Billions lost to rent waivers and weak enforcement in Maldives resort sector

The Auditor General’s Office has raised serious concerns over the Maldives government’s handling of resort rent collections and tax enforcement, warning that widespread waivers and repeated concessions are encouraging non-compliance within the tourism sector.

The 2023 audit report of the Maldives Inland Revenue Authority (MIRA), issued by Auditor General Hussain Niyaazi, revealed that MVR 5.9 billion in resort rent and related penalties remained unpaid at the end of the year — accounting for 45 percent of all money owed to the state.

The report highlights that the government’s approach of waiving off rent penalties and granting generous rent concessions has blurred the lines between compliant and non-compliant businesses, effectively rewarding non-payment.

From 2021 to 2023, the total amount of resort rent payable decreased by 38 percent. A major reason for this was the government’s decision in 2022 to exempt MVR 4.1 billion in rent payments. While some recovery was made in 2023 through settlement agreements, the Auditor General warned that such agreements are often signed with repeat defaulters who fail to honor previous deals, creating a cycle of non-compliance.

The audit directly criticized the Ministry of Tourism for failing to take appropriate action against resorts that violated rent agreements. It found that the ministry had not enforced penalties or pursued recovery measures, despite repeated defaults by certain resort operators.

“Default agreements are repeatedly signed with those who do not respect the agreements,” the report said, emphasizing that this undermines accountability and damages the integrity of the tax and rent system.

In addition to rent arrears, the report disclosed that unpaid taxes totaled MVR 6.6 billion by the end of 2023 — nearly half of the total revenue due to the state for the year.

Breakdown of unpaid taxes:

- General Goods and Services Tax (GST): MVR 2.9 billion

- Tourism Goods and Services Tax (TGST): MVR 1.3 billion

- Business Profit Tax: MVR 1.7 billion

The Auditor General’s Office stressed the need for decisive enforcement action to recover outstanding rent and tax dues and prevent further revenue loss. The report recommended that relevant authorities avoid blanket waivers and take a stricter stance against non-payment.