Towards a Plastic-Free Maldives

The role of Maldives in the international platforms on environmental protection and climate change has grown significantly over the years. As a prominent voice in the Alliance of Small Island States, Maldives spreads on the impact of climate change, especially on small island nations like Maldives and advocates on the importance of establishing sustainability goals and practices around the world for environmental protection.

To achieve its sustainability objectives, Maldives has taken steps to tackle one of its major environmental concerns - waste management. The Waste Management Act, which came into effect on December 18th, 2022, is one such measure.

The Waste Management Act banned the production and importing of single use plastic in Maldives and imposed a mandatory fee on plastic bags sold or provided at point of sale of the business pursuant to the Plastic Bag Fee Regulation implemented as an important step towards improving the current waste management practices in the Maldives.

The Waste Management Act defines “Plastic bag” as bags made of plastic including degradable plastics made of oxo-degradable and synthetic polymers, which are used for carrying goods.

Exemptions from Plastic Bag Fee

• Plastic bags sold or provided free of charge from duty free shops.
• Plastic bags used to carry unpackaged fresh fish.
• “Bin liners” sold or provided free of charge specifically for the purpose of waste disposal by parties or authorities who provides waste management services.
• A plastic bag used by the manufacturer of a good for the packaging necessary for the sale of such a good.

Collection and Computation of Plastic Bag Fee

• Commencing from 18^th April 2023, the plastic bag fee of MVR 2 must be collected from all plastic bags sold or provided at point of sale of the business.
• This includes plastic bags sold or provided free of charge in supplying a GST exempt and zero-rated good or services.
• The fee collected from plastic bags must be shown separately in the invoice / receipt.
• GST is NOT subject on the plastic bag fee collected unlike service charge. Taxpayers must ensure that GST is not collected from the plastic bag fee shown in a separate line of the tax invoice.
• The responsibility of submitting the plastic bag fee information and paying plastic bag fees collected to MIRA falls on GST registered taxpayers.
• Excess plastic bag fees collected, or plastic bag fee is charged on a bag exempted from the fee must be included in the GST return for the period and paid to MIRA.
• Tax point of sale of Plastic Bag Fee

Submission of the plastic bag fee information and payment to MIRA

• GST registered taxpayers will be required to declare the amount collected as plastic bag fee in the GST Return of the taxpayer.
• The deadline for the submission of the information of Plastic Bag Fee collected and payment to MIRA is the same GST deadline applicable for the taxpayer under the GST Act
• Plastic bag fee shall be collected and paid to MIRA in Maldivian Rufiyaa (MVR), even by taxpayers registered for Tourism Goods and Services Tax (TGST). 

Record Keeping

The following records and documents must be maintained with respect to the plastic bag fee:

(1) Details of plastic bags purchased;

(2) Details of plastic bags received free of charge;

(3) Details of plastic bags sold;

(4) Details of plastic bags supplied free of charge;

(5) Details of plastic bags damaged;

(6) Details of plastic bags returned by customers.

Records relative to plastic bag fees must be kept in accordance with the Tax Administration Act and Regulation and kept for a minimum of 5 years. 

Penalties

Treatment of plastic bag fees for Income Tax purposes