Maldives has signed the Convention on Mutual Administrative Assistance in Tax Matters (MAAC).
The convention was signed by the Maldives at a ceremony held at OECD Headquarters in Paris on August 11. The agreement was signed by Hassan Sobir, the Ambassador of the Maldives to the European Union.
Following the signature of MAAC, two Competent Authority Agreements specifying the modalities for exchanging information was signed on August 12 by the Commissioner General of Taxation Fathuhulla Jameel. These agreements are the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (CRS-MCAA) and Multilateral Competent Authority Agreement on the exchange of Country-by-Country Reports (CbC-MCAA).
In a press statement, Maldives Inland Revenue Authority (MIRA) stated the Maldives joined as a member of Global Forum on Transparency and Exchange of Information on Tax Matters (Global Forum) in February 2016. MIRA stated since then, the authority has been continuously working on the implementation of the international tax standards with the assistance from Global Forum, which is an international body comprising of over 160 countries and financial centers working together to increase transparency of tax systems to curb tax evasion and avoidance on a global scale.
MIRA stated the agreement provides an international legal framework for exchanging information and cooperation in tax matters while respecting the fundamental rights of taxpayers. MIRA revealed as a member of the convention, various forms of administrative cooperation such as exchange of information on request (EOIR), automatic exchange of financial information (AEOI), spontaneous exchange of information (SEOI), service of documents and assistance for conducting tax examinations will be provided between the signatories of the convention. The tax authority said these actions aid in combating non-compliance through tax evasion and avoidance.
Furthermore, MIRA stated as party to the MAAC, under the Common Reporting Standard (CRS), MIRA will have access to financial information of Maldivian tax residents that hold financial accounts (whether in banks or other specified financial institutions such as trusts) in countries participating in this convention. MIRA stated this includes information of financial accounts of all individuals, and entity accounts with a balance or value more than USD 250,000 which are maintained by financial institutions of the participating jurisdictions. The authority added this is particularly important as tax residents of the Maldives are taxed on their worldwide income, and having access to financial account information that may be held in 143 other countries further supports MIRA’s efforts to prevent tax evasion, and also in identifying those who have under-declared their incomes.
Furthermore, MIRA revealed under Country-by-Country Reporting (CbCR), MIRA will also have access to financial information of Multinational Enterprises with consolidated revenue of USD 880 million that have constituent entities that are resident in Maldives, and operate in jurisdictions of participating countries. MIRA stated the assistance provided under the agreement will be reciprocal and hence, the Maldives will also be providing pre-agreed information to tax authorities of participating jurisdictions.
MIRA further noted it has worked closely with the Tax Policy Unit of Ministry of Finance in putting together necessary laws and policies in place to implement this international commitment by the Maldives. The authority said the regulations and policies that are required for the implementation of these international standards have been published and MIRA will be issuing further guidance in relation to CRS and CbCR on the website and other media platforms.