of
30,000 – 60,000
income
Between
Next 40,000 of
60,000 – 100,000
income
Between
Next 40,000 of
100,000 – 150,000
income
3%
Second
6%
Third
9%
Fourth
Fifth
0%
More than
15%
150,000
Annualising
20.
monthly amounts
Categories specified in Section 19 of this Act are based on monthly income
of the taxpayer for ease of understanding. However, in determining the
taxable income for the taxable period under this Act, and in deducting
expenses under this Act, and in filing tax return under this Act, and in
paying tax under this Act, a period of 12 (Twelve) months shall be
considered in relation to that basis.
Manner in which
tax is charged
21.
Tax shall be paid after determining the taxable income of the taxpayer and
categorising such income into the categories specified in Section 19 of this
Act, and charging tax on the amount of income falling into the relevant
categories at the specified rate, and calculating the amount of tax payable
as follows.
(a)
The first 30,000 (Thirty Thousand) at the rate of 0% (Zero per cent),
since that 30,000 (Thirty Thousand) of taxable income is in the first
category;
(b)
The next 30,000 (Thirty Thousand), if any and to the extent
remaining, at the rate of 3% (Three per cent) since it is in the
second category;
(c)
The next 40,000 (Forty Thousand), if any and to the extent
remaining, at the rate of 6% (Six per cent) since it is in the third
category;
(d)
The next 50,000 (Fifty Thousand), if any and to the extent
remaining, at the rate of 9% (Nine per cent) since it is in the fourth
category;
(e)
Any amount remaining thereafter shall be charged at the rate of
15% (Fifteen per cent) since it is in the fifth category.
Example 1:
If the taxable income is determined as MVR 80,000, that amount
shall be categorised into three categories.
The first category will include the first 30,000 of that 80,000. The
second category will include 30,000 from the 50,000 remaining after
deducting that 30,000. The third category will include the 20,000
remaining after deducting that 30,000. And tax will be charged on
the amount falling within each category.
•
Tax for the MVR 30,000 in the first category need not be paid as
the rate for the first category is 0%.
•
As the rate for the second category is 3%, the MVR 30,000
falling within that category shall be charged at the rate of 3%,
and will result in tax payable of MVR 900.
•
As the rate for the third category is 6%, the MVR 20,000 falling
within that category shall be charged at the rate of 6%, and will
result in tax payable of MVR 1,200.
Therefore, if the taxable income of a taxpayer is MVR 80,000, that
person shall pay the total of MVR 900 and MVR 1,200 as tax,
amounting to MVR 2,100.
Example 2:
If the taxable income is determined as MVR 155,000, that amount
shall be categorised into five categories.
The first category will include the first 30,000 of that 155,000. The
second category will include 30,000 from the 125,000 remaining
after deducting that 30,000. The third category will include 40,000
from the 95,000 remaining after deducting that 30,000. The fourth
category will include 50,000 from the 55,000 remaining after
deducting that 40,000. The fifth category will include the 5,000
remaining after deducting that 50,000. And tax will be charged on
the amount falling within each category.
•
Tax for the MVR 30,000 in the first category need not be paid as
the rate for the first category is 0%.
•
As the rate for the second category is 3%, the MVR 30,000
falling within that category shall be charged at the rate of 3%,
and will result in tax payable of MVR 900.
•
As the rate for the third category is 6%, the MVR 40,000 falling
within that category shall be charged at the rate of 6%, and will
result in tax payable of MVR 2,400.
•
As the rate for the fourth category is 9%, the MVR 50,000
falling within that category shall be charged at the rate of 9%,
and will result in tax payable of MVR 4,500.
•
As the rate for the fifth category is 15%, the MVR 5,000 falling
within that category shall be charged at the rate of 15%, and
will result in tax payable of MVR 750.
Therefore, if the taxable income of a taxpayer is MVR 155,000, that
person shall pay the total of MVR 900 and MVR 2,400 and MVR
4,500 and MVR 750 as tax, amounting to MVR 8,550.
Income
22.
(a)
The total income of taxpayers resident in the Maldives shall consist
of income generated within and outside the Maldives.
