Tax Administration Reforms in the Maldives

Publication | June 2015

The Maldives is a small economy but it is vulnerable to shocks. Tourism accounts for nearly 30% of gross domestic product and more than 60% of foreign exchange receipts. Fluctuations in tourist arrivals can undermine macroeconomic stability.

By 2008, lower-than-expected tourist arrivals and fish exports, combined with high government spending on social needs, subsidies, and public sector wages, had engendered structural problems and a balance of payments crisis. In 2009, the Government of the Maldives and ADB linked arms to push an economic recovery program. The outcome, validated as successful by independent evaluation in 2014, was greater fiscal space in the budget and financial flexibility through a more diversified tax base and rationalized expenditure, better debt management, more efficient privatization of state-owned enterprises, and deepening of the financial market with the issuance of treasury bills and bonds.

Highlights

  • Taxes provide the funding that makes it possible for government to function. They are dues we must pay with respect to welfare and public services governments extend each day.
  • The Maldives is a small, open economy. Tourism is, unequivocally,the driving force behind recent progress. But, in the absence of any significant other source of revenue, this makes the country extremely vulnerable to external shocks.
  • In 2009, with help from the Asian Development Bank, the Maldives launched ambitious and transformational reforms toward modern taxation.

Contents 

  • The Good of Taxation
  • The Predicament of the Maldives
  • Enhancing Tax Administration in the Maldives

Additional Details

Authors
Type
Series
Subjects
  • Governance and public sector management
Countries
  • Maldives
SKU
  • ARM157292-2

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