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State revenue dips by 82 percent

15 July 2020, MVT 11:56
Mira staff operating in protective wear made mandatory for running operations under the new normal. PHOTO: MIHAARU
15 July 2020, MVT 11:56

Maldives Tax Authority and Maldives Inland Revenue Authority (MIRA) announced on Monday that the country’s receipts this June was 82 percent lower than returns over same period in 2019. As

per MIRA’s monthly financial reports, Maldives collected a total of MVR 276 million in tax by July 2020 - a crisp comparison to June 2019, when the revenue authority recorded receipts of MVR 1.5 billion and an additional USD 7.4 million.

Maldives heavily tourism-reliant economy continues to grapple with severe repercussions caused by the travel restrictions imposed over the global COVID-19 pandemic. It is estimated that the country will face a shortfall of approximately USD 450 million (MVR 6.9 billion) in foreign currency.

In a bid to cushion the pandemic's financial blow on local economy, Maldivian government introduced a MVR 2.5 billion economic relief fund to prevent the closure of local businesses and the loss of jobs

Therefore, with the travel industry ground to a halt, the government introduced measures intended to alleviate the present-day struggles, including allowing businesses to make Tourism Goods and Services Tax (TGST) payments in Maldivian Rufiyaa (MVR) from April to September.

Maldives also recorded a similar decrease in revenue by 80 percent this May, raking in MVR 206 million only. 

Given that over 60 percent of the country’s GDP is attributed to revenue generated by the tourism industry, international border closures and travel bans have had a ripple effect across investments in Maldives, leading World Bank to project the island nation as being the worst hit, financially, across Southeast Asia.

However, from Wednesday onwards, Maldives has officially now re-opened its borders and will be welcoming tourists again, in a bid to recover from the economic regression. 

MIRA estimates that this year, the country will generate MVR 8.95 billion in tax, a whopping 48 percent less than the originally projected MVR 17.3 million.

Up to 75 percent of Maldives' state revenue is attributed to tax collections.

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