(b)
The total income of taxpayers not resident in the Maldives shall
consist of income generated only in the Maldives.
Sources of income
23.
(a)
The following sources shall be considered as sources of income of
the taxpayer.
(1)
Remuneration earned from employment;
(2)
Income earned from a business conducted;
(3)
Income earned from work carried out;
(4)
Income earned from a service provided;
(5)
Money received as pension;
(6)
Money received as retirement benefit;
(7)
Dividend paid by a company resident in the Maldives;
(8)
Money received as royalty;
(9)
Management fee paid by a resident in the Maldives;
(10)
Income received by transacting movable property;
(11)
Income received by transacting immovable property;
(12)
Income received by transacting intellectual property;
(13)
Interest earned on a loan granted;
(14)
Taxable income required to be taxed under an international
agreement;
(15)
Income earned from an activity carried out in the Maldives
in return for a remuneration or fee.
(b)
In determining the total income of the taxpayer, generated in the
Maldives, income generated in the Maldives from sources specified
in Section 23(a) shall be considered.
(c)
In determining the total income of the taxpayer, generated
oversees, income generated from oversees from sources specified
in Section 23(a) shall be considered.
(d)
The MIRA shall determine in the Regulation made pursuant to this
Act, matters to be included in the sources specified in Section 23(a).
Exempt income
24.
The following types of income shall be exempt from the charge of tax
under this Act.
(a)
Dividend paid by a company listed on the Maldives Stock
Exchange;
(b)
Interest on debentures issued by a company listed on the Maldives
Stock Exchange;
(c)
Income of persons granted with diplomatic immunity;
(d)
Remuneration paid by the Government of a foreign State to a
person employed by that Government, if that person is not
resident in the Maldives or if he is resident in Maldives for the sole
purpose of such employment, and if such remuneration is paid in
that foreign State, and if such remuneration is subject to tax in that
foreign State.
(e)
Financial assistance approved by the MIRA to carry out research or
study in an institution approved by the Government of Maldives;
(f)
Payment received as Mahr, Nafaka and Halana;
(g)
Payment received under a life insurance policy.
Chapter 5
Deductions
Deducting certain
expenses
25.
(a)
If this chapter provides for the deduction of an expense, the taxable
income of the taxpayer shall be computed by deducting such
expenses from that Person’s total income.
(b)
If any Section of this Act refers to expenses authorised to be
deducted in accordance with this Act, such reference shall be to the
expenses specified in this chapter as authorised to be deducted
under this Section.
Deducting only
26.
(a)
expenses
In computing the taxable income of the taxpayer, expenses incurred
during a taxable period shall be deducted, only if that expense was
incurred in the taxable period for the sole purpose of generating
income.
(b)
The provisions on determining expenses specified in Section 26(a)
shall be stipulated in the Regulation made pursuant to this Act.
(c)
Where certain expenses incurred by a taxpayer during a taxable
period were not incurred for the sole purpose of generating income,
the proportion of that expenditure which was incurred for the
purpose of generating income shall be determined in accordance
with the Regulation specified in Section 26(b), and such amount
may be included within the expenses allowed to be deducted under
Section 26(a).
Zakat payment
27.
Payment of Zakat al-Mal and Zakat al-Fitr by the taxpayer shall be
considered as an expense and shall be deducted in computing the taxable
income in accordance with the Regulation made pursuant to this Act.
Pension expense
28.
The amount required to be deducted monthly from the basic salary of a
taxpayer under Section 14 of the Maldives Pension Act (Law Number
8/2009) as contribution to the Maldives Retirement Pension Scheme under
Section 12 of the said Act shall be deducted in computing the taxable
income.
Donations
29. (a)
Donations made by the taxpayer to the following places may be
deducted in accordance with the Regulation made pursuant to this
Act in computing the taxable income.
(1)
An association or public institution established for the
promotion of Islam;
(2)
An association or public institution established to provide
health care services for the general welfare of the public on a
non-profit basis;
(3)
An association or public institution established to help the poor;
(4)
An association or public institution established to provide
education for the general welfare of the public on a non-profit
basis;
(b)
The maximum amount allowed as deduction for donations under
Section 29(a) shall be 5% (Five per cent) of the taxable profit that
would have been derived had such expenditure not been deducted.
