Cash basis approved for businesses below MVR 10 mn

Maldives Inland Revenue Authority (MIRA) has announced changes to regulation, allowing businesses which earn an income lower than MVR 10 million to be allowed to calculate tax returns based on the cash basis method of recording income.

Tax returns based on the cash basis method record income as businesses receive it and expenses as businesses pay them.

Cash basis council only be used previously for businesses with a yearly income of less than MVR 5 million.

The new arrangement comes with the 11 amendment to regulation on business profit tax made on Tuesday, January 17.

MIRA announced that the change was made to increase convenience of taxpayers, and that the change will be applicable to records from 2016 onwards

Businesses with an annual income of more than MVR 10 million need to calculate tax returns bases on accrual basis – which means income and expenses need to be reported as they are incurred, regardless of when the money is received.

MIRA has also declared that businesses with an annual income of less than MVR 750,000 and businesses with an annual profit of less than MVR 500,000 will no longer be required to submit business profit tax.

In addition to this, businesses which have requested dissolution will not be required to submit any tax statements from the day the request is made.