MDP members have expressed concern during Monday's parliament session over differences in the minimum income amount required for income tax compared, to that specified in the Agenda 19 that was promoted during the elections campaign trail.
According to the bill presented to parliament by Ungoofaaru constituency MP Mohamed Waheed, the minimum income amount required for income tax is MVR40,000 per month. However, Agenda 19 promises a minimum income amount of MVR 60,000 per month as taxable income.
This discrepancy was pointed out by South Galolhu constituency MP Meekail Naseem.
The bill currently specifies an income tax rate of eight percent for an income of over MVR 40,000 per month, but we campaigned under agenda 19 and promised our constituents to take 3.5% from incomes over MVR 60,000 per monthSouth Galolhu constituency MP Meekail Naseem
The MP also expressed concerns over Article 12 of the income tax bill which states that foreign companies operating in the Maldives are exempt from paying dividend taxes. He stressed that there is no reason for exemption despite claims of double taxation from such companies.
Nevertheless, I believe the dividend tax is necessary. Countries such as America and England also tax dividends. This is because companies are a separate entity. They are entitled to certain rights as well as responsibilities. On the other hand, citizens are in a separate category compared to companies. Therefore, paying a business profit tax shouldn't exempt shareholders of companies from income taxSouth Galolhu constituency MP Meekail Ahmed Naseem.
He added that there is no use of charging an income tax without charging the dividend tax as well. However, South Henveyru constituency MP Hussain Shaheem responded stating that charging dividend tax would not be advisable at present as the dividends will be factored into the salary based on the scale of the business as per the current taxation regulation.
Most of the income from dividends will be spent by the time the audit report is due. If dividends are charged tax at the end of the month or year, they will have to sell their family, their home, etc. Hence dividends are strictly a tax paid amount as the company passes on the dividend to the shareholder after deducting the amount for taxMP Hussain Shaheem
Shaheem further added that a well-rounded taxation regulation needs to be established and that MDP pledged to charge tax on incomes over MVR60,000 which should be respected, hence he requested revisions to be made in the committee stage of the bill according to the citizen's wishes.
Velidhoo constituency MP Mohamed Abdulla Shafeeq also supported these concerns, stating that agenda 19 guaranteed to tax incomes over MVR60,000 to make things more convenient for citizens. Likewise, he highlighted that the bill should not charge or reduce taxes on communication and travel services.
Tax exemptions or reductions should be made on communication and travel services. This would be most convenient for citizens.Velidhoo MP Mohamed Abdulla Shafeeq
Shafeeg recommended that the committee should bring these revisions as they continue to analyze the bill.
The Minister of Finance has determined to charge income tax from next year onwards. The finance ministry predicts an approximate revenue of 600 million if income tax as per the rate determined for the minimum income of MVR 40,000.
