President Ibrahim Mohamed Solih on Tuesday ratified the Income Tax Bill passed by the Parliament on December 4.
Following this ratification, the state will commence the collection of income tax on January 1, 2020.
However, the income tax imposed on 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, will be collected starting from April 1.
Following the amendments, income tax will be collected from individuals earning a monthly salary of MVR 60,000 and above. When first submitted to the parliament, the bill proposed to impose tax on monthly earnings that were MVR 40,000 or higher.
Overview of income tax:
- 5.5 percent tax: Income between MVR 60,000 - 100,000
- 8 percent tax: Income between MVR 100,000 0 150,000
- 12 percent tax: Income between MVR 150,000 to MVR 200,000
- 15 percent tax: Income of over MVR 200,000
Ministry of Finance estimates that the state will generate an annual revenue of MVR 450 million through income tax alone, with a total of 3,200 individuals who meet the criteria of paying this tax.
Collecting income tax was amongst the key electoral pledges of President Solih's administration.
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