Majlis passes bill on General Sales Tax

The People’s Majlis has today passed a legislation which will introduce General Sales Tax (GST) in the Maldives for the first time in history. According to the newly passed legislation, taxes would be levied on sale of goods and services starting from the coming October.

According to the new legislation, GST in the tourism sector would be lower than proposed. Tourism GST for the remaining period of this year would be 3.5 per cent, for the next year 6 percent, and from 2013 onwards 8 per cent. The legislation also set the rate of general taxation on all other sectors at 6 per cent.

GST Bill was passed by a vote of 40 to 30 in a session where 70 members were present. 36 votes were needed to pass the Bill.

Opposition members continued their vehement criticism of the Bill, saying that implementation of it as a law would cause serious financial and administrative difficulties and push many traders into bankruptcy.

Dr. Abdullah Mausoom, member of main opposition DRP, and MP for Kelaa Constituency, urged that the people should be given a 3-month period before implementation of the new legislation. He also said that the percentage of tax should be set at 5 per cent as in the original bill, or lowered to 4 per cent. However, ruling MDP members opposed all these propositions.

Dr. Afrasheem Ali, MP for Ungoofaaru Constituency said that while it was befitting to tax the rich in order to provide benefits for the needy in the country, the current program of taxation initiated by the MDP government was nothing but a ploy designed to raise funds for 2013 presidential elections.

Qasim Ibrahim, MP for Maamigili Constituency and Leader of Jumhooree Party, said that levying a tax on the common traders and common people without first tackling the issues with foreign exchange rate would only lead to further destitution among the public.

“GST would be charged on the whole population. I heard the claim that the nation would be run from the incomes derived from one or two resorts. However, the government’s top level has become heavier and heavier, and the budget is running into a deficit of four to five billion. The new taxes are to be used for government’s recurrent expenditure. This should not be done without strengthening the currency first”, said Qasim.

Ahmed Siyam Mohamed, MP for Meedhoo Constituency said that such a tax should be introduced only with an appropriate “grace period”, of at least 6 months. He also said that at a time when even some resort owners had defaulted on payment of taxes that they have to pay, introduction of such a huge taxation system would overburden medium businesses. “I call upon the President Nasheed and all MPs to think about this and give the people additional time”, said Siyam.

On the other hand, MPs belonging to the ruling MDP stated resolutely that the new legislation would do nothing but good to the people and the country. “Those who did not vote for the bill are members who would reduce the income of the state by 5 billion Rufiyaa”, said Mohamed Aslam, leading figure of MDP and MP for Hithadhoo Uthuru Constituency.