It is common practice for countries to grant tax exemptions or tax incentives targeted at new or specific industries with the purpose of correcting market inefficiencies, promoting certain economic activities and increasing foreign investment.
In Maldives, until the First Amendment to the Income Tax Act, which came into effect on 20 July 2021, there were limited provisions in the income tax laws with respect to granting tax exemptions. However, the said Amendment handed the President of the Maldives a discretionary power to grant income tax exemption on income received from specific business projects and industries.
As such, this guide will primarily summarise the key components of the special exemption from payment of income tax eligible for specific business projects and industries.
The guide will also briefly look at some other tax exemptions currently in place, including GST exemption specific to social housing schemes, reimbursement arrangements and exemption from custom duties.