Tourism sector accounts should be audited alongside small businesses, says governor

The Maldives Inland Revenue Authority (MIRA) should not limit audits to small businesses and street shops but should also scrutinise the accounts of tourism businesses, Maldives Monetary Authority (MMA) Governor Ahmed Munawar said on Tuesday.

Speaking at Parliament's Budget Committee, Munawar said MIRA carries significant responsibility in collecting Business Profit Tax and ensuring tax compliance across sectors.

According to Munawar, information shared with the MMA indicates that only around 50 of the country's 185 resorts are paying income tax. He questioned whether the remaining resorts were genuinely operating without profits or whether there were issues that warranted closer examination.

“Based on information shared with us, only around 50 of 185 resorts are paying income tax. What does that mean? Are they not making a profit, or are there other issues?” Munawar said.

He said this was why tourism-sector accounts should also be subjected to audits.

“They have to audit those accounts. They should not only go to the street shop. We need to ensure that our tourism accounts are accurate,” Munawar said.

Munawar further stressed the importance of ensuring that foreign currency earnings enter the domestic banking system, noting that every dollar brought into the system contributes to the Maldivian economy.

“It has to be monitored. If it is not monitored, those dollars do not enter the banking system. If they do not enter the system, they do not play a role in the Maldivian economy. There are structural issues that cannot be resolved overnight,” he said.

Tourism remains the Maldives' largest economic sector and a major source of government revenue through Tourism Goods and Services Tax (TGST), green tax, Business Profit Tax, resort rent and other fees.

According to the latest figures released by the Ministry of Finance, the state had collected MVR 9.32 billion in TGST and MVR 1.88 billion in green tax as of October 29. Revenue from resort rent stood at MVR 1.66 billion.

The ministry estimates corporate income tax collections, including taxes paid by tourism businesses, at MVR 3.2 billion for the year. As of October 29, the government had already collected MVR 3.08 billion under the category.

The remarks come as authorities continue efforts to increase the amount of foreign currency entering the domestic banking system under regulations requiring tourism establishments to channel a portion of their foreign currency earnings through local banks.