COVID-19: Tax Considerations for Individuals & Businesses
by Zaina Zahir
As the COVID-19 pandemic continues, businesses and individuals will inevitably undergo its unprecedented impacts. The income fallout of the reduced economic activity, coupled with taxes and fees that oblige regular payments, may even call for a liquidity crisis for many at this juncture. Hence, policymakers around the world are welcoming a whole raft of measures as they navigate through this crisis, including tax relief measures devised to help the most affected.
With this in perspective, this post will present to you the reliefs and payment options that are currently available to taxpayers in the Maldives.
Deferment of Payments and Return Filing Deadlines
From 15 April 2020 onwards, the greater Male’ area has been on lockdown in an effort to control the community spread of the disease. As a result, Maldives Inland Revenue Authority (“MIRA”) has announced that any deadlines falling within this period will be extended until the first working day following the lockdown as their office will be closed during the period. This includes deadlines with respect to filing tax returns and payment of taxes, land rent and fees or other charges paid to the MIRA. MIRA is yet to announce its reopening date.
What this means for you is, if you are unable to meet the statutory deadlines within this period of lockdown, you will get more time to file and pay what you owe – interest-free and penalty-free. You do not need to file for an extension individually- the extension applies to all taxpayers automatically.
However, if you are able to meet your payment and filing obligations, you may do so via the MIRA’s online portal, MIRAConnect.
Instalment Plans
The MIRA has also announced that ‘special arrangements’ are available for taxpayers who wish to enter into an instalment agreement with MIRA to pay its outstanding taxes, subject to certain conditions.
While MIRA has always had an established procedure to go through when entering into an instalment arrangement, on 1 December 2019 – prior to declaration of the Public Health Emergency – MIRA had amended its Enforcement Policy, incorporating more lenient commitment payment rates and payment schedules for eligible taxpayers that apply for an instalment plan between 1 December 2019 and 29 February 2020. Hence, what MIRA has effectively done through its announcement on 25 March 2020 is that it had extended the availability of the ‘special arrangement’ until 30 June 2020 – giving the taxpayers more time to apply for an instalment plan and utilise the special commitment payment rates and payment schedules. Details of payment options available, as per the announcement, can be found here.
What must be taken into consideration is that this option is only available for tax payments, meaning, payments related to Business Profit Tax, Income Tax, Goods and Services Tax and Green Tax, etc. This does not apply for non-tax payments such as tourism land rent. Tourism land rent is a levy imposed under the Maldives Tourism Act, thus, requests for relief with respect to payment of tourism land rent must be directed to the Ministry of Tourism.
If you are opting for an instalment plan to ease the difficulties faced in meeting the tax payment deadlines, do keep in mind that interest and payment fines will still accrue. However, you will have the option of requesting for fine relief through the submission of MIRA 910 Form. This is a separate process and there is no publicly available policy on it. MIRA will base its decision on its internal policy and inform you of its decision.
Follow our COVID-19 Resource Center
As the situation unfolds, new extensions, deferrals and reliefs for individuals and businesses are expected to be announced by the respective authorities. You can follow these developments and how they can impact you or your business from our COVID-19 Resource Center which brings together important information and updates relating to taxes and other fees.