Interest expense
30.
The following amounts in relation to interest charged on a loan obtained
by the taxpayer for an income generating activity shall be deducted in
computing that Person’s taxable income.
(a)
Any amount of interest paid to a bank or financial institution
approved by the MIRA;
(b)
The amount of interest payable to a bank, financial institution or
any other Person not specified in Section 30(a), up to 6% (Six per
cent) per annum.
Depreciation
31.
(a)
If the taxpayer, for the purpose of generating income purchases
during an accounting period an asset, that cannot be used after a
certain period of use, or loses its utilisation capacity after a certain
period of utilisation, or loses economic value after a certain period of
time, capital allowance shall be given in accordance with the
Regulation made pursuant to this Act. And such capital allowance
shall be deducted in computing that Person’s taxable income.
(b)
For the purpose of Section 31(a), “Capital Allowance” refers to the
allowance given towards the deduction of an expense incurred on
assets acquired during an accounting period for the purpose of
increasing the value of the business and developing it, whereby
such expenses may be deducted over a certain period of time rather
than deducting it in its entirety during that accounting period.
(c)
The MIRA has the discretion to determine the types of assets falling
within Section 30(a), in the Regulation made pursuant to this Act.
Pre-trading expense
32.
(a)
If a taxpayer has incurred any expenses during the commencement
of a venture or for the purpose of commencing a venture in order to
earn income, such expense shall be deemed to have been incurred
on the first day of the commencement of the venture, and shall be
deducted in accordance with the Regulation made pursuant to this
Act in computing the taxable income.
(b)
Expenditure specified in Section 32(a) shall be deducted only once
every 5 (Five) years. And a maximum of MVR 750,000 (Seven
Hundred and Fifty Thousand Maldivian Rufiyaa) shall be allowed
for every such instance.
Losses
33.
(a)
If the taxpayer in a taxable period indicates on the tax return that a
loss has been incurred in selling an asset for money or any other
consideration that can be valued in money, or in such asset being
damaged, or in such asset being lost, such losses may be treated as
an expense and deducted in accordance with the Regulation made
pursuant to this Act in calculating taxable income.
(b)
If the taxpayer indicates on the tax return that a loss has been
incurred in the activity undertaken for the purpose of earning an
income by that Person during a taxable period, the value of such
loss shall be considered as an expense and shall be deducted in
accordance with the Regulation made pursuant to this Act in
computing the taxable profit.
Non-deductible
expenses
34.
Except under the circumstance specified in Section 24 of this Act, and
unless otherwise specified in another section of this Act, the following
expenses shall not be authorised to be deducted in computing the taxable
income of Persons required to pay tax under this Act.
(a)
Domestic or private expenses;
(b)
Capital expenditure incurred for the purpose of improving the
quality of a capital asset or altering or changing its nature, except as
may be provided by the Regulation made pursuant to this Act;
(c)
Losses or expenditure covered under a compensation procedure, an
agreement or an insurance policy;
(d)
Income tax payable in the Maldives or any other country;
(e)
Donations, which do not form part of the recipient’s total income;
(f)
Interest payable on a loan obtained for personal use;
(g)
Fines or other amounts payable in respect of any failure to comply
with any law or regulation made pursuant to a law;
(h)
Premium paid to an issuer of life insurance policy;
(i)
Expense incurred in the payment of Nafaka, under a Shari’ah
judgement.
Deduction allowed
35.
only once
Notwithstanding the allowance of a deductible expenditure under one
Section of this Act being deductible under another Section of this Act, the
expense shall, under this Act, be deducted only once. A single expenditure
shall not be separately deducted more than once under the two Sections.
Chapter 6
Tax Return
Filing tax return
36.
(a)
Unless prescribed otherwise in this Act, taxpayers required to pay
tax under this Act for any taxable period shall file a tax return to the
MIRA in accordance with this Act.
(b)
The tax return specified in Section 36(a) shall be filed with the
MIRA using the return form prescribed by the MIRA.
Information to be
included in the tax
return
37.
