Auditor General says government unpaid bills fuelling MIRA tax arrears of MVR 22 billion

Auditor General Hussain Niyazi stated today that unpaid taxes owed to the state are rising year after year, partly because the government itself is failing to pay money it owes to companies. Speaking at a meeting of the committee studying the next year’s estimated budget, Niyazi said accounts show approximately MVR 22 billion in tax revenue due to the state has not been received. Referring to the Maldives Inland Revenue Authority (MIRA), he said one reason for the increase in unpaid taxes is the government’s failure to pay money owed to companies carrying out contracted projects. “By the end of September, the number of unpaid bills within the state’s public accounting system amounts to close to seven billion,” Niyazi said. He noted that while a large portion of the money the government owes to companies remains unpaid, no funds have been allocated in next year’s budget to cover these bills. He stressed the importance of the Finance Ministry finding ways to pay this money. “There is also money owed to the private sector from this. Furthermore, MIRA has also highlighted that one issue leading to low tax compliance is the difficulties arising from the government not paying money owed to the private sector,” Niyazi said. The amount the government owes to companies stands at approximately MVR 7 billion. The government established an arrangement on the first day of this month to deduct tax payable from money that should have been received by a state institution but was not. Under the arrangement, special procedures have been determined for bills submitted by micro, small, and medium enterprises. If the tax payable to MIRA by these businesses exceeds the money the government owes that entity, the tax money is deducted from the government’s owed amount and the remaining balance must be paid to MIRA by that entity as tax. If the tax payable to MIRA is less than the government’s owed amount, the remainder is paid by the government to that entity. President Dr. Mohamed Muizzu announced last December that a mechanism would be established to reduce taxes from the money the government is supposed to pay.