Auditor General Hussain Niyazy stated that tax revenue owed to the State increases year on year, adding that failure on the part of the government to settle payments owed to companies is a leading cause of taxes being left unpaid.
During today's Budget Committee meeting to study the estimated budget for 2027, Niyazy said their calculations show that there is around MVR 22 billion currently owed to the state. Citing the Maldives Inland Revenue Authority (MIRA), he also said that one of the reasons for the increase in a lack of tax payments is because of the government not settling payments owed to companies for projects awarded by the state.
"The state's Public Accounts System shows that up until September, there is almost MVR 7 billion in unpaid bills. We inquired whether settlement of the the unpaid bills has been included in the budget. They said that this was not included," said Niyazy.
He said that while there is a large amount of payments that have not been made by the government to companies, the 2027 budget does not include funding to cover the bills. And so, he said that it is important the Ministry of Finance and Public Enterprises finds a way to settle the payments.
"This also includes payments to the private sector. MIRA has also highlighted that one of the reasons tax compliance has fallen is because of the difficulties faced when the state does not make the required payments to the private sector," continued Niyazy.
According to him, even though options to make the payments were proposed, it is important MPs seek a way for payments to be made by the government.
While money owed by the government to companies has reached around MVR 7 billion, the government made arrangements on 1st November for pending payments from state administrations where it will be deducted from tax owed.
In a statement issued by the Ministry of Finance at the time, it said that arrangements are now in place so that when parties wishing to set off money owed to them by a state institution against taxes payable to MIRA submit their request to MIRA, the money owed by the government will be set off.
Under this arrangement, special rules have been established for pending, unpaid bills submitted by micro, small, and medium-sized enterprises (MSMEs). Accordingly:
- If the tax money payable to MIRA by those businesses exceeds the amount owed to them by the government, after setting off the tax money against the money owed by the government, the remaining amount must be paid by that party to MIRA as tax.
- If the tax money payable to MIRA is less than the amount owed to them by the government, after setting off the money owed by the government against the money payable as tax, the remaining amount will be paid by the government to that party.
When submitting a request to set off money payable to MIRA, the Ministry of Finance requested that the request be submitted along with necessary details in accordance with the rules established by the authority.
President Dr. Mohamed Muizzu announced last December that a mechanism would be established enabling taxes to be deducted from money owed by the government, in order to resolve the issue where companies were required to pay taxes to MIRA even while payments owed to them by the government were delayed.
