Government Establishes Tax Offset Mechanism for Businesses Owed State Dues

The Maldivian government has formally introduced a national tax offset framework allowing private businesses to settle outstanding tax liabilities against money owed to them by state institutions and state-owned enterprises.

Under the newly enacted policy published by the Maldives Inland Revenue Authority and the Ministry of Finance, eligible taxpayers holding verified receivables from government entities can apply to deduct those sums directly from their pending tax obligations. The financial relief mechanism was established following commitments from President Dr Mohamed Muizzu to resolve long-standing state debts owed to private contractors and local commercial enterprises, particularly small and medium businesses impacted by delayed government payments.

To utilize the arrangement, interested businesses must submit formal offset applications directly to the tax authority alongside comprehensive documentation of the exact amounts owed by specific state bodies. Under the established administrative guidelines, offset requests will formally take effect once the relevant government institution or state enterprise approves the debt reconciliation and guarantees the direct transfer of equivalent funds to the revenue authority to satisfy the tax account. Finance ministry officials project that the offset mechanism will significantly improve cash flow liquidity across the private sector while establishing a standardized procedure to clear accumulated public sector debts.