Ugoofaaru MP Mohamed Waheed, on behalf of the state, submitted the bill on income tax to the parliament on Tuesday.
According to the bill, those receiving a monthly income which exceeds MVR 40,000 or those earning an annual income of MVR 480,000 will be subject to the tax.
Earnings are inclusive of salary, business profits, revenue generated by leasing movable and immovable assets, dividend, interest, annuity, pension and retirement benefits, salary earned by beneficiaries, technical service fee, commissions and royalties.
The state estimates that a total of 2,621 individuals, earning between MVR 40,000 to MVR 60,000, will pay eight percent of their income while 2,285 individuals earning between MVR 60,000 and 100,000 will pay 10 percent of their income.
The state further determined that those earning over MVR 100,000 must pay income tax at a rate of 15 percent.
Moreover, banks must pay 25 percent of their earnings to the state under the bill. Entities other than civilians generating monthly incomes of over MVR 500,000 must pay 15 percent of earnings as taxes.
Both the income earned from within the country and internationally is considered by the state when collecting taxes.
According to the bill, remittance tax, land sales tax, business profit tax, bank profit tax and petroleum tax will no longer be collected, since the aforementioned earnings fall under the total income.
Zakat from earnings, retirement pension scheme payments, welfare costs, donations and the six percent paid as interest annually, will be collected after considering deductions from income tax.
Moreover, as per the bill, businesses already registered at Maldives Inland Revenue Authority (MIRA) do not have to reregister.
Ministry of Finance estimates that the state will generate a revenue of MVR 680 million through income taxes if the bill is passed without amendments. The budget proposed for next year contains MVR 600 million that will be generated from income tax as well.
Hence, it is believed that the government will start collecting income tax from next year onwards.