A tax return submitted under Section 36(a) of this Act shall include the
following information:
(a)
Name of the taxpayer;
(b)
Taxpayer Identification Number (TIN);
(c)
Total income earned during the taxable period;
(d)
Total taxable income for the taxable period;
(e)
Losses, if any, incurred during the taxable period;
(f)
Self-assessed amount of tax payable for the taxable period,
computed in accordance with this Act;
(g)
Additional information as required by the Regulation made
pursuant to this Act.
Self-assessed
38.
amount of tax
The amount referred to in Section 37(f) of this Act is the self-assessed
amount of tax calculated by the taxpayer in accordance with this Act,
hereinafter referred to as “self-assessed amount”.
Deadline for filing
39. Tax returns shall be filed by 31st May of the following tax year.
tax returns
Extension of the
40.
(a)
deadline for filing
A taxpayer may request to the MIRA in writing for an extension to
the deadline for filing a tax return under Section 36 of this Act.
tax returns
(b)
A request for the extension of the deadline for filing a tax return
under Section 40(a) shall be made 15 (Fifteen) days prior to the
deadline for filing the tax return under Section 39 of this Act.
(c)
Where a taxpayer makes a request to the MIRA for the extension of
deadline for filing a tax return under Section 40(a), and if the MIRA
is satisfied that such a request was made on the occurrence of an
event specified in the Regulation made pursuant to this Act, the
deadline for filing the tax return by the taxpayer under Section 39 of
this Act may be extended up to 90 (Ninety) days from the date
specified in the said Section.
Amending the tax
41.
(a)
return
The taxpayer may amend the tax return filed under Section 36 of
this Act by writing to the MIRA within 12 (Twelve) months
following the deadline for filing that return.
(b)
The MIRA shall amend obvious errors discovered on assessment of
a Person’s tax return filed under Section 36 of this Act by writing to
that Person within 12 (Twelve) months after the deadline for filing
that return.
(c)
The MIRA shall amend obvious errors discovered on assessment of
an amendment submitted under Section 41(c) by writing to that
Person within 12 (Twelve) months after the amendment is received
by the MIRA.
(d)
Amendments made by the MIRA as per Section 41(b) or 41(c) except
in the case specified in Section 41(e), shall be considered as an
amendment to the tax return filed under Section 36 of this Act.
(e)
Objections by the taxpayer to amendments to the tax return made
by the MIRA under Section 41(b) or 41(c) shall be notified to the
MIRA within 2 (Two) months from the date of receipt of the
amendment by the taxpayer. The procedure for dealing with such
objections shall be detailed in the Regulation made pursuant to this
Act.
Circumstances
where a tax return
is not required to
be submitted
42.
(a)
Notwithstanding Section 36 of this Act, the MIRA has the authority
to exempt taxpayers from filing a tax return under the following
circumstances.
(1)
Taxable income of the taxpayer does not fall outside the first
category among the categories of income specified in Section
19 of this Act; or
(2)
The total income of the taxpayer is based solely on the
remuneration earned from one employment.
(b)
Notwithstanding Section 42(a), if a taxpayer in computing his
income wishes to utilize the benefit of the deductions allowed under
this Act, he shall file a tax return under Section 36 of this Act.
Chapter 7
Investigation
Power of
43.
(a)
investigation
The MIRA may conduct an investigation into transactions of a
taxpayer relating to a taxable period or periods if it has reasonable
grounds to believe the existence of any of the following
circumstances:
(1)
Non-compliance in the payment of tax in accordance with
this Act and the Regulation made pursuant to it; or
(2)
(b)
Fraud in the payment of tax.
A decision by the MIRA to conduct an investigation under Section
43(a) shall be notified in writing to the taxpayer concerned.
(c)
An investigation under Section 43(a) shall be carried out before the
end of 12 (Twelve) months from the end of the taxable period of the
taxpayer in which the cause for the investigation took place.
Regulation for
investigation
44.
The administrative procedures for conducting an investigation as per
Section 43 of this Act shall be determined by the MIRA in the Regulation
made pursuant to this Act.
Assessment by the
45.
