Committee backs two-year jail term for failure to file tax returns

The Committee on Economic Affairs of Parliament on Tuesday approved an amendment to the Tax Administration Act to increase the jail term for failing to file tax returns to two years.

The committee passed the bill unanimously at Tuesday’s meeting.

The amendment, moved by PNC MP Mohamed Ismail on August 5 last year, proposes increasing the maximum jail term to two years for those who intentionally evade taxes, including individuals who do not file tax returns.

Under the current law, failure to file tax returns carries a maximum sentence of one year in jail.

According to the amendment, if a tax return contains incorrect information, omits required details, or if financial statements are proven to be inaccurate, it will be considered an act of tax evasion.

Under existing law, the penalty for failing to file tax returns is house arrest for between one and six months.

If the proposed bill is passed and enacted, failure to file a tax return would carry a fine of up to MVR 50,000, and instead of house arrest, offenders could be imprisoned for between one and six months.

At the same time, the current penalty for failing to pay tax by the due date is 0.05 percent of the outstanding amount for each day past the deadline. If the amendment is approved, this figure will increase to 0.1 percent.