Maldives Parliament Committee approves harsher tax evasion penalties

The Economic Affairs Committee of the Parliament has unanimously approved amendments to the Tax Administration Act that would significantly increase penalties for tax-related offenses. The proposed changes, introduced by PNC MP Mohamed Ismail, seek to classify the intentional failure to file tax returns as tax evasion.

Under the new provisions, the maximum prison sentence for intentional tax evasion would double from one year to two years. The amendment also expands the definition of tax evasion to include providing incorrect information, omitting required details, or submitting inaccurate financial statements. For the specific offense of failing to submit a tax return, the amendment proposes replacing current house arrest sentences of one to six months with actual imprisonment for the same period, alongside potential fines of up to MVR 50,000.

Additionally, the bill proposes doubling the penalty for late tax payments. The daily charge for outstanding amounts would increase from 0.05 percent to 0.1 percent. The amendment must now receive full parliamentary approval and be ratified before the new penalties can be implemented.