Tax bill proposing prison terms for evasion passes committee
The legislation proposes changes to tax offences and penalties, while giving MIRA further powers to recover unpaid taxes.
Parliament’s Economic Affairs Committee on Tuesday passed amendments to the Tax Administration Act that would introduce prison sentences for tax offences, increase penalties for late payments and expand the enforcement powers of the Maldives Inland Revenue Authority (MIRA).
The government-sponsored bill was introduced by Vilimalé MP Mohamed Ismail, Deputy Leader of the ruling PNC Parliamentary Group, in August last year.
Parliament accepted the bill with 60 votes and referred it to the Economic Affairs Committee on 6 August 2025.
The legislation proposes changes to tax offences and penalties, while giving MIRA further powers to recover unpaid taxes. It would also allow MIRA to estimate and determine tax liabilities where taxpayers fail to submit returns.
The committee passed the bill unanimously on Tuesday with amendments made during its review.
The committee report has not yet been published on Parliament’s website, leaving details of some changes made during the committee stage unavailable.
During Tuesday’s meeting, the committee also removed Clause 64(d) from the bill. Funadhoo MP Mohamed Mamdooh of the PNC proposed its removal on the grounds that the provision repeated wording already contained in the existing law.
The bill will now proceed to the Parliament floor for a vote.
Prison terms for tax evasion
Among the changes proposed is an increase in penalties for tax evasion.
Section 64 of the Tax Administration Act covers actions such as submitting false declarations, withholding required information and committing other acts intended to avoid tax obligations. The bill provides further definitions of conduct that would constitute tax evasion.
Under the existing law, the offence carries between three months and one year of house arrest. The amendment proposes replacing this with imprisonment ranging from three months to two years, depending on the offence.
The bill also revises penalties for failing to submit tax returns, documents or information required under tax laws.
The offences would include failing to submit tax returns and accompanying documents, failing to provide information requested under tax legislation, and failing to cooperate with a person or team appointed by the Commissioner General of Taxation to carry out functions under the law.
The civil penalty for failing to submit a tax return would remain at 0.5% of the tax payable for the relevant period.
The existing provision imposing a fine of up to MVR 50 for each day a return remains overdue would be changed to a fixed fine of MVR 50 per day.
For criminal violations related to these requirements, the existing penalty of between one and six months of house arrest would be replaced with a fine of up to MVR 250,000 and imprisonment of between one and six months.
Late payment penalty to double
The bill also proposes doubling the penalty imposed on overdue tax payments.
Under the existing law, unpaid tax attracts a daily penalty of 0.05% of the outstanding amount. The amendment would increase the rate to 0.1% per day.
For example, an unpaid tax liability of MVR 100,000 would currently generate about MVR 1,500 in penalties over 30 days. Under the proposed rate, the amount would increase to MVR 3,000.
The legislation also introduces an eight-year limitation period for prosecuting criminal tax offences.
It further sets out how the existing two-year period for initiating civil proceedings over tax offences should be calculated.