MIRA
Subsequent to an investigation carried out under Section 43 of this Act, the
MIRA shall, based on the findings of the investigation, determine any or all
of the following in relation to a taxable period of a taxpayer. Hereinafter
the assessment made by the MIRA shall be referred to in this Act as “MIRA
Assessment”.
Assessment
46.
notification by the
(a)
Total income earned by that Person during that period;
(b)
Amount of tax assessed by the MIRA for that period.
If an amount has been assessed by the MIRA under Section 45 of this Act, it
shall be notified in writing to the relevant taxpayer and the notice shall
MIRA
contain the following information:
Effect of
assessment by the
MIRA
47.
(a)
Name and address of the taxpayer;
(b)
The taxable period relating to that assessment;
(c)
Taxable income of the taxpayer;
(d)
MIRA assessed tax amount for the taxpayer;
(e)
Amount of tax paid by the taxpayer, if any, for that period.
An assessment made by the MIRA in accordance with Section 45 of this Act
shall have the following effects:
(a)
If the tax return relating to the taxable period of assessment has been
filed, the return shall be deemed to have been amended in
accordance with the assessment;
(b)
If tax return relating to the period of assessment has not been filed,
the assessed tax amount by the MIRA shall be deemed to be the
amount of tax payable by the taxpayer for that taxable period.
Provisions relating
48.
to more than one
If reference is made to more than one taxable period in a notice sent under
Section 43(b) for an investigation carried out under Section 43(a) of this Act,
period
the assessment made by the MIRA under Section 45 of this Act shall apply
separately to all periods referred to in the notice.
Timeline for
49.
investigation
A notice of MIRA assessment under Section 45 shall be sent within 12
(Twelve) months from the date of notice of investigation under Section 43
of this Act.
Chapter 8
Objection
Objection
50.
If an objection is raised to the assessment made under Section 45 of this Act
and notified under Section 46 of this Act, it shall be notified in writing to
the MIRA within 30 (Thirty) days of the notice of assessment, stating in
detail the grounds for the objection.
Validity of the right
51.
to objection
Notwithstanding the objection on the MIRA assessment by the taxpayer
under Section 50 of this Act, he is liable to pay to the MIRA the amount
stated in MIRA assessment. The right to objection under Section 50 of this
Act shall not be valid until such payment due under the assessment or any
payment due under this Act to that date has been settled in full.
Procedures for
52.
objection
Refunds or set offs
The procedures for dealing with objections filed under Section 50 of this
Act shall be determined in the Regulation made pursuant to this Act.
53.
If a review as per the Regulation specified in Section 52 of this Act of an
objection filed under Section 50 of this Act concludes that the amount as
per the MIRA assessment is higher than the actual tax payable, the excess
amount hence paid shall be refunded by the MIRA, or it may be set off
against the tax payable in the future.
Chapter 9
Payment
Payment of tax
54.
(a)
Tax under this Act shall be paid in two interim payments and one
final payment. The two interim payments and the final payment
shall be paid as follows:
(1)
The first interim payment, by 31st August of the current tax
year;
(2)
The second interim payment, by 28th February of the
following tax year;
(3)
Final payment, by the due date for filing the tax return by the
taxpayer with the MIRA for the taxable period.
(b)
Notwithstanding Section 54(a), taxpayers specified under Section 2
of this Act who started earning income through a source of income
specified in Section 23(a) of this Act after the date of commencement
of this Act shall, during the first year of earning such income, only
pay the final payment specified in Section 54(a) instead of the two
interim payments specified in the said Section.
(c)
Notwithstanding Section 54(a), interim payment shall not be made in
accordance with Section 54(a) in relation to the withholding tax
required to be paid under Section 62 and 63 of this Act.
Estimation of
interim payment
55.
(a)
Each of the two interim payments under Section 54 of this Act for the
first tax year subsequent to the commencement of this Act shall be
equal to half of the self-assessed estimated tax payable for the
current year, computed in accordance with this Act.
(b)
Beginning with the second year subsequent to the commencement of
this Act, each of the two interim payments under Section 54 of this
Act for each tax year shall be equal to half of the total tax paid for the
previous tax year.
