The Maldives Inland Revenue Authority (MIRA) has introduced a new tax ruling that will impact how taxpayers can benefit from making charitable donations, starting March 1, 2024. This update, announced on Sunday, January 14, 2024, clarifies the interpretation of Section 21 of the Income Tax Act.
According to the recent ruling, individuals who make monetary donations to State institutions or charitable organizations approved by the Commissioner General can now deduct these contributions from their taxable income. This adjustment modifies the previous regulations found in Sections 17 and 32 of the Income Tax Act.
Specifically outlined in Section 50 of the Income Tax Regulation (Regulation Number 2020/R-21), the ruling states that for a donation to qualify for deduction, it must be made in monetary form to a charitable organization listed as approved under Section 47(a) of this Regulation at the time of the donation. This list is maintained and approved by the Commissioner General.
Issued under the authority of Section 84 of the Tax Administration Act (Law Number 3/2010), this ruling represents a significant update in the taxation policy related to charitable donations. It emphasizes the government’s commitment to promoting philanthropy while ensuring systematic regulation of associated tax benefits.
The impact of this ruling is expected to be substantial, especially for taxpayers actively involved in charitable activities. By allowing deductions for monetary donations, it creates an incentive for increased philanthropic contributions, potentially resulting in more support for state institutions and recognized charitable organizations within the Maldives.
Set to come into effect on March 1, 2024, taxpayers are advised to take note of these changes and plan their charitable contributions accordingly. This move is seen as a positive step in cultivating a culture of giving and supporting the work of approved charitable organizations across the country.
