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International Monetary Fund. Fiscal Affairs Dept.
The Maldives has identified the estimation and regular reporting of tax expenditures (TEs) as one of the top priority areas in continuing its tax modernization process. TEs are alternative policy tools (e.g., to direct transfers and other spending measures) in the form of provisions in the tax legislation that modify the tax liability of individuals or companies. The cost of TEs should be identified, measured, and publicly reported to improve transparency in fiscal management.
International Monetary Fund. Fiscal Affairs Dept.

-mal deduction is also low—below 1 percent of BPT revenues. Figure 5. Business Profit Tax Expenditure in 2019 Source: IMF staff calculation. 26. If we consider the higher tax rate on banks as negative TE, the 2019 BPT TE is MVR 27 million (one percent of total BPT collected or 0.2 percent of total tax revenue) (see Appendix) . The 25 percent tax rate on banks raises significant additional revenue (40 percent more than would be collected under the standard rate of 15 percent). 27. There is significant variation in the allocation of TE across industries ( Figure