Fast-Track Tax Reform: Lessons from the Maldives

By Asian Development Bank

The economy of Maldives faced two very challenging episodes traced to the 2004 tsunami and the 2008-2009 global financial crisis. To develop alternative sources of funding and to improve services delivery, the government, with the help of partners like the Asian Development Bank and others, succeeded in transforming the country's revenue system into a modern, e-enabled system for effective tax collection and development of a broader tax base. Find out more about Maldives' fast-track approach to tax reforms which can serve as a guide for other developing countries.

• Language: English
• Publisher: Asian Development Bank
• Release date: Oct 1, 2017
• ISBN: 9789292579586

Book preview

FAST-TRACK TAX REFORM

Lessons from Maldives

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

© 2017 Asian Development Bank

6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines

Tel [phone]; Fax [phone]

www.adb.org

Some rights reserved. Published in 2017.

ISBN 978-92-9257-957-9 (Print), 978-92-9257-958-6 (e-ISBN)

Publication Stock No. TIM178673-2

DOI: http://dx.doi.org/10.22617/TIM178673-2

The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.

ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned.

By making any designation of or reference to a particular territory or geographic area, or by using the term country in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of this license. For attribution, translations, adaptations, and permissions, please read the provisions and terms of use at https://www.adb.org/terms-use#openaccess

This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material.

Please contact [e-mail] if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo.

Notes:

In this publication, $ refers to US dollars.

Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda

Unless specified, all photos are from Maldives Inland Revenue Authority.

Contents

Tables, Figures, and Boxes

TABLES

FIGURES

BOXES

Abbreviations

Currency Equivalents

(as of 31 December 2015)

Currency unit – rufiyaa (Rf)

Rf1.00 = $0.064893

$1.00 = Rf15.41000

Unless otherwise stated, $ refers to US dollars.

Preface

By Western taxation norms, Maldives was in essence a tax haven until 2011. It had no general income taxes. Government revenue was sourced totally from import duties, taxes on tourists and banks, land and resort island rents, business and other property income, fees and levies, and foreign aid.

That government revenue base had to change as the country came under intense economic pressure in the first decade of the 21st century, primarily as a result of the aftereffects of the 26 December 2004 tsunami and the 2008–2009 global financial crisis. This fiscal predicament, together with a growing domestic and international appetite for change in the way Maldives government revenue was raised, culminated in the introduction in 2011 of a goods and services tax (GST), first restricted to the tourism sector but quickly rolled out into a general GST across the whole economy. In addition, 2011 also saw the introduction of a broad based business profit tax (BPT).

This book details how the Government of Maldives was able to successfully introduce direct and indirect taxes in a remarkably short period, and particularly how Maldives Inland Revenue Authority (MIRA) was able to implement a largely successful tax administration system to enable the collection of those taxes and other government-imposed levies.

In addition, this publication:

• highlights the factors to Maldives’ success, which other developing countries might emulate, and

• notes the