Tax revenue projected to drop by 48 percent due to pandemic

Maldives Inland Revenue Authority (MIRA) projects a 48 percent drop in tax revenue for the year due to the impact of the new coronavirus pandemic on the Maldivian economy.

Commissioner General of Taxation Fathuhullah Jameel appeared for a press briefing at the National Emergency Operations Center (NEOC) to provide an update on MIRA’s work on Wednesday afternoon.

Fathuhulla said MIRA had prepared annual tax revenue projections based on five possible scenarios, and had shared the projections with the Finance Ministry and other relevant institutions.

He said that the current situation fell within the third scenario, which projects the State will generate MVR 8.95 billion as tax revenue this year, a significant drop compared to MVR 17.5 billion in tax revenue the country had expected to generate when the annual budget had been passed.

Economic projections prior to the coronavirus pandemic had been positive, with projections of economic growth and an increase in tourist arrivals.

Fathuhulla said that the annual tax revenue had taken a massive hit due to the impact of the pandemic on the tourism industry. While MIRA had collected MVR 1.8 billion as tax revenue in January, it collected only MVR 527 million in April. And by May 17, MIRA collected only MVR 109 million.

“This drop in revenue is due to the cease in tourism and other economic activities,” he said.

Maldives is heavily dependent on tourism as a source of income. The government has announced plans to gradually reopen its borders for tourism in July.