Maldives has seen significant changes in its taxation system within a relatively short period. The major taxes that apply are income tax, which targets individuals as well as businesses, and goods and services tax, which consists of a dual rate system for general goods and services and tourism goods and services. Other forms of taxes include import duties and green tax. Import duties are charged either in proportion to the estimated value of goods, ranging from 0% to 400%, or at a specific rate. Green tax is charged per tourist per day spent in a tourist establishment and is aimed at funding the country’s climate change and environmental initiatives.
Below is an overview of the key laws that govern taxation in Maldives.
Tax Administration Act
The Tax Administration Act of 2010 outlines the provisions for establishing and implementing an administrative framework for tax administration in Maldives. The Act established Maldives Inland Revenue Authority (MIRA), responsible for implementing tax laws and policies, and collecting all taxes payable to the state. It also created the Tax Appeal Tribunal, which adjudicates tax-related cases. The Act highlights the general obligations of taxpayers, the audit and investigation powers of MIRA, the objection and appeal process, as well as the offenses and penalties.
Goods and Services Tax Act
The Goods and Services Tax Act has been in force since 2 October 2011. This Act covers provisions on goods and services tax (GST) collection, calculation methods, taxable periods, classification of exempt and zero-rated goods and services, and registration obligations for GST. The Act categorizes GST into two sectors: the general sector and the tourism sector. For current GST rates, refer to our taxation guide #2.
Income Tax Act
The Income Tax Act came into effect on 1 January 2020. Under this Act, tax is levied on various sources of income, including remuneration, income derived from businesses, dividends, interest, rental income, annuities, pensions, retirement benefits, beneficiary income, fees for technical services, commissions, royalties, capital gains, and income from any other source, including proceeds from illegal or criminal activity. This Act repealed the Business Profit Tax and Bank Profit Tax, integrating both into the new framework. Business income is taxed at 15%, non-resident withholding at 10%, and banks at 25%. Additionally, the Act abolished Remittance Tax, Land Sale Tax, and Petroleum Tax.
Maldives Tourism Act
The Sixth Amendment to Maldives Tourism Act introduced the Green Tax, replacing the previous Tourism Tax (Bed Tax). Effective from 1 November 2015, this tax is charged at US$ 6 per tourist per day staying at tourist resorts, hotels, vessels and other tourist establishments. The Eighth Amendment to the Tourism Act extended the Green Tax to guesthouses, setting at US$ 3 per day for each tourist staying at guesthouses.
Airport Taxes and Fees Act
Under the Airport Taxes and Fees Act, a Departure Tax is levied on passengers (both local and foreigners) departing from the Maldives. However, transit passengers and children under the age of 2 are exempt from paying the Departure Tax. Additionally, an Airport Development Fee is charged on passengers (both local and foreigners), including transit passengers, departing the Maldives from Velana International Airport. The rates for both the Departure Tax and Airport Development Fee are based on travel class and differ between locals and foreigners. Passengers with diplomatic immunity are exempt from both the Departure Tax and the Airport Development Fee. For current rates, refer to our taxation guide #2.
Waste Management Act
The Waste Management Act requires businesses operating in the Maldives to charge MVR 2 (approx. US$ 0.13) as a plastic bag fee for each plastic bag sold or provided free of charge to customers at the point of sale, effective from 18 April 2023. Businesses registered for GST must pay their plastic bag fee collections to MIRA on or before the GST payment deadline.