Welcome to the Maldives Tax Newsletter where you will find highlights from national developments in tax law and policy.

Tax Cases

Maldives Inland Revenue Authority (MIRA) v Eutopia Holdings Private Limited [2023/HC-A/362]

On 17 June, High Court of Maldives passed its judgement in MIRA v Eutopia Holdings Private Limited [2023/HC-A/362]. The case concerned a tax audit where MIRA had determined an arm’s length price for a related party loan taken by the respondent. Highlights from the judgement are:

Tax Appeal Tribunal did not err in deciding that the respondent can deduct loan interest expense as per Section 11(a)(5) of the Business Profit Tax Act (“BPT Act”).
If MIRA had conducted a comparability analysis to determine an arm’s length price, it should have been submitted during the Tax Appeal Tribunal stage. However, it is not a matter that can now be decided upon at the appellate stage.

Premier Property Private Limited v MIRA [TAT-CA-G/2021/005]

On 22 June, Tax Appeal Tribunal passed its judgement in Premier Property Private Limited v MIRA [TAT-CA-G/2021/005]. Highlights from the judgement include:

The fact that MIRA has not previously assessed additional tax on similar construction service-related barter transactions does not preclude MIRA from doing so.

GST is chargeable under Section 19(b) of the Goods and Services Act (“GST Act”) from the transaction in dispute. Section 19(b) of GST Act states that “Where the consideration for the good sold or service supplied is not in money, the value of that good or service shall be such amount as, with the addition of the tax charged, is equal to the market value of that consideration.”.
Without MIRA having previously made a clear representation, a legitimate expectation that MIRA will not assess GST for this transaction cannot arise.

Expert Motor Services Private Limited v MIRA [TAT-CA-G/2022/001]

On 29 June, Tax Appeal Tribunal passed its judgement in Expert Motor Services Private Limited v MIRA [TAT-CA-G/2022/001]. The case concerned a situation where the appellant had charged GST for the full transaction from the first installment payment. The Tribunal struck down MIRA’s decision that the taxpayer had overcharged GST. The Tribunal ruled that although GST was overcharged from the first instalment, GST had not been overcharged for the full transaction.

An audit period extension had also been granted by the Tribunal during the audit stage of this case. While deciding on a procedural argument raised by the appellant, the Tribunal stated that it is not legally mandatory for the taxpayer to be consulted on audit period extensions requested by MIRA from the Tribunal.

Conclusion

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