Introducing income tax to the Maldives could discourage foreign investors from investing in the archipelago, resort tycoon Gasim Ibrahim warned Tuesday.
Responding to increasing calls to introduce income tax in the Maldives as the parliament debates the proposed state budget for next year, Gasim who represents Maamigili in parliament said investors are attracted to the island nation because of the many privileges on offer.
But if the country introduces income tax, it would force investors to take their business elsewhere, Gasim who owns a chain of resorts in the Maldives warned.
As the Maldives deals with a rising budget deficit, the loss of foreign investors could put the country's fragile economy back even further, he added.
Most lawmakers had expressed concern over the new measures proposed to boost revenue which largely looks to impose a regressive tax system.
Responding to the concerns, finance minister Munwwar insisted that the Maldives boasts a contemporary progressive tax system, pointing out the Business Profit Tax (BPT) as a prime example to back his statement.
So even if the state has steered clear of income tax, business related taxes have been charging taxes from the source of the country's income elite, Munwwar explained.
"The government has not considered an income tax policy. But that doesn't mean we can call it a regressive tax system. This is definitely a progressive tax system. We are still looking at major reform for this system. This system has been praised by major international financial institutions such as the World Bank," the minister noted.
Maldives governor appeared to disagree, stressing on the need to introduce income tax to the Maldives.
However, Dr Azeema Adam had insisted that the introduction of income tax must be given time and must be backed the necessary government policies.
"We need a proper policy that outlines the changes we plan to make to the entire tax system. The introduction of a new tax must be pre-planned and must come through such a policy," Azeema explained insisting that a sudden tax could have adverse effects on the country's fragile economy.
