Maldives Customs Service faces big challenges in recovering outstanding payments, including import duties on goods temporarily imported for economic activities and projects, according to the agency's latest audit report.
The 2023 financial audit report of the Maldives Customs Service, released by the Auditor General’s Office, reveals that MVR 461 million remained owed to the state by the end of that year. Import duties account for 95 percent of this total, while the remaining five percent consists of fines and other administrative fees.
The audit highlights that a substantial portion of the unpaid import duty stems from goods imported temporarily under Section 8 of the Maldives Export-Import Act. This includes items brought into the country for various projects under duty exemption schemes.
Customs informed the auditors that it is implementing measures, in accordance with its internal policies, to recover the outstanding funds.
Under these procedures, the party in default receives a 30-day notice. A follow-up reminder is sent five days before the deadline. If payment is not settled within this period, services to the party are temporarily suspended, and the matter is referred for legal action.
Despite these measures, Customs noted that major obstacles hinder the recovery process. A big challenge is the prolonged delay in enforcing court judgments even after the litigation process concludes. Currently, MVR 160.5 million remains uncollected at the judgment enforcement stage alone.
Furthermore, there are difficulties in identifying instances where duties must be reclaimed after initial exemptions were granted for economic activities. Relevant ministries often fail to share necessary information with Customs promptly. The lack of a robust legal framework to facilitate duty recovery was also cited as a major impediment.
To address these issues, the Auditor General recommended that Customs consult with relevant authorities to strengthen enforcement actions against defaulters. The report also urged the establishment of a mechanism with ministries to ensure the prompt sharing of information regarding cases where duties must be re-levied.
Additionally, Customs was instructed to resolve difficulties in enforcing court judgments and to pursue the recovery of funds through legal action if necessary. The Auditor General further advised expediting legislative and regulatory amendments to establish a comprehensive recovery system for duties on goods imported for economic purposes.
