Emergency Committee Meeting Held: Bill to Imprison Tax Evaders Passed by Committee

The Economic Affairs Committee of the People's Majlis has passed an amendment to the Tax Administration Act, aimed at enhancing the powers of the Maldives Inland Revenue Authority (MIRA) and introducing imprisonment for tax evasion.

The government-sponsored bill, introduced by Vilimalé Constituency MP Mohamed Ismail, was initially passed by the Parliament and referred to the committee on August 6 last year. After a year of deliberation, the committee concluded its review of the bill, which had originally received 50 votes in favor, while incorporating several amendments.

During the review, PNC MP for Funadhoo Constituency, Mohamed Mamdhooh, proposed the deletion of Clause 64(d) of the bill. The member noted that the provision in the bill mirrored existing legislation, rendering its inclusion redundant. Following this adjustment, the committee passed the bill with the unanimous consent of the members present.

The primary objective of the proposed amendments to the Tax Administration Act is to review and strengthen MIRA’s enforcement powers regarding tax recovery and to increase the severity of penalties for tax-related offenses.

Previously, failure to file tax returns or provide necessary information did not carry criminal penalties such as imprisonment. However, the new amendments introduce a fine of up to MVR 250,000 and a prison sentence ranging from one to six months for such violations.

The bill also includes modifications to Chapter 15 concerning confidentiality. Specifically, it proposes adding three sub-sections to Section 15(k).

These provisions stipulate that employees involved in the administration of tax laws must not disclose information used in the course of their duties to unauthorized persons. Furthermore, it mandates the confidentiality of information shared with foreign jurisdictions or regional tax authorities under international tax cooperation frameworks.

Additionally, the bill mandates that any information disclosed for statistical purposes must be anonymized to protect the identity of the taxpayer. In such instances, the recipient of the information is legally obligated to maintain its confidentiality and is prohibited from disclosing it to any third party.

While the bill has drawn public concern, some financial experts suggest that these measures are driven by the government’s urgent need for revenue. Critics have alleged that the administration is seeking to maximize revenue through aggressive enforcement, noting that the initiative may be a policy direction rather than an independent decision by the Commissioner General of Taxation.