MALDIVES Law and Practice Contributed by: Hassan Maaz Shareef, Aminath Amathulla, Aishath Shifala, Mohamed Azmee, Nazahath Ahmed, Maaisha Mohamed Musthafa, Aifa Shareef and Noorul Hudha Ahmed, Premier Chambers LLP
rently required to pay goods and services tax (GST) at the rate of 8% to MIRA and businesses operating in the tourism sector have to pay a tourism goods and services tax (T-GST) at the rate of 17% to MIRA. Green tax Under the Tourism Act of the Maldives (Law 2/99) (the “Tourism Act”), the green tax, introduced by the Tour - ism Act, applies to tourists staying in various types of accommodation such as tourist resorts, integrated tourist resorts, resort hotels, tourist hotels, hotels, tourist guesthouses and tourist vessels. It is the responsibility of the establishment operator to collect the green tax from tourists and remit it to MIRA. Tourism establishments must pay USD12 daily per guest, while tourist hotels and guesthouses with fewer than 50 rooms must pay USD6. OECD Two Pillar solution The Maldives is a member of the OECD/G20 Inclu - sive Framework on Base Erosion and Profit Shift - ing (BEPS). While both pillars have been endorsed, domestic legislation to implement them has not yet been enacted. A mechanism to implement the Two Pillar solution is scheduled to be formulated in 2026. The Maldives has not introduced a domestic top- up tax (Qualified Domestic Minimum Top-up Tax or QDMTT). Consequently, there is no domestic top-up tax that has been granted or is expected to be grant - ed, safe harbour status on the OECD central record at this stage. As a result, any top-up tax applicable to Maldivian entities within the scope of multinational groups would currently be collected in other jurisdictions under the Pillar Two rules, once those rules are effective else - where. 5.3 Available Tax Credits/Incentives Tax Incentives Under the Special Economic Zone Act (SEZ Act) The SEZ Act classifies various zones, including indus - trial estates, export processing zones, free trade zones, enterprise zones, free ports, single-factory export processing zones, centres providing offshore financial services and high-technology parks, as spe -
cial economic zones. Under the SEZ Act, zone devel - opers are guaranteed the following incentives: • relief from import duty on capital goods; • relief from GST for the first ten years; and • relief from withholding tax for the first ten years. The SEZ Act provides similar concessions to individu - als investing in SEZs, with the extent of these benefits depending on the industry and type of investment. Special Exemptions Provided Under the Income Tax Act Under Section 12-1 of the Income Tax Act, the Presi - dent, in specific circumstances, can exempt income from specific business projects or industries from tax. The determination of eligible projects or industries is made by the President, with advice from the Cabinet of Ministers and published in the government gazette. Exemptions are granted for a specific period and take into account factors such as revenue impact, economic and social impact and the attainability of objectives. A list of exempted persons and the reasons for exemp - tion needs to be published in the government gazette. Foreign Tax Credit Under Section 72 of the Income Tax Act, residents paying taxes abroad can deduct either the foreign tax paid or the tax payable in the Maldives on the net foreign-sourced income, whichever is lower. Deductions are applied separately with respect to each type of income and each country or territory from which each type of income was derived. Deductions must be claimed within two years after the end of the accounting period and adjustments can be made within two years of any tax payable adjust - ments. Tax Treaties Tax credits are also applicable under any double tax avoidance agreements (DTAAs) and are deducted in line with the provisions of the Tax Administration Act
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