Application of the
56.
provisions relating
Notwithstanding the submission of tax return under Section 36 of this Act
or the amendment or non-amendment of the tax return under Section 41 of
to interim payment
this Act, the interim payments shall be paid in accordance with Section 54
and Section 55 of this Act.
Final payment
57.
(a)
Without any notification by the MIRA, every taxpayer shall pay tax
by the due date for filing the tax return under Section 39 of this Act.
(b)
The final payment referred to in Section 57(a) shall be the final
payment referred to in Section 83(a)(3) of this Act.
(c)
The final payment referred to in Section 57 shall be based on and to
the extent of the excess, if any, of the sum of the following two items
against the self-assessed tax amount of the taxpayer:
(1)
Total of the interim payments made by that Person for the
current tax year;
(2)
The excess amount of tax for a previous tax year paid to and
not refunded by the MIRA.
Fines
58.
Failure to pay the interim payment as per Section 54 (a) of this Act and the
final payment as per Section 57 of this Act shall result in a fine on the
taxpayer in accordance with the Regulation made pursuant to this Act.
Fines overdue and not paid shall result in an additional 0.05% (Zero point
Zero Five per cent) on the total amount due to date.
Excess payment of
59.
(a)
tax
Taxpayers may request for a refund of money paid in excess of the
amount payable to the MIRA.
(b)
A request as per Section 59(a) shall be dealt with by the MIRA in one
of the following manners:
(1)
Refunding the money to the taxpayer if that taxpayer has no
outstanding payments to the MIRA under this Act;
(2)
Adjusting the amount from the tax payable in the subsequent
taxable period.
(c)
The tax payable by that person under Section 59(b)(2) shall include
the interim payments required to be paid.
Tax to be
60.
considered as debt
Tax payable under this Act by the taxpayer is a debt owed to the State from
the time the tax payer is required to pay tax, until it is received by the
MIRA. And the MIRA has the authority to recover the debt for the State in
accordance with the Tax Administration Act (Law Number 3/2010).
Chapter 10
Withholding Tax
Types of
withholding tax
61.
Withholding tax charged under this Act is divided into the following two
categories.
(a)
Withholding tax required to be paid by employers.
(b)
Withholding tax required to be paid in relation to international
transactions.
Withholding tax
62.
(a)
payable the
If remuneration paid to a Person employed in the Maldives falls into
one of the categories stated in Section 19 of this Act, withholding tax
employers
shall be paid monthly at such rate as determined for such category in
the said Section.
(b)
If the amount paid to a taxpayer as remuneration during a month is
less than MVR 30,000, no amount may be deducted by his employer
in the form of withholding tax for the said month.
(c)
Notwithstanding any provisions in another Act, the amount of
withholding tax stated in Section 62(a) payable as per this Act shall
be deducted from the remuneration payable to the employee.
Deducting such amount is an obligation on the employer under this
Act.
(d)
Withholding
tax
shall
be
deducted
from
the
employees’
remuneration in accordance with Section 62(a), from the amount
remaining after deducting the amount of pension specified in Section
28 of this Act.
Withholding tax
payable in relation
to international
transactions
63.
If the taxpayer is required to make the following payment or transfer, for
the service received or a right earned from a Person not resident in the
Maldives, such payment or transfer shall be subject to withholding tax at
the rate of 10% (Ten per cent) in accordance with this Act.
(a)
Payments in respect of rent, royalties, and other such consideration
for the use of movable property for the purpose of a business;
(b)
Payments made for carrying out research and development;
(c)
Payments made to a licensee as charges for the use of a software for
an electronic device;
(d)
Payments made for management fees;
(e)
Payments made to public entertainers;
(f)
Payments
of
distributors’
fees
for
the
public
viewing
of
cinematographic films;
Payer of
64.
(g)
Payments made as commission;
(h)
Payments made in respect of technical assistance.
(a)
Withholding tax payable on the remuneration of a taxpayer as per
withholding tax
Section 62 of this Act shall be paid to the MIRA by the employer. The
amount shall be paid by the employer after deducting the
withholding tax payable from each month’s remuneration.
