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IMF Says Maldives Needs Only Nominal Tax Increases

by Ulrika Lomas, Lowtax.net, Brussels
03 February, 2016

The International Monetary Fund (IMF) has said that Maldives can embark "on an unprecedented scale up in public infrastructure" without needing to significantly increase the tax burden.

The IMF said that, if handled well, this investment could prove transformational for the economy. However it said "it also brings with it large financing risks." The IMF's annual review of the territory's policies therefore looked at how to manage those plans and ensure fiscal sustainability in the medium term.

The IMF said that the territory's fiscal deficit narrowed a little in 2015, as revenues exceeded expectations. It recommended that: "Durable increases in revenues can be achieved using Maldives' well administered tax system (which performs better than in neighboring economies), and by leveraging the small number of broad based taxes." It added that "user fees (for commercial and leisure use) should be introduced for key projects [and] a range of additional tax measures are also needed given the scale of the financing requirements. This could include considering broadening the base for business profits tax and increasing rates for a range of taxes and excises."

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