Maldives: Business Environment

Accounting Rules

Tax Year: The taxable period coincides with the Gregorian calendar year (1 Jan-31 Dec).
Accounting Standards: Companies registered under the Companies Act No 10 of 1996 are required to follow international accounting standards in the preparation and presentation of their statutory financial statements. In practice, this is interpreted to include both full IFRS Standards and the IFRS for SMEs Standard.
IFRS Standards are required for all listed companies and financial institutions.
Accounting Regulation Bodies: Maldives Inland Revenue Authority (MIRA)
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)
Accounting Reports: According to the Companies Act No 10 of 1996, the Board of Directors shall prepare the accounts to be submitted to the annual general meeting, showing the income and expenses, profit and loss, the annual balance sheet and annual report. The annual report shall include the following:
(1) A review of the business and other activities of the company during the past year
(2) The amount which the Board of Directors recommend should be paid as dividends and the amount they propose to set aside as reserves
(3) Names of the directors of the company and details of the members of the company in the past year
(4) The main activities carried out by the company in the past year.
Publication Requirements: According to the Company Act of the Maldives, all registered companies are required to submit annual financial statements, director’s reports, and auditor’s reports of the previous year to the registrar of companies.
Professional Accountancy Bodies: Institute of Chartered Accountants of the Maldives
Certification and Auditing: Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
Auditor General's Office.
Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: Goods and Services Tax (GST)
Tax Rate: 6% (standard rate) - 8% as of 2023
12% (tourism sector) - 16% as of 2023
Reduced Tax Rate: Zero-rated goods and services include rice, sugar, flour, salt, milk, cooking oil, eggs, tea leaves, deep sea fish, reef fish, all types of fish packed in the Maldives, and rihaakuru (fish paste), vegetables such as potatoes, onions, carrots, cabbage, beans and tomatoes, ingredients used in making curry paste (cumin, fennel, coriander, turmeric, garlic, ginger, chilli, chilli powder, cinnamon, cardamom, peppercorn, any other such ingredient), dhiyaahakuru, coconuts (kaashi, kurun’ba, kurolhi), carrots, cabbage, beans and tomatoes among vegetables, all kinds of fruits, bread, buns and faaroshi (rusk), baby and adult diapers, baby food, cooking gas, diesel, petrol.
Some items are exempt, including electricity service, water facilities, postal service (not including courier services), sewerage facilities, education, health services, medical devices and drugs, financial services, rent earned from the lease of immovable property, international transportation services, payments collected as fines, daycare services; flats, land and buildings sold by the Government or by the Government through a third party under social housing schemes in which the Government has the discretion to control the price of the property being sold.
Other Consumption Taxes: Customs duties are levied at rates varying between 0% and 100% of the value of goods). Certain goods can be imported duty-free after receiving an authorisation from the respective Ministry or Authority responsible for granting the duty exemption.

Corporate Taxes

Company Tax

Tax Rate For Foreign Companies

Foreign companies are taxed at the same rates as local ones, in respect of income that is derived from the Maldives.
Non-resident international transport operators are taxed at 2%.

Capital Gains Taxation

No capital gains tax is levied in the Maldives.

Main Allowable Deductions and Tax Credits

Expenses eligible for deduction from business income include:

payment of zakat al-mal paid to a relevant government institution
contribution to the Maldives Retirement Pension scheme
donations to government-approved institutions or a charitable organisation approved by the Commissioner General of Taxation (capped at 5% of the taxable income).

Further deductions are available (subject to conditions) for welfare expenses, interest on loans (up to 6% per year), bad debts included in the corporate’s total income if reasonable steps have been taken to realise the debt; head office expenses (capped at 3% of total income), expenses incurred before the commencement of business.

The loss suffered in a tax year can be carried forward and set off against the taxable income of future years.

Other Corporate Taxes

Corporate taxes levied in the Maldives include a Green Tax (levied on tourists who stay in tourist resorts, tourist hotels, and tourist vessels at USD 6/day); customs duty (from 0% to 100% of the value of goods); and social security contributions (7% of the employee’s pensionable wage payable by the employer).

