Maldivian govt slaps USD 20.5 mn income tax notice on GMR

The Maldivian government has slapped a notice seeking USD 20.5 million towards income tax and fines on GMR Male International Airport (P)Ltd, a GMR group company, that won USD 271 million arbitration against the premature termination of Male International Airport contract.

A GMR spokesperson refuted the tax claim by the island nation.

According to a regulatory filing, the Indian infra major said the Maldives Inland Revenue Authority (MIRA) had issued tax audit reports and notice of tax assessments demanding business profit tax amounting to USD 14.4 million, USD 2.8 million as the additional withholding tax and further USD Rs 3.3 million towards fines totalling USD 20.5 million.

GMIAL entered into an agreement on June 28, 2010 with Maldives Airports Company Limited (MACL) and Ministry of Finance and Treasury (MoFT), Maldives, for the rehabilitation, expansion, modernisation, operation and maintenance of Ibrahim Nasir International Airport for a period of 25 years.

However, On November 27, 2012, MACL and MoFT issued notices to GMIAL stating that the concession agreement was "void ab initio and that neither MoFT nor MACL had authority under the laws of Maldives to enter into the agreement and MACL took over the possession and control of the MIA and GMIAL vacated the airport effective December 8, 2012.

The matter was under arbitration.

"During the current year (2017-18), Maldives Inland Revenue Authority ('MIRA') has issued tax audit reports and notice of tax assessments demanding business profit tax amounting to USD 1.44 crores ( USD 14.4 million), USD 0.28 crore (USD 2.8 million as the additional withholding tax and further USD Rs 0.33 crore ( USD 3.3 million) towards fines," GMR said.

When contacted a GMR spokesperson refuted the tax claims and said they are awaiting response from Maldives Airports Company Limited on the issue.

"Maldives Inland Revenue Authority has issued tax notices to GMIAL in late 2017. We have refuted the tax claims as GMIAL has no business operations in Maldives.

Further the compensation awarded to us by the arbitration tribunal indemnified us against any tax liabilities that may be imposed on us in Maldives.

We have sought MACL's response in the matter and will decide the future course of action basis their response," the GMR official told PTI in an email reply.

During the year ended March 31, 2017, the arbitration tribunal in Singapore delivered its final award in favour of GMIAL, pursuant to which the GMR group company received USD271 million from MACL.