On 16 December 2020, the President ratified the Third Amendment to the Tax Administration Act (Law No. 27/2020) (the Amendment), which, among others, brings several changes to the appeals procedures and enables the Maldives to become a party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Major provisions in the Amendment are summarized below.

Appeals at the Tax Appeal Tribunal

• Taxpayers may appeal a decision of the MIRA pursuant to an objection, at the Tax Appeal Tribunal (the Tribunal), within 60 days of the decision, after paying 25% of the amount in dispute (excluding penalties and interest). Prior to the Amendment, an appeal had to be lodged within 30 days, after paying 30% of the amount in dispute.
• The Tribunal must issue its judgement within 180 days of case lodgement. If the Tribunal believes that a fair judgement cannot be issued within this period, it may be extended by 90 days, in which case the judgement must specify the reason for the extension. Prior to the Amendment, there was no timeframe for the Tribunal to issue a judgement.
• The Tribunal must issue judgements in all appeal cases ongoing as of the enactment of the Amendment, within 180 days of enactment.

Appealing a Judgment issued by the Tribunal

• A taxpayer or the MIRA may appeal a judgment of the Tribunal at the High Court within 60 days (prior to the Amendment, such appeals had to be lodged within 30 days). The High Court must issue its judgement within 180 days of case lodgement.
• A taxpayer or the MIRA may appeal a judgment of the High Court at the Supreme Court within 60 days. The Supreme Court must issue its judgement within 180 days of case lodgement.
• If the High Court or the Supreme Court believes that a fair judgement cannot be issued within 180 days, they may extend the duration by 90 days, in which case the judgement must specify the reason for the extension.

Lawsuits for Collection of Tax Revenue

• Courts must not adjudicate on underlying substantive matters in lawsuits filed by the MIRA for recovery of unpaid tax. Substantive matters can only be pursued at the Tribunal.
• Courts must issue judgments in lawsuits filed by the MIRA for recovery of unpaid tax, within 180 days of case lodgement.
• The judgement of the court in lawsuits filed by the MIRA for recovery of unpaid tax is final and cannot be appealed at a higher court.

Collection and Enforcement of Non-Tax Revenue

• The MIRA shall have the discretion to collect fees, charges, rent and penalties payable by individuals and legal entities to the government or to the state pursuant to a law, regulation or an agreement, unless specified otherwise in another law.
• The Attorney General may sue a party in a court of law for the recovery of any unpaid non-tax revenue. Courts must issue judgments in such suits within 6 months.
• Prior to the Attorney General filing suit for the recovery of unpaid non-tax revenue, the MIRA may send demand notices to non-payers, publicly name them, or suspend the provision of services to such person by the respective government agency.

Other Major Provisions

• Multinational entities which are resident in the Maldives must submit a country-by-country report to the MIRA in accordance with regulations to be issued by the MIRA. The report must include information about the business activities and management of the group to which the entity belongs.
• The MIRA is authorized to exchange information with other jurisdictions through automatic exchange of information systems under tax treaties and tax information exchange agreements.
• Financial institutions are required to submit information about taxpayers and their related parties to the MIRA. Financial institutions include all institutions which are required to submit information under the common reporting standard (CRS).
• The MIRA is authorized to obtain information about the beneficial owner of a legal entity, transaction, or an arrangement, and to exchange such information.
• The MIRA is required to issue regulations with respect to mutual agreement procedures and dispute resolution mechanisms which may be initiated pursuant to a tax treaty or a tax information exchange agreement.
• The MIRA is authorized to enter into advance pricing agreements with taxpayers and other tax administrations. Such agreements will not be valid for more than 5 years.

Regulations required pursuant to the Amendment must be issued within 3 months of enactment.

The Amendment Bill to the Tax Administration Act was presented to the parliament on 6 October 2020 and passed on 29 November 2020.