Billions Lost to Rent Waivers and Weak Enforcement in Maldives Resort Sector
The Auditor General’s Office has raised red flags over how the Maldives government is managing rent collections and tax enforcement in the lucrative resort sector. The latest audit warns that repeated rent waivers and concessions are encouraging some operators to ignore their payment obligations, undermining both compliance and state revenue.
MVR 5.9 Billion in Resort Rent Unpaid
According to the 2023 audit report on the Maldives Inland Revenue Authority (MIRA), issued by Auditor General Hussain Niyaazi, resorts owed MVR 5.9 billion in unpaid rent and penalties at the close of the year. This figure represents 45 percent of all money owed to the state, underscoring the scale of the problem.
The report criticized the government’s approach to waiving penalties and extending concessions, saying it has blurred the line between compliant and non-compliant businesses. When penalties are waived for everyone, the report argued, there is little incentive for timely payment.
“There is no difference between rent payers and non-rent payers when it comes to waiving penalties for non-payment,” the audit stated. “This creates a spirit of non-payment of rent among such parties.”
Large-Scale Exemptions and Repeat Defaulters
From 2021 to 2023, the total resort rent payable fell by 38 percent. A major reason was the government’s 2022 decision to exempt MVR 4.1 billion in rent. While some of the arrears were later addressed through settlement agreements, the audit warned that many of these deals were made with repeat defaulters who had already failed to honor previous commitments.
The report took aim at the Ministry of Tourism for failing to act against resorts that repeatedly violated rent agreements. In many cases, penalties were not enforced, and recovery efforts were not pursued, even when operators defaulted multiple times.
“Default agreements are repeatedly signed with those who do not respect the agreements,” the Auditor General’s Office noted, warning that this practice weakens accountability and erodes trust in the system.
Unpaid Taxes Add to Revenue Gap
The rent arrears are only part of the financial picture. By the end of 2023, unpaid taxes reached MVR 6.6 billion, nearly half of the total revenue due to the government that year.
Breakdown of unpaid taxes:
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General Goods and Services Tax (GST): MVR 2.9 billion
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Tourism Goods and Services Tax (TGST): MVR 1.3 billion
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Business Profit Tax (BPT): MVR 1.7 billion
These figures highlight the combined impact of rent and tax arrears on the state budget, particularly in a country where tourism is the primary economic driver.
Call for Stronger Enforcement
The Auditor General’s Office has urged the government to take a firmer approach to rent and tax collection in the tourism sector. The report recommended avoiding blanket waivers, enforcing penalties consistently, and prioritizing recovery actions against persistent non-payers.
Without stronger enforcement, the audit warns, the state risks losing billions more in revenue and weakening the financial foundation of one of its most important industries.