Other Domestic Resources

Maldives Inland Revenue Authority (MIRA), Tax guides

Country Comparison For Corporate Taxation

	Maldives	South Asia	United States	Germany
Number of Payments of Taxes per Year	17.0	26.7	10.6	9.0
Time Taken For Administrative Formalities (Hours)	390.5	273.5	175.0	218.0
Total Share of Taxes (% of Profit)	30.2	43.9	36.6	48.8

Source: Doing Business - Latest available data.

Individual Taxes

Tax Rate

Personal income tax	2023 brackets
MVR 0 - 720,000	0
MVR 720,000 - 1,200,000	5.5%
MVR 1,200,000 - MVR 1,800,000	8%
MVR 1,800,000 - MVR 2,400,000	12%
Above MVR 2,400,000	15%

Allowable Deductions and Tax Credits: No specific expense in relation to employment is allowed as a deduction from employment income. Zakat payments and contributions to the Maldives Retirement Pension Scheme are deductible.
Life insurance premiums can be deducted if several conditions are respected. Donations to a State institution or a charitable organisation approved by the Commissioner General of Taxation are deductible up to 5% of the taxable income. Interest on loans is also deductible (up to 6% per year).
Special Expatriate Tax Regime: A tax resident in the Maldives is subject to income tax on worldwide income; whereas a non-resident and a temporary resident is taxable in respect of income that is derived from the Maldives.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: Maldives Inland Revenue Authority.
Withholding Taxes: Dividends: 0 (resident)/10% (non-resident), Interests: 0 (resident)/10% (non-resident; except interest payable to a bank or financial institutions approved by the MIRA), Royalties: 0 (resident)/10% (non-resident).

Sources of Fiscal Information

Tax Authorities: Maldives Inland Revenue Authority
Other Domestic Resources: Maldives Monetary Authority

Intellectual Property

National Organisations: Intellectual Property Unit - Ministry of Economic Development
Regional Organisations: WIPO

Legal Framework

Equal Treatment of Nationals and Foreigners: Historically, the judicial process has been slow and, often, arbitrary. The Maldivian judiciary is a semi-independent institution but has been subjected to executive influence, particularly the Supreme Court, despite the fact that articles 141 and 142 of the Maldives Constitution affirm the independence of the judiciary.
The Language of Justice: Divehi. Article 51 of the Constitution states that everyone charged with an offence has the right "to an interpreter to be provided by the State where he does not speak the language in which the proceedings are conducted, or is deaf or mute".
Sources of the Law and Legal Similarities: The Maldives legal system is based on a mixture of Islamic Law and English common law. English common law greatly influences the civil and commercial laws of the country, and it is one of the main sources of the law together with the Constitution and Shariah Law.
Checking National Laws Online: My Law governmental portal

Standards

National Standards Organisations: Maldives Standards and Metrology Centre (MSMU)
Integration in the International Standards Network: The Maldives is not a member of ISO.
Classification of Standards: Accreditation is done according to the international ISO standards that are recognized as Maldivian (MDV) ones.
Online Consultation of Standards: Maldives Standards and Metrology Centre (MSMU)
Certification Organisations: Maldives Standards and Metrology Centre (MSMU)

Business Practices

General Information
Opening Hours and Days: The public offices working week starts on Sundays and ends on Thursdays, offices are generally open from 8 am until 2 pm.
Most banks are open from 8.30 am to 2.30 pm.
Most of the stores are open to customers daily, from 9 am to 7 pm, while the opening is in the afternoon on Fridays.

Public Holidays

New Year's Day	1st January
Ramadan (Eid and Hajj)	variable
Labor Day	1st May
Independence Day	26th July
National Day	27th September
Prophet Mohamed’s (SAW) Birthday	8th October
The Day Maldives Embraced Islam	27th October
Victory Day	3rd November
Republic Day	11th November

Holiday Compensation: Overtime pay for Fridays or public holidays is set at 1.5 times an employee’s hourly salary rate.

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