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IMF Country Report No. 21/234
MALDIVES
TECHNICAL ASSISTANCE REPORT––ESTIMATING TAX EXPENDITURES
October 2021
This Technical Assistance Report paper on Maldives was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in March 2021.
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Title page
FISCAL AFFAIRS DEPARTMENT
Maldives
Estimating Tax Expenditures
Shafik Hebous, Marc Seguin, and Nate Vernon
Technical Report
September 2021
The contents of this report constitute technical advice provided by the staff of the International Monetary Fund (IMF) to the authorities of the Maldives (the “TA recipient”) in response to their request for technical assistance. This report (in whole or in part) or summaries thereof may be disclosed by the IMF to IMF Executive Directors and members of their staff, as well as to other agencies or instrumentalities of the TA recipient, and upon their request, to World Bank staff and other technical assistance providers and donors with legitimate interest, unless the TA recipient specifically objects to such disclosure (see Operational Guidelines for the Dissemination of Technical Assistance Information— http://0-www-imf-org.library.svsu.edu/external/np/pp/eng/2013/061013.pdf). Disclosure of this report (in whole or in part) or summaries thereof to parties outside the IMF other than agencies or instrumentalities of the TA recipient, World Bank staff, other technical assistance providers and donors with legitimate interest shall require the explicit consent of the TA recipient and the IMF’s Fiscal Affairs Department.
Contents
C. Model for Estimating Tax Expenditures in the Business Profit Tax
C. Model for Estimating Tax Expenditures in the Goods and Services Tax
BOXES
1. Formulas for Estimating Goods and Services Tax Expenditures in the Model
2. Example from Canada – Charitable Donation in the 2021 Tax Expenditure Report
FIGURES
11. Distribution of Goods and Services Tax Payments Based on Turnover
13. Tax Expenditures in the Goods and Services Tax in 2014 and 2020
TABLE
APPENDIX
Abbreviations and Acronyms
BPT | Business Profit Tax |
CFC | Controlled Foreign Corporation |
ETR | Effective Tax Rate |
FAD | Fiscal Affairs Department (of the IMF) |
GFCF | Gross Fixed Capital Formation |
GDP | Gross Domestic Product |
GST | Goods and Services Tax |
HIES | Household Income and Expenditure Dataset |
IMF | International Monetary Fund |
ITA | Income Tax Act |
MIRA | Maldives Inland Revenue Authority |
MNEs | Multinational Enterprises |
NPISH | Non-profit Institutions Serving Households |
MOF | Ministry of Finance |
OECD | Organization for Economic Cooperation and Development |
PIT | Personal Income Tax |
R&D | Research and Development |
SUT | Supply and Use Table |
TE | Tax Expenditure |
TPU | Tax Policy Unit |
VAT | Value-Added Tax |
WEO | World Economic Outlook |
WHT | Withholding Tax |
Preface
At the request of Mr. Ibrahim Ameer, Minister of Finance, a team headed by the IMF Fiscal Affairs Department (Tax Policy Division) conducted a ‘remote’ mission to the Maldives during March 1– 18, 2021, to assist the authorities in estimating tax expenditures. The mission comprised Shafik Hebous (mission head), Nate Vernon (FAD), and Marc Seguin (FAD expert).
The mission held discussions with the Ministry of Finance (MoF) led by Mr. Ahmed Saruvash Adam (Chief Financial Budget Executive), Ismail Ali Manik (Minister of State for Finance), and Fathimath Razeena (Financial Controller).
The mission also held discussions with the Maldives Inland Revenue Authority (MIRA) led by Mr. Fathuhulla Jameel Commissioner General of Taxation and Asma Shafeeu (Deputy Commissioner General of Taxation).
The mission delivered a remote workshop providing a hands-on training on tax expenditure models developed for the Maldives. Attendees were a joint team from the MoF and MIRA that is expected to assume the responsibility of estimating tax expenditures. During the workshop, a set of accompanying slides (with details of the models) was delivered. The mission team thanks all attendees for the active participation in the workshop.
The mission team would like to express its sincere thanks to the authorities for the constructive discussions, and to Ms. Hasna Ahmad (head of the Tax Policy Unit at the MoF) for the excellent organization throughout the mission, and to Ms. Zumra Aminath (Director for Planning and Development at MIRA) for facilitating access to data and informative discussions.