3-Year tax fraud case filed against Hope Travels

The Maldives Inland Revenue Authority (MIRA) has launched a significant investigation and filed charges against Hope Travels, a company known for its ferry services in Shaviyani and Noonu atolls, on suspicion of tax evasion.

MIRA stated that for the tax collection period spanning July 1, 2020, to May 31, 2023, the GST returns submitted by Hope Holdings (which operates the service) and the income tax returns for 2020 and 2021 are allegedly false. The authority initiated the investigation after discovering that the company was reportedly attempting to evade taxes.

While Hope Holdings Partnership is registered with MIRA for GST, the specific Hope Travels activity under the business has long remained unregistered with the authority. MIRA also revealed that an alarming 89 percent of the total income generated from the business activity during the investigation period was not included in the GST returns filed with them.

The investigation uncovered that the taxpayer failed to report an income of MVR 54 million and over MVR 3 million in GST for the period. Furthermore, MIRA found that MVR 29 million was omitted from the income tax returns filed for the 2020 and 2021 tax years.

As part of the investigation, MIRA searched the office of Hope Travels, which handles business documents, and summoned individuals for information, taking statements related to criminal charges.

MIRA has approached the Prosecutor General's Office to seek prosecution against two business partners: Shahud Ibrahim Manik and Mohammed Ali, both associated with Hope Holdings.

Under Article 64 of the Administrative Taxation Act, it is an offense to knowingly or intentionally evade tax payments, or to assist a taxpayer in committing such an offense.

MIRA has affirmed its commitment to taking action against those found committing tax offenses, fraud, or deception, in line with its Tax Crime Mitigation Strategy.

With taxes forming the majority of the state's revenue, the issue of tax evasion has been on the rise. To combat this, the Administrative Taxation Act has been amended, introducing a maximum penalty of three years imprisonment for failing to comply with tax notices and information requirements with the intent to knowingly evade tax payments.