Parliament rejects motion to amend GST time-of-supply rules

Parliament on Tuesday rejected an emergency motion seeking to address concerns over the timing of Goods and Services Tax (GST) payments under the current law, which requires businesses to pay GST before receiving payment for goods or services.

The motion, submitted by Keyodhoo Member of Parliament Mohamed Niushad, was rejected with 36 votes against and 11 in favour. Of those in favour, 10 were from the Maldivian Democratic Party (MDP) and one from the ruling People’s National Congress (PNC), Ahmed Azaan of Hithadhoo Central constituency.

Under the existing GST Act, a taxable supply occurs at the earlier of two events: when a tax invoice is issued or when the buyer makes full or partial payment. As a result, businesses are liable to pay GST based on the issuance of an invoice, even if they have not received payment.

Niushad stated that this requirement is creating financial strain for businesses, particularly when supplying to government agencies and state-owned enterprises, which often delay payment. He argued that this situation could lead to the shutdown of businesses, job losses, and broader economic impact.

The motion highlighted concerns from business operators who claim they must pay GST from the moment a tax invoice is issued, even when they have no control over when the payment is made. Niushad said this undermines the financial stability of enterprises, especially smaller businesses.

Although the motion was not accepted for debate, the issue remains a subject of concern among segments of the business community.