Parliament motion challenges GST law over timing of tax liability
The motion notes that business owners have limited control over when they receive payments.
A motion has been submitted to the Parliament of Maldives raising concerns about the provisions of the current Goods and Services Tax (GST) Act that determine the timing of tax liability for businesses.
The motion, introduced by Maldivian Democratic Party (MDP) MP Mohamed Niushad on Monday, alleges that the existing law requires businesses to pay GST before receiving payment for the goods or services they provide.
According to the GST Act, there are two events that determine the time of supply for GST purposes:
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1-
The issuance of a tax invoice for the value of the goods or services
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2-
The receipt of full or partial payment by the seller
In practice, this means that the liability to pay GST arises when the tax invoice is issued, regardless of whether the payment has been received. The motion argues that this arrangement imposes financial strain on businesses, especially those supplying goods or services to government bodies and state-owned enterprises, which may delay payments.
MP Niushad stated that many businesses have expressed concern over being required to pay GST before receiving payments from government entities, sometimes waiting several days or longer. He argued that such delays place businesses in a difficult financial position and could lead to business closures, job losses, and broader economic challenges.
The motion notes that business owners have limited control over when they receive payments and questions the fairness of obliging them to pay tax before the funds are in hand.
