The Maldives Inland Revenue Authority, on 15 December 2020, published the Twenty-Eighth Amendment to the Goods and Services Tax Regulation, introducing some notable changes to selected provisions of the Regulation. The key changes introduced via the Amendment is as follows:
Time of supply where the consideration of a supply is non-monetary
- The Regulation now clarifies when the time of supply will be triggered for supplies where the consideration is non-monetary. It is stated that by providing a non-monetary consideration for a supply, you are in return making a supply. Meaning, where such transactions take place between GST-registered taxpayers, both parties need to determine the market value of the consideration received for the supply to account for GST payable – with the presence of a valid tax invoice, the parties will be entitled to claim input tax for such supplies.
- In addition, the Amendment also explains the time of supply rules where the consideration of a supply is an immovable property or right to use an immovable property.
Value of supplies made to related parties
- Prior to the Amendment, the Regulation stated the rules in determining the value of supply where a supply was made indirectly via another person that is related to the supplier of the good or service. The same rules are now imposed under Section 25-1(a) of the Regulation.
- Section 25(g) now stipulates that where the consideration of a supply between related parties is non-monetary, the open market value of such supplies will be considered as the consideration – although this was not specifically stated before, the application of the law remained the same. Hence, the mentioned Amendment is perceived as being included for clarification purposes.
Value of supply of goods and service provided through a related party
Section 25-1(b) stipulates that for MIRA to determine the value of supply, the person who enjoys the benefit of the supply need not be related to the supplier.
Input tax in relation to capital expenditure
The amended Section 46(a)(3) now allows taxpayers to claim input tax in relation to capital expenditure in taxable periods outside of the 12-month or 36-month limitation period provided earlier.
Goods and services supplied in the Maldives
- Previously, in determining if goods were supplied in the Maldives, Section 104(a) only required the supplier to be in the Maldives. The said provision is now amended so that good is deemed to be supplied in the Maldives if both the supplier and recipient are in the Maldives.
- However, the aforementioned will not apply if at the time of supply the goods are in the Maldives. In that case, irrespective of where the supplier or recipient is, the goods will still be deemed as being supplied in the Maldives.
Determining if a person is in the Maldives
The Amendment introduces rules, similar to those provided in the Income Tax Act, to determine if a person is in the Maldives for the purpose of the GST Act. However, although a person is not considered to be in the Maldives, if the goods that are being supplied is in the Maldives at the time of supply, or if a service or part of the service is physically performed in the Maldives, the deemed place of supply of the good or service will be the Maldives.
The Amendment takes effect from 15 December 2020 onwards.