Auditor General Links Government Debt to Rising Unpaid Taxes

Auditor General Hussein Niyaz has stated that a key factor behind the increasing amount of tax revenue owed to the state is the government's prolonged delay in paying its dues to businesses. Speaking at a committee meeting reviewing the proposed budget for next year, Niyaz revealed that the current unpaid tax amount owed to the state stands at 22 billion Rufiyaa. He further noted that as of the end of September, the government has yet to pay seven billion Rufiyaa owed to various businesses. "Another issue highlighted by MIRA regarding low tax compliance is the difficulties arising from the government delaying payment of bills owed to the private sector," Niyaz said. Niyaz pointed out that while the government owes large sums to businesses, this includes money that the government itself needs to pay to its own state-owned enterprises. However, he said that this amount has not been included in the budget proposed for next year and submitted to Parliament for payment. During the budget review, Niyaz requested that the Finance Ministry provide a schedule for how this money will be paid. "We clearly clarified with the Finance Ministry whether a separate budget has been allocated in next year's budget to pay the unpaid bills, or if those mentioned by them have been included," Niyaz said. Earlier this month, the government implemented a mechanism allowing taxes to be paid after deducting the debt the government owes to businesses. According to the Finance Ministry, this must be requested through a procedure established by MIRA. Under this procedure, if money is owed by government departments or state-owned companies, tax can be paid after deducting that amount. Other payments due to MIRA, such as fines, can also be deducted. However, under the procedure, no deduction can be made unless the money owed to the business is first deposited by the government department or company into MIRA. Therefore, even if business owners submit applications for tax deduction, the process will only proceed once the government deposits the owed amount into MIRA. Clearing the government's debts to business owners is one of President Muizzu's major promises. President Muizzu set six deadlines to clear this money before the People's Majlis elections and local council elections, but the debt has not been cleared at any point.