by Ali Naeem, Counsel
The Tax Administration Act (TAA) lays out specific procedures to go about when you disagree with a decision made by the Maldives Inland Revenue Authority. The decisions that affect your business or tax liability are twofold – tax assessments and other administrative decisions. These administrative decisions, among other things, include decisions made with respect to requests for exemptions, tax credits, excess tax paid and registration.
What do you do if you disagree with the MIRA?
Tax assessments and other administrative decisions, like any decision made by a state institution, can be challenged at a relevant tribunal or court of law. However, the tax laws prescribe certain procedures when contesting decisions, especially with respect to tax assessments issued by the MIRA.
Procedures and rules concerning tax assessments and other decisions are dissimilar. However, it is not clear from the limited case law and the tax laws, how a taxpayer may go about contending against certain administrative decisions of the MIRA.
Undoubtedly, the most common tax disputes relate to assessments made by the MIRA. Both the TAA and BPT Act gives very clear directions on what you need to do to contest those assessments. Section 42 of the TAA and Section 26 of BPTA requires you to file an objection with the MIRA should you wish to challenge the assessed tax. This, according to Tax Administration Regulation (TAR), has to be done through a Notice of Objection. The MIRA reviews your objection and can decide to their decision or revise the assessment. If you still disagree, you can appeal the decision made with respect to your Notice of Objection, to the Tax Appeal Tribunal.
Can TAT hear all tax cases?
The TAA mandates the Tax Appeal Tribunal (TAT) to hear all types of tax cases: disputes with respect to tax assessments and other administrative decisions. Although the TAA has not laid this out in specific terms, the general understanding confirmed by the decisions on tax contentions made by the TAT and High Court up to this date, is that TAT has the jurisdiction to hear tax related matters. This was made especially clear in the HC judgments number 203/HC-A/2013 and 144/HC-A/2013.
The Procedures on Administrative Decisions
These decisions epitomize the need for following the procedures laid out in the TAA when contending to decisions made by the MIRA. It must nevertheless, be noted that all these decisions generally relate to disputes arising from a tax assessment followed by audits conducted by the MIRA. Hence, the procedures that are not directly related to tax assessment are yet to be confirmed by a higher court or the tribunal.
I am inclined to believe that in the absence of clear procedures, the same procedures laid out for contending to tax assessments would not apply to other administrative issues.
Providing documents during audits
The Tax Ruling Number A2 allows the MIRA to disregard documents and information, which were requested but not provided or disclosed during the audit, when making a determination on the Objections. Hence, it is important to provide all available and relevant documentations and information prior to the conclusion of the audit.
Can you include new grounds in your appeal?
If you are not satisfied with the outcome of your objection, your next step would be to file an appeal with the TAT. The Objection Review Report issued by the MIRA would be the primary document that your lawyers would use when drafting an appeal. Hence, it is important that you complete your Notice of Objection correctly, and with a comprehensive and detailed response to the MIRA’s assessment.
The ORR is the MIRA’s response to the specific objections raised in your Notice of Objection and this will give you the opportunity to understand the position taken by the MIRA with respect to each of the individual points you have raised.
It has been the position of the MIRA that you cannot raise new grounds, or points of law in your appeal if you did not include them in your Notice of Objection. However, the TAT recently made a determination on this very important issue, effectively allowing you to include new points of law in your appeal.
Although new points of law can be appealed to the TAT, it is advisable that all possible grounds and points be covered when filing the Notice of Objection. This would ultimately help you get a view of the MIRA’s stand on certain issues before they are appealed and helping you strategically put forward counter arguments in your appeal submissions.