Parliament passes to raise income tax bracket to MVR 60,000

Parliament on Wednesday passed an amendment to the Income Tax Bill to raise the lowest amount eligible for income tax to MVR 60,000.

Initially, when Ungoofaaru MP Mohamed Waheed submitted the bill drafted by ruling Maldivian Democratic Party (MDP), the minimum amount put forth was MVR 40,000 with an eight percent taxation.

However, the amount was raised and the tax percentage decreased after MDP's Parliamentary Group leader Ali Azim put forth a motion to raise the income tax bracket to MVR 60,000 with 5.5 percent taxation. Additionally, the motion presented to replace the original tax brackets with five new ones.

Original four tax brackets:

Income MVR 0 – MVR 40,000: no tax

Income MVR 40,000 – MVR 60,000: 8 percent

Income MVR 60,000 – MVR 100,000: 10 percent

Income MVR 100,000 plus: 15 percent

New five tax brackets:

Income MVR 0 – MVR 60,000: no tax

Income MVR 60,000 – MVR 100,000: 5.5 percent

Income MVR 100,000 – MVR 150,000: 8 percent

Income MVR 150,000 – MVR 200,0000: 12 percent

Income MVR 200,000 plus: 15 percent

The motion was passed by the Parliament, with 31 lawmakers voting in favour, during the Whole House Sub Committee.

Under the guidelines set by the government, about 6,000 people have to pay income tax. Approximately 2,600 people receive an income between MVR 60,000 and MVR 40,000 in Maldives.

Charging income tax was one of the pledges of President Ibrahim Mohamed Solih during his election campaign in 2018.