VAT's Maldives got right?

Abstract

Sri Lanka has the lowest tax revenue collected through Value Added Tax (VAT) in South Asia while Maldives with a lower tax rate collects nearly 5 times more through its Goods and Services Tax (GST).

In 2023, Sri Lanka’s VAT rate was 15%, which generated LKR 694 billion—equivalent to 2.5% of GDP—making it the lowest in South Asia. In contrast, countries with similar or lower VAT rates collected higher revenue. For example, Bangladesh, with a similar rate, collected revenue amounting to 3.6% of GDP, and Nepal, with a lower rate of 13%, generated 5.3% of its GDP from VAT in 2023.

The Maldives stands out with a Goods and Services Tax (GST) that raises revenue amounting to 12% of GDP, despite having a lower average rate of about 12% (8% for general GST and 16% for tourism GST).