The rule of Law in the Maldives and the tax regime’s contribution to its failure.

Abstract

This thesis was inspired by my work as an international tax adviser to the Maldives on behalf of the Asian Development Bank from 2011 to 2015. The Maldives had just transitioned from what was an autocracy to a supposed democracy, and from a tax haven to a country with new direct and indirect tax regimes. During that period, I regularly witnessed Legislative, Executive and Judicial manoeuvres that were the antithesis of what I had always taken for granted in New Zealand as fair treatment of people in accordance of the rule of law. I observed the contradictions both generally in Maldivian society and in the taxation field. I began to question why there was a stark contrast between what I was observing in the Maldives and the ideals of a fair and equitable society, which my New Zealand upbringing, education and experience had instilled in me. This thesis is therefore the outcome of a study of what the rule of law is supposed to be and whether, because the Maldives is a small, conservative Islamic state, its religion and culture explain, and even justify, the behaviour of the three branches of the State. That led to a review of Islamic notions akin to the Western perception of the rule of law. The structure of the thesis is as follows: Chapter 1 offers a general introduction to the objective and design of the thesis. Chapter 2 gives a background to the unique geography, history, cultural features and economy of the Maldives. It also introduces the two principal taxes on which the analysis of application of the rule of law in the taxation field focuses. Chapter 3 draws on the literature and jurisprudence to discuss various interpretations of the rule of law. It identifies six main elements of the rule of law as a benchmark to assess the level of compliance with the rule of law in the Maldives generally and in the sphere of taxation legislation and administrative practice. Chapter 3 also examines principles analogous to the rule of law that can be found in Islamic shari’ah and arrives at some conclusions about the compatibility of the two. Chapter 4 surveys some key instances of disrespect for the rule of law at the Legislative, Executive and Judicial levels of governance generally in the Maldives, while Chapter 5 looks at conflicts with the rule of law in the same branches of the State with particular reference to tax law and practice. This is where the main analytical focus lies. Chapter 6 concludes with some comments about the state of the rule of law in the tax arena, in the light of the general state of the rule of law in the Maldives during the period under review. Chapter 6 also offers some recommendations on improvements in the way the rule of law could be applied in the Maldives if the country is to achieve its aspirations of a truly democratic Islamic state.