The Government has submitted to People’s Majlis, a bill to amend the Tax Administration Act, introducing enhanced penalties for individuals who wilfully fail to file tax returns with the intent to evade taxation.

Sponsored by Vilimalé MP Mohamed Ismail, the proposed legislation seeks to expand the enforcement powers of the Maldives Inland Revenue Authority (MIRA). It revises existing provisions governing tax offences and associated penalties and confers additional authority on MIRA to determine tax liabilities and recover outstanding amounts.

Under the proposed changes, a person will be deemed to have committed tax evasion if they intentionally provide false information, omit material particulars, or submit inaccurate financial data in a tax declaration. Wilful failure to file a tax return, or refusal to cooperate with the Commissioner General of Taxation, would also constitute intentional non-compliance.

One of the most significant amendments is the introduction of custodial sentences for the wilful non-filing of tax returns. At present, the penalty provides for one to six months of home confinement. The amendment would replace this with a prison term of one to six months and a fine of up to MVR 250,000. In aggravated cases of deliberate tax evasion, the prison sentence could be extended to a maximum of three years.

The bill also proposes a revised framework for penalties relating to late submissions. Whereas the existing law permits a discretionary fine not exceeding MVR 50 per day, the amendment would impose a fixed penalty of MVR 50 for each day that a return remains outstanding. In addition, the daily penalty for failure to pay taxes by the prescribed due date would be increased from 0.05 per cent to 0.1 per cent of the unpaid amount.

To enhance procedural clarity, the amendment prescribes new provisions governing the service of official notices. A notice will be deemed duly served if it is sent to the taxpayer’s registered address, delivered by email, submitted through MIRA’s online portal, or personally handed to the taxpayer by an authorised officer.

According to the Government, the proposed changes are intended to strengthen tax compliance and to ensure that penalties are proportionate to the gravity of the offence.