The Regulation on the Classification of SMEs was gazetted on 9 January 2022 providing further details on the registration and classification of SMEs. The Regulation replicates the classification criteria of SMEs laid down under the First Amendment to the Small & Medium Enterprises Act. The businesses under the Small & Medium Enterprises Act (SME Act) are classified into micro, small and medium businesses.
- The Regulation provides that the applications for SME classification can be submitted to the Ministry of Economic Development (the “Ministry”) using the Business Portal of the Ministry.
- For the purposes of SME classification, newly incorporated companies are required to submit to the Registrar of Companies, the forecasted revenue and number of employees for the first 12 months from incorporation date.
- Based on data from the Maldives Inland Revenue Authority, Maldives Pension Administration Office and the implementing agency of the Employment Act (Law Number 2/2008), the Ministry is required to conduct annual reviews before the end of August to revise the classification of businesses and record the changes in a manner accessible to the public.
The Regulation reiterates the classification criteria of SMEs provided under the SME Act. The classification is be based on the following information of the company:
- Number of employees;
- Total revenue; and
- Net profit.
Where a business does not fulfill all the criterias within a category, the classification is to be determined by allocating priority in the following manner:
- Number of employees – 40% (Forty Percent);
- Total revenue – 30% (Thirty Percent); and
- Net profit – 30% (Thirty Percent)
Similarly to the SME Act, the formulas to be utilised in determining the classification based on the above allocations have been provided Regulation.
Businesses Not Listed as SME
The Regulation further provides that where a business exceeds any maximum threshold prescribed in the criteria, such businesses will be recorded as not being classified as an SME.
The Regulation is in force from 9 January 2022.