Parliamentary committee pushes income tax bracket to MVR 60,000

Whole House Sub Committee of the Parliament has voted in favor of amending the Income Tax Bill to push the starting income bracket for individual income tax up to MVR 60,000 from the originally suggested MVR 40,000.

The decision was made at the Whole House Sub Committee session this Wednesday, after MDP parliamentary group leader, Ali Azim recommended pushing up the individual income brackets and lowering the tax rates in the bill.

Pushing up the brackets for individual income tax had been the biggest amendment suggested by MDP to the Income Tax Bill drafted by the government – which had established the starting income bracket as MVR 40,000 and the starting tax bracket as eight percent.

MDP, this Wednesday, presented a motion to push the starting income bracket on individual income tax to MVR 60,000 and to lower the starting tax bracket to 5.5 percent.

It also presented a motion to amend and replace the original four brackets with five brackets.

ORIGINAL TAX BRACKETS:

• Income MVR 0 – MVR 40,000: nil
• Income MVR 40,000 – MVR 60,000: 8 percent
• Income MVR 60,000 – MVR 100,000: 10 percent
• Income MVR 100,000 plus: 15 percent

AMENDED TAX BRACKETS:

• Income MVR 0 – MVR 60,000: nil
• Income MVR 60,000 – MVR 100,000: 5.5 percent
• Income MVR 100,000 – MVR 150,000: 8 percent
• Income MVR 150,000 – MVR 200,0000: 12 percent
• Income MVR 200,000 plus: 15 percent

The motions passed with the unanimous consensus of all 31 members present during the Whole House Sub Committee session.

Speaker Mohamed Nasheed, the Chairperson of the Whole House Sub Committee, noted that that the amendments will result in a considerable reduction in the projected income from the tax.

“These amendments will mean a MVR 150 million reduction in the projected income from income tax,” said Nasheed.

Finance Ministry had originally projected to generate MVR 600 million from income tax.

The amendments suggested by MDP falls in line with its legislative agenda, Agenda 19.