On 20th October 2024, MIRA brought significant changes to its enforcement policies. The changes, which are already in effect, involve three key areas:
- First amendment to the General Enforcement Policy (2022/G-11)
- First amendment to the policy on accessing bank account information and freezing bank account (2022/G-9)
- Third amendment to the Name and Shame Policy (2022/G-10)
The key changes introduced through the amendments to these enforcement policies and their implications are as follows:
1. General Enforcement Policy (2022/G-11)
The amendment shortens the notice periods provided to taxpayers for fulfilling filing and payment obligations.
First Notice: Taxpayers are granted 15 days to file returns and settle outstanding payments.
Final Notice: If obligations are not met within the “First Notice” period, a final notice is issued with an additional 15-day period, along with a reminder of the enforcement actions MIRA may take.
Total Response Time: With the amendment, taxpayers now have an aggregate of 30 days (reduced from 60 days) before MIRA initiates enforcement actions.
2. Policy on accessing and freezing bank account (2022/G-9)
The policy amendment brings clarity to the conditions required before MIRA can freeze bank accounts after serving all relevant notices. The four prerequisites include:
- The outstanding dues exclusive of fines and interest, must exceed the threshold set by MIRA.
- The taxpayer has not agreed to an installment plan with MIRA to address the outstanding dues.
- The outstanding dues did not arise from payment failures associated with a state institution, a 100% state-owned entity, or a majority state-owned entity.
- There are no excess tax payments recorded in MIRA that could be applied to the outstanding dues. This includes requests from taxpayers to offset excess payments from one tax account against another account or a request to apply excess payments made by a third party towards the outstanding taxes.
While maintaining the original clause, the amendment brings more clarity to the fourth condition above, which includes requests from taxpayers to offset excess payments from one tax account against another account or a request to apply excess payments made by a third party towards the outstanding taxes.
3. Name and Shame Policy (2022/G-10)
The third amendment to name and shame policy brought changes to various sections of the policies such as factors to be considered in disclosing the taxpayer’s name, the particulars to be disclosed, the timing of the disclosures and factors to be considered by MIRA prior to disclosure of information.
Factors to be satisfied to disclose name of taxpayers include:
- 2 notices were given to the taxpayer and the deadlines specified in the notices are expired for non-filing or non-payment of taxes.
- In case of non-compliant taxpayers, the amount of unpaid taxes exceed the threshold specified by MIRA.
- The taxpayer is non-compliant taxpayer, failing to submit tax returns by the required deadlines.
- Taxpayer determined as a candidate for name disclosure from risk profiling, with reference to compliance risk assessment.
Prior to the amendment, the policy included specific requirements to disclose the information based on the number of tax returns not filled, and certain income thresholds to meet, with regard to income taxes.
With the amendment, if a taxpayer has not filed any tax returns, their details as a non-compliant taxpayer may be disclosed, provided the other conditions outlined in the policy are met.
The particulars disclosed includes:
- Name and address of the taxpayer
- Business registration number
- TIN
- Registered taxable activities (newly added with the amendment)
- Pending tax liability and default period (newly added with the amendment)
Factors considered by MIRA before disclosing taxpayer information
MIRA is now required to confirm only two key aspects before disclosing taxpayer information:
- The taxpayer is not removed from the taxpayers' registry.
- The taxpayer is not deceased.
Previously, the state of a taxpayer's liquidation and request to de-register from taxpayers' registry were also taken into account. However, these criteria are no longer part of the considerations for disclosure.
Revised Procedures for Disclosure of Taxpayer Information by MIRA
MIRA has introduced amendments to its procedures for disclosing the names of taxpayers in relation to their tax and other payment obligations. Under the revised process, disclosure will follow these 2 stages in the given order:
- Publication on MIRA's Website and at the Taxpayer Service Center
- Publication in the Maldives Gazette
The amendment reduces the duration between these stages of disclosure from 15 days to 5 days. Additionally, it removes the specific timeframes previously observed by MIRA based on type of taxes, for publishing taxpayer information.
Under the earlier framework, GST, GRT, and WHT disclosures were made in March and September, while income taxes and other non-tax payments were disclosed in October.
As MIRA refines its enforcement tools, businesses and individuals will need to align their practices to avoid penalties and maintain a positive compliance profile.