On 17 December 2019, President Ibrahim Mohamed Solih has ratified the Income Tax Bill into law. The Income Tax Act, marks the introduction of tax on personal income and introduces several important changes to the tax regime of the Maldives.
The Act, which was passed by the People’s Majlis on 4 December 2019, by a majority vote of 67 members, is set to commence on 1 January 2020, and the tax regime on Employee Income to be introduced under the Act will commence from 1 April 2020 onwards.
Under the Act, the existing Business Profit Tax (and non-resident Withholding Tax) and Bank Profit Tax will be abolished and ‘rolled over’ to the income tax regime with certain changes. Further, an individual’s salary income will be subject to income tax on a ‘Pay As You Earn’ (PAYE) mechanism. The Act also introduces a more comprehensive Capital Gains Tax regime compared to the BPT Act, and upon ratification of Act, the Land Sales Tax and Remittance Tax will be abolished, effective from 1 January 2020.
(Photo credit: President’s Office)