(b)
Withholding tax referred to in Section 63 of this Act shall be paid to
the MIRA by the bearer of the cost of a service specified in that
Section. Such payment shall be made to the MIRA, after deducting
the amount of withholding tax from the total amount payable by the
bearer of the cost of that service.
Information on a
withholding tax
return relating to
remuneration
65.
(a)
If the payer of withholding tax under this Act is a person specified in
Section 64(a) of this Act, such person shall pay withholding tax
referred to in Section 62 of this Act together with a tax return that
includes the following information.
(1)
The name and National Identity Card number of persons
receiving remuneration by the payer of withholding tax;
(2)
Monthly remuneration paid to each employee by the payer of
withholding tax;
(3)
The amount of withholding tax payable in relation to the
remuneration paid to each employee by the payer of
withholding tax;
(4)
The total monthly remuneration paid to employees by the
payer of withholding tax;
(5)
The total amount of withholding tax payable in relation to the
total remuneration paid to employees by the payer of
withholding tax.
(b)
The MIRA has the authority to determine in the Regulation made
under this Act, other information to be included in the tax return
specified in Section 65(a).
Information on a
66.
(a)
withholding tax
If the payer of withholding tax under this Act is a person specified in
Section 64(b) of this Act, such person shall pay withholding tax
return relating to
international
referred to in Section 63 of this Act together with a tax return that
transactions
includes the following information.
(1)
Total amount paid with respect to the service received or the
right acquired, and the reason for making that payment;
(2)
Date of payment for the service received or the right acquired;
(3)
Name and address of the recipient of the payment for the
service received or the right acquired;
(4)
The account to which the payment with respect to the service
received or the right acquired was transferred, or the address
to which it was delivered;
(5)
The amount of withholding tax deducted under Section 63 of
this Act.
Obtaining and
forwarding a
withholding tax
certificate
67.
(a)
If any payment has been made to the MIRA as withholding tax
under Section 62 or 63 of this Act, the person making such payment
shall obtain a certificate from the MIRA to that effect.
(b)
If the certificate specified in Section 67(a) is obtained in relation to
the tax specified in Section 62 of this Act, a copy of that certificate
shall be given to the person whose remuneration was subject to the
tax deduction. If such certificate was obtained in relation to the tax
specified in Section 63 of this Act, a copy of that certificate shall be
forwarded to the payee.
No right to claim
68.
The amount noted on the certificates referred to in Section 62 or 63 of this
Act shall not be claimed from anyone by any Person with the right to it had
such amount not been deducted.
Deadline for the
69.
(a)
payment of
Withholding tax required to be paid under Section 62 of this Act
shall be paid to the MIRA within 15 days from the date the
withholding tax
remuneration was due to be paid.
(b)
Withholding tax required to be paid under Section 63 of this Act
shall be paid to the MIRA by the 15th day of the month following the
month in which the payment was made.
Adjustment
70.
(a)
If a Person required to pay withholding tax under Section 62 and 63
of this Act, makes an excess payment of tax under another Section of
this Act to the MIRA, and if the withholding tax has not been paid to
the MIRA within the period specified in Section 69 of this Act, the
amount payable as withholding tax may be set off against the excess
payment received earlier by the MIRA.
(b)
Adjustments made as per Section 70(a) shall be notified in writing to
the taxpayer and he shall be exempt from paying the amount set off
as withholding tax.
Withholding tax
71.
considered as a
Withholding tax payable under this Act shall be a debt owed to the State by
the taxpayer from the time it is required to be paid until it is received by
debt
the MIRA. And the MIRA has the authority to recover such debt owed to
the State in accordance with the Tax Administration Act.
Taking personal
72.
(a)
responsibility
If the withholding tax required to be deducted by a payer of
withholding tax is not deducted, or if it is not paid to the MIRA in
the required period, it shall be the obligation of that person to pay
that tax in accordance with this Act. And that person shall take
personal responsibility in paying that tax.
(b)
Notwithstanding Section 72(a), no restrictions apply in deducting the
amount of money required to be paid in accordance with that
Section from a later transaction.
Chapter 11
Registration
Obligation to
73.
(a)
register
Persons specified in Section 2 of this Act as being within the scope of
this Act, shall apply to the MIRA to be registered within the period
specified in Section 74 of this Act, in accordance with the Tax
Administration Act (Law Number 3/2010).
