The government has denied unfairly targeting Jumhooree Party leader Gasim Ibrahim’s business interests after the tax authority froze the bank accounts of his Villa Shipping and Trading Company.
Three ministers met the press at the president’s office to defend the Maldives Inland Revenue Authority on Wednesday, stressing that MIRA is an independent institution whose enforcement actions are taken after due process and without any government interference.
“MIRA has always been collecting income owed to the government from properties that are leased under an agreement and taking the necessary action if the money is not paid,” said Tourism Minister Moosa Zameer.
Ahmed Zuhoor, the president’s office minister and chair of the economic and youth council, said the current administration does not discriminate in reclaiming islands that businesses have failed to develop after they were leased.
If he believes MIRA’s actions are illegal or unfair, Gasim has the right to file cases with the police or the courts, Zuhoor said.
Villa’s accounts were frozen over US$18.6 million allegedly owed as fines and unpaid rent for the island of Elaa in Thaa atoll. The move came shortly after the high court overturned a civil court ruling in favour of Villa over the tourism ministry’s termination of the lease agreement for the island.
Villa has since appealed the high court decision and challenged the legality of MIRA’s action at the civil court.
The opposition meanwhile denounced the freezing of Villa’s accounts as part of a “ramped up crackdown” against opposition leaders over last week’s no-confidence vote against the speaker of parliament. But the government dismissed the allegations and insisted that the police and judiciary are independent.
In a speech at a ruling party event on Tuesday night, President Abdulla Yameen also reiterated that the courts are free of undue influence from the executive.
The tax authority also asserted its independence in a statement on Tuesday night. Unlike taxes, MIRA said it does not determine payments and fines owed under agreements made between government offices and businesses.
“In such situations, MIRA’s role is collecting the money in a manner determined by the relevant agency and taking action if the money is not paid,” MIRA said, adding that the enforcement policy is applied fairly and without exception in accordance with taxation laws.
Enforcement action has been taken against 1,824 parties since January, of which 270 were tourism businesses.
The bank accounts of 17 companies have been frozen over unpaid land rent and fines, which relates to eight resorts in operation and the cancellation of lease agreements for nine islands, MIRA said.
Without naming Villa, the statement noted that in two cases enforcement action was suspended due to civil court judgments but reinstated after the high court overturned the lower court decision.
At Wednesday’s press briefing, Finance Minister Ahmed Munawar observed that 11 percent of government revenue in 2016 came from MIRA’s collection of unpaid taxes, rent and fines.
MIRA has collected MVR4.9 billion (US$317 million) through enforcement action since 2011, he said.
“The government’s policy is to collect money that is owed and to carry out the services we have to provide to the public and the public sector investment projects without interruption,” he said.
Gasim meanwhile insists that Villa does not owe unpaid rent or fines, calling MIRA’s actions “manufactured” and “a drama” played out by the government for political purposes.
At a press conference on Monday, Gasim said the lease agreement for Elaa exempts Villa from paying taxes until 2018. Villa has also paid US$4.6 million as rent and advance payments for Elaa, he added.
The island was among five properties leased as part of a settlement agreement reached with the government in December 2013 after the supreme court ruled that Villa was owed US$9.7 million by the state.
However, after the JP formed an alliance with the opposition Maldivian Democratic Party in early 2015, the tourism ministry cancelled the “amended and restated” lease agreements for the five properties and the tax authority sought US$90.4 million allegedly owed as unpaid rent and fines.
The central bank subsequently froze Villa’s accounts, which was lifted after Gasim announced his retirement from politics and backed the government in several crucial votes, including a constitutional amendment that barred him from contesting in the 2018 presidential election.
Gasim said on Monday that MIRA’s notice for the US$90 million was “a joke” as it came months after Villa won the tax authority’s “Ran Laari” award as one of five companies that paid the highest amount to the state.
The high court decision on Elaa in late March was meanwhile the latest in a series of rulings that have overturned lower court judgments in favour of Villa after Gasim backed former President Maumoon Abdul Gayoom’s decision to withdraw support for the government in late October.
By January last year, Villa had won back all five properties seized at the height of the political crisis in February 2015 after the civil court ordered the tourism ministry to comply with the lease agreements.
However, less than a month after Gasim threw his weight behind Gayoom, the high court overturned the civil court’s ruling over the seizure of the Vaavedhdhi and Bolidhuffaru lagoons.
In February, the high court also overturned a stay order issued by the civil court to halt the takeover of the Kaadehdhoo airport in Gaaf Dhaal atoll from Villa Air.
After the crippling freeze in May 2015, Villa had advised some 4,500 employees “who find it hard to work with us to rebuild the company again” to resign and promised to pay outstanding salaries at a later date.