Tax authority reports fall in revenues for April

Tax receipts fell 19.9 percent below forecasts in April, the Maldives Inland Revenue Authority has said. Some MVR887.3million (US$57.5million) was collected last month.

MIRA blamed the drop partly on payment delays by taxpayers and the extension of a deadline for Business Profit Tax to May. Tax receipts had registered a 5.6percent decline compared to the same month last year.

Goods and Services Tax was the biggest contributor to revenues in April.

The fall in TGST or Tourism sector GST, as compared to last year, appears to indicate a slowdown in tourism. But figures for tourist arrivals have not been published yet.

March revenues also saw a steep drop; falling 8.2percent below forecasts and a 13.7percent decline as compared to the same period last year.

MIRA had collected MVR1.10billion (US$71million) in March.

February and January, however, saw record revenues, off the back of a sharp increase in tourist arrivals. MIRA collected MVR1.71billion (US$110million) in January and some MVR1.51billion (US$97million) in February.

President Abdulla Yameen’s administration hopes to raise MVR21.5billion in revenue this year.

The slump in revenue collection comes amid growing concern over the state of the Maldivian economy.

“Maldives’ high levels of fiscal deficits and public debt pose a significant risk, as the country is structurally spending beyond its means,” the World Bank warned in a report issued last week.

The economy slowed to just 1.9percent last year, the weakest showing since the global recession of 2009, the report said. Growth was dragged down by a slump in tourist arrivals and a number of cancellations following a state of emergency in November, it added.

The World Bank forecast moderate growth of 3.5percent this year, rising to 4.6percent in 2018. The deficit, at -8.4percent last year, is expected to widen further, to -13.3 percent this year and -18.9 percent in 2018.

The bank said public debt could rise from 73 percent of GDP this year to 120percent by 2020 owing to mega projects such as a US$800million project for airport expansion and a US$210million bridge between the capital and the airport.

It went on to urge the Maldives to reign in expenses and implement sequencing of mega projects

A ruling party MP promptly dismissed the report as one prompted by jealousy, while ministers said the government was aware of risks posed by high borrowing, but remains confident it could service the debt.