MIRA Publishes 31st Amendment to the GST Regulation
On 25 November 2024, the Maldives Inland Revenue Authority (“MIRA”) has published the 31st Amendment to the Goods and Service Tax Regulation 1 (“Amendment”). Summarised below are the notable changes introduced via the Amendment.
Key Changes
One of the major changes introduced by the 7th Amendment to the GST Act 2 is that supplies made by cafes operated in a tourist establishment that cater exclusively to employees are excluded from the definition of tourism sector goods and services.
As a result, staff cafes are now eligible to register for general sector GST and charge GST at the rate of 8%. Previously, this exemption applied only to staff shops, while other facilities within tourist establishments were required to register for the tourism sector GST (“T-GST”).
As such, the new provisions of the GST Regulation introduced via the Amendment, now applies the same registration and tax rules to staff cafes as those previously applied to staff shops, specifically:
Registration
- Similar to staff shops, staff cafes must be registered separately from other taxable activities carried out by that person.
- However, MIRA has introduced a new registration procedure, whereby, if a staff shop or staff cafe is operated by the same person within the same tourist establishment, these staff shops and cafes will be registered together.
Exemption from charging output tax
- When an operator of a tourist establishment or vessel supplies goods or services to a staff cafe, similar to those rules applicable to staff shops, GST will not be charged on such supplies, provided the staff cafe is operated by the same operator and is registered for GST.
Anti-avoidance rules
- MIRA has also clarified that staff cafes will be subject to the same anti-avoidance provisions as staff shops. That is, if MIRA determines that staff cafes are being used to avoid tax, specifically, to bypass the tax that would otherwise be payable at the T-GST rate, such transactions will be taxed at the applicable T-GST rate.
The Amendment also repeals Tax Ruling TR-2014/G22, which previously provided guidance on domestic air transport services for Maldivian citizens and staff shops. This is now incorporated directly into the updated GST Regulation and does not bring any significant changes.
Effective Date
The Regulation came into effect on 25 November 2024.
