Taxation System in the Maldives: An Overview

The Maldives, known for its stunning islands, luxury resorts, and vibrant marine life, is a nation that attracts thousands of tourists annually. While the country gains significant revenue from its booming tourism industry, its system of taxation is also well-structured to ensure sustainable economic growth. This article explores various aspects of the taxation system in the Maldives, providing a comprehensive overview for businesses and individuals considering operating within this beautiful island nation.

Tourism Goods and Services Tax (TGST)

One of the primary sources of revenue for the Maldivian government is the Tourism Goods and Services Tax (TGST). This tax is levied primarily on tourism-related goods and services, such as accommodation, food, beverages, and recreational activities. As of the latest updates, TGST stands at 12%. It is crucial for businesses, especially those in the hospitality sector, to comply with TGST regulations, as penalties for non-compliance can be severe.

General Goods and Services Tax (GGST)

For non-tourism-related goods and services, the Maldives imposes a General Goods and Services Tax (GGST). This tax is levied on the supply of most goods and services throughout the country. The GGST rate is set at 6%. Both TGST and GGST are collected by the Maldives Inland Revenue Authority (MIRA), which oversees tax regulations and compliance.

Business Profit Tax (BPT)

Another significant aspect of the Maldivian taxation system is the Business Profit Tax (BPT). BPT is levied on the profits earned by companies operating within the country. The standard BPT rate is 15%, with an additional lower rate of 5% for smaller businesses, encouraging entrepreneurship and small business growth.

Green Tax

To promote environmental sustainability, the Maldives has also introduced the Green Tax. This tax is collected from tourists staying at resorts, guesthouses, and hotels. It is set at a fixed rate of $6 per guest per day for tourists and $3 per day for tourists staying at guesthouses. The revenue generated from the Green Tax is utilized for environmental conservation projects and maintaining the natural beauty of the islands.

Withholding Tax

The Maldives has a withholding tax system in place, which applies to certain types of payments made to non-residents. This includes payments such as interest, dividends, royalties, and fees for technical services. The withholding tax rate is generally 10%, ensuring that non-resident entities also contribute to the Maldivian economy.

Personal Income Tax

As of now, the Maldives does not impose a personal income tax on individuals. This makes it an attractive destination for expatriates and foreign workers looking to relocate. However, individuals are still subject to various other taxes and fees, such as visa fees and the Airport Development Fee.

Double Taxation Avoidance Agreements (DTAA)

To facilitate international business and prevent double taxation, the Maldives has entered into Double Taxation Avoidance Agreements (DTAA) with several countries. These agreements help in resolving issues related to cross-border taxation and ensure that businesses are not taxed twice on the same income in different jurisdictions.

Ease of Doing Business

The Maldivian government has made significant efforts to create a business-friendly environment. The Maldives ranks relatively high in the ease of doing business index, thanks to streamlined administrative procedures, investor-friendly policies, and robust legal frameworks. The government encourages foreign investment, particularly in sectors like tourism, real estate, and fisheries.

Conclusion

The taxation system in the Maldives is intricately designed to support the country’s economic growth while promoting environmental sustainability and social welfare. With a focus on tourism and business profitability, the country’s tax structure offers an inviting environment for both local and international businesses. Understanding the various taxes and complying with local regulations is key to successful business operations in this tropical paradise.

Suggested related links about Taxation System in the Maldives:

Maldives Inland Revenue Authority

Ministry of Finance Maldives

World Bank

International Monetary Fund

PWC

KPMG

Deloitte

Ernst & Young