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Invest in Maldives

a guide for foreign investors

CTL Strategies ranked in Chambers Global Guide 2024

CTL Strategies has been ranked in the Chambers Global Guide 2024, published by Chambers and Partners.

The new edition of the Global Guide highlighted CTL for its considerable market respect in tax  matters, and demonstrating strength in litigation and corporate services. Among responses received from interviewees, Chamber and Partners quoted that the firm is “able to handle complex matters and provide unbiased legal advice.”

Chambers and Partners is an independent research firm that operates in 200 jurisdictions and is commonly referred to as the “gold standard” in the legal profession. Chambers and Partners publishes rankings and information on the world’s top lawyers and law firms. In-depth interviews with lawyers, in-house counsel for clients, and independent experts were used to compile the rankings.

Recent Updates

MIRA Issues Regulation on Information Submission for Special Economic Zone Developers and Investors

Pursuant to section 70(b) of the Special Economic Zones Act1(“SEZ Act”), Maldives Inland Revenue Authority (“MIRA”) has issued a regulation2 detailing the information submission requirements for developers and investors in Special Economic Zones (“SEZs”).

This regulation follows the Maldivian government’s recent Memorandum of Understanding with Dubai’s International Free Zone Authority (IFZA), which was signed on 12 May 2024 to develop a special economic and financial services zone in K. Funadhoo near Malé and the Maldives Economic Gateway in Ihavandhippolhu in the north.

The regulation specifies the procedures for submitting documentation necessary to evaluate the scale of economic activities within SEZs and to calculate the “tax expenditure” related to the incentives and benefits offered under the SEZ Act.

Documentation requirements

Under the regulation, SEZ developers and investors are required to submit an annual tax return or a statement as prescribed by MIRA for SEZs along with the following documents by 30th June of the following year.

  1. Audited Financial Statements
  2. Auditors Report
  3. Directors Report (only applicable for companies)

The regulation further prescribes that the Audited Financial Statements should be prepared using accrual basis of accounting and presented in either United States Dollars or Maldivian Rufiyaa, depending on the entity’s functional currency. Entities with a functional currency other than Maldivian Rufiyaa are required to present the Audited Financial Statements and accompanying documents in United States Dollars, while those whose functional currency is Maldivian Rufiyaa should use Maldivian Rufiyaa as their presentation currency.

Moreover, the SEZ developers and investors must prepare and maintain transfer pricing documentation for transactions with associates, as outlined in section 68(b) of the Income Tax Act.

Additional matters

The Zone Superintendent from the Board of Investments for each SEZ must provide quarterly reports to MIRA. These reports, containing details about authorised developers and investors in the zones as well as any permit revocations, are to be submitted by the 15th of the month after each quarter ends.

Additionally, the regulation specifies that the information provided by SEZ developers and investors will be shared with the Ministry of Finance for the purpose of calculating tax expenditure related to the incentives and benefits offered under the SEZ Act, and this will not be regarded as a violation of confidentiality.

Effective date

28 October 2024

Tax Rates Increased Following Ratification of New Amendments

The rates for the Tourism Goods and Services Tax (“TGST”), Green Tax (“GRT”), and Airport Taxes and Fees have been increased, following the ratification of several key amendments today, 5 November 2024. These include:

  • Seventh Amendment to the Goods and Services Tax Act1
  • Fourteenth Amendment to the Tourism Act2
  • Second Amendment to the Airport Taxes and Fees Act3

This is part of the government’s fiscal strategy aimed at reducing budget deficits and boosting foreign currency inflows. These changes are expected to impact both businesses and travellers across the tourism industry.

The new rates are set to be implemented with varying effective dates for each tax type. Further details on the changes introduced via the amendments, including the effective dates and changes to the tax rates for each tax type is outlined below.

Tourism Sector Goods and Services Tax

Starting from 1 July 2025, the TGST rate will increase from 16% to 17%. A transitional period of 7 months is provided giving some time for businesses operating in the tourism sector to prepare for the rate change and address any potential impacts.

Current Rate
(1 January 2023 – 30 June 2025)
New Rate
(Effective from 1 July 2025)
16% 17%

In addition to the above, the amendment now allows not only staff shops but also staff cafes that cater exclusively to employees in tourist establishments to register for general sector GST instead of TGST. Previously, this exemption applied only to staff shops, while all other facilities and places in tourist establishments were required to register for TGST.

Green Tax

The Fourteenth Amendment to the Tourism Act introduces changes to the GRT rates, effective 1 January 2025. The updated rates are as follows:

GRT new rates effective from 1 January 2025
Tourist resorts, integrated tourist resorts, resort hotels, tourist vessels and;                                                                                                                      Hotels and guesthouses located in uninhabited islands USD 12 from each tourist per day of stay
Hotels and guesthouses located in inhabited islands With more than 50 rooms With 50 rooms or less
USD 12 from each tourist stay per day of stay USD 6 from each tourist stay per day of stay

Additionally, effective from 1 January 2025 an exemption has also been introduced for infants under the age of 2, who will no longer be subject to GRT.

Airport Taxes and Fees

Departure Tax

Departure Tax is levied on passengers4 departing the Maldives based on travel class. Following changes are brought to departure tax rates, which is set to come in effect from 1 December 2024 onwards.

Class Maldivian passengers Foreign passengers
Until
30 Nov 2024
New rates effective from
1 Dec 2024
Until
30 Nov 2024
New rates effective from
1 Dec 2024
Economy USD 12 USD 12 USD 30 USD 50
Business USD 60 USD 120 USD 60 USD 120
First USD 90 USD 240 USD 90 USD 240
Private jet USD 120 USD 480 USD 120 USD 480

Airport Development Fee (“ADF”)

ADF is collected from passengers departing from Maldives from Velana International Airport. Following changes are brought to ADF rates which are also set to come in effect from 1 December 2024 onwards.

Class Maldivian passengers Foreign passengers
Until
30 Nov 2024
New rates effective from
1 Dec 2024
Until
30 Nov 2024
New rates effective from
1 Dec 2024
Economy USD 12 USD 12 USD 30 USD 50
Business USD 60 USD 120 USD 60 USD 120
First USD 90 USD 240 USD 90 USD 240
Private jet USD 120 USD 480 USD 120 USD 480

It is notable that ADF and Departure Tax rates for Maldivian passengers traveling in economy class will remain unchanged.

Additionally, the amendment introduces provisions for reclaiming any excess or incorrectly collected airport taxes and fees paid to the Maldives Inland Revenue Authority (MIRA) where these amounts are later refunded to the passenger.

Accompanying Regulations
The necessary amendments to the respective regulations accompanying the acts are to be gazetted within 30 days of the effective date of the amendments.

Effective Date
The effective date of the above outlined amendments are 5 November 2024.

Update

CTL Strategies ranked in Chambers Global Guide 2024

Guide

Year In Review 2023

News

Overview of Tourism Land Rent Regulation