President ratifies prison terms and higher fines for tax offences
Under the amended law, the penalty has been changed to imprisonment ranging from three months to two years.
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President Mohamed Muizzu on Monday ratified amendments to the Tax Administration Act introducing prison sentences for tax evasion and other tax offences, while doubling the daily penalty imposed on unpaid tax.
Parliament passed the amendments last Wednesday to revise penalties for tax offences, define additional forms of non-compliance and set time limits for criminal prosecution.
The amendments take effect upon ratification.
Under Section 64 of the Tax Administration Act, tax evasion is a criminal offence. The amendments expand the provisions covering tax evasion to include submitting false statements, withholding information required under tax laws and using deception to avoid paying tax.
Tax evasion previously carried a sentence of between three months and one year under house arrest. Under the amended law, the penalty has been changed to imprisonment ranging from three months to two years.
The amendments also revise penalties for failing to submit tax returns, documents and information required under tax laws.
The provisions cover failure to submit tax returns and supporting documents, failure to provide documents or information requested under tax legislation, and refusal to cooperate with officials authorised by the Tax Commissioner to enforce the law.
The existing civil penalty of 0.5 per cent of the tax payable for the relevant taxable period will continue to apply when a tax return is not submitted.
The amendment also changes the daily penalty for late filing from an amount not exceeding MVR 50 to a fixed penalty of MVR 50 for each day of delay.
Failure to submit required returns can also result in a fine of up to MVR 250,000 and a prison sentence of between one and six months. The previous law provided for between one and six months of house arrest.
The amendment also doubles the daily penalty imposed on unpaid tax balances from 0.05 per cent to 0.1 per cent.
For example, an unpaid tax balance of MVR 100,000 over 30 days would incur a penalty of MVR 3,000 under the new rate, compared with MVR 1,500 under the previous rate.
The law also establishes an eight-year limitation period for initiating criminal prosecution for tax offences.
It further sets out how the existing two-year limitation period for civil enforcement action against taxpayers is to be calculated.
The amendments were among seven bills ratified by President Muizzu at the President's Office on Monday.
