MALDIVES LAW AND PRACTICE Contributed by: Shaaheen Hameed, Hassan Maaz Shareef, Aminath Amathulla, Nazahath Ahmed, Isha Ali Raoof, Aifa Shareef, Noorul Hudha Ahmed and Mohamed Azmee, Premier Chambers LLP
Social Charges Under the Pensions Act (Law 8/2009), both employers and employees have to contribute to the Maldives Retirement Pension Scheme. Both have to contribute a minimum of 7% of the pen - sionable wage (basic salary). Participation in the Maldives Retirement Pension Scheme is mandatory for all local employees aged between 16 and 65. Foreign employees within the same age bracket have the option to voluntarily register and contribute to the Mal - dives Retirement Pension Scheme. 5.2 Taxes Applicable to Businesses Taxes Applicable to Businesses Income tax Under the Income Tax Act, entities other than banks and individuals who are resident in the Maldives have to pay income tax at the rate of 15% where taxable income exceeds MVR500,000. For income tax purposes, a com - pany is considered resident if it is incorporated, has its head office, or central management and control in the Maldives. Partnerships are consid - ered resident if they are incorporated and have their head office in the Maldives. Banks are taxed at a rate of 25% of their taxable income. Non-resident withholding tax Under the Income Tax Act, income derived from the Maldives by non-residents is subject to a tax rate of 10% on the gross amount of income received by them. Non-resident withholding tax is payable on rent in relation to immovable prop - erty situated in the Maldives, royalties, interest, dividends, fees for technical services, commis - sions paid in respect of services supplied in the Maldives and insurance premiums paid to insur - ers.
The Employment Act only mandates employees have to be informed by the employer in the event of a redundancy situation. The Occupational Safety and Health Act man - dates employees have to be informed by the employer in the following circumstances. • Any health and safety policy amendments. • Regularly updating the employees on safety measures relating to machinery