(b)
All Persons registered under Section 73(a) shall be issued a Taxpayer
Identification Number.
Period to apply for
registration
74.
The following persons in the following periods shall apply for registration
with the MIRA in accordance with Section 73 of this Act.
(a)
Persons receiving income generated in the Maldives, whether or not
being resident in the Maldives at the time of commencement of this
Act, shall apply within 90 (Ninety) days from the date of
commencement of this Act.
(b)
Employers in the Maldives at the time of commencement of this Act
shall apply within 90 (Ninety) days from the date of commencement
of this Act.
(c)
Employees in the Maldives at the time of commencement of this Act
shall apply within the period determined and announced by the
MIRA, after the commencement of this Act.
(d)
Persons resident in the Maldives at the time of commencement of
this Act, earning income generated oversees, shall apply within 60
(Sixty) days from the date of commencement of this Act.
(e)
Any person who starts earning income generated in the Maldives
after the commencement of this Act shall apply within 45 (Forty
Five) days from the date such income was first earned.
(f)
Employees or employers that commence employment after the date
of commencement of this Act shall apply within 45 (Forty Five) days
from the date such employment commenced.
Chapter 12
General Provisions
Maintenance of
records
75.
(a)
The documents and financial records required to be maintained
under this Act shall be specified in the Regulation made pursuant to
this Act. And that Regulation shall also specify provisions for
maintaining such records.
(b)
The maintenance and making up of documents and financial records
shall be carried out in accordance with the Regulation referred to in
Section 75(a).
This Act to be read
76.
together with the
This Act shall be read together with the Tax Administration Act (Law
Number 3/2010). And any word or expression defined in the Act contained
Tax Administration
herein, unless the context otherwise requires, shall have the same meaning
Act
such word or expression has in the Tax Administration Act.
Making regulations
77.
(a)
and administration
Regulations required to be made pursuant to this Act shall be made
and administered by the MIRA.
(b)
Regulations required to be made pursuant to this Act shall be made
and publicised by the MIRA within 6 (Six) months from the date of
commencement of this Act.
Commencement of
78.
(a)
This shall commence from 01 January 2012.
(b)
The first year in which tax shall be charged in accordance with this
the Act and the
charge of tax
Act shall be the financial year commencing from 01 January 2012.
(c)
The first interim payment, out of the two interim payments required
to be made under this Act, shall be made on 31 August 2012.
Definitions
79.
Unless otherwise specified in this Act, the following words and phrases
shall have the following meaning.
“Remuneration” refers to basic salary, financial benefits and other benefits
to which a monetary value can be attributed, earned from employment.
“Payment” refers to the money paid as tax to the MIRA under this Act.
“Remuneration” refers to salary and other benefits earned from
employment.
“Royalty” refers to a proportion of the payment made to the owner of a
good or a product in return for the right to sell such good or product, from
the profit made by the recipient of the right to sell such good or product by
selling it or exploiting it in any other manner.
“Resident Company” refers to a company registered in the Maldives, or
where the company is not registered in the Maldives, if that company has
established its head office in the Maldives or if control and management of
that company has been established in the Maldives.
“Capital Allowance” refers to a relief in determining the taxable profit in
the form of instalment on the payment of expenditure incurred on assets
acquired in a specific accounting period, instead of deducting it in full
during the year of acquisition.
“Retirement Benefit” refers to annuity received under a retirement scheme
except pension money received under the Maldives Retirement Pension
Scheme established in pursuance to the Maldives Pension Act (Law
Number 8/2009).
“MIRA” refers to the Maldives Inland Revenue Authority established
pursuant to the Tax Administration Act (Law Number 3/2010).
DISCLAIMER OF LIABILITY – The Maldives Inland Revenue Authority shall not accept any liability or responsibility arising out of any reliance whatsoever on the translation contained herein. In the event of
conflict between the translations contained herein and the Dhivehi text of the Personal Income Tax Bill, the latter shall prevail for all given purposes. Therefore, it is advised that both the Dhivehi text and
its English translations be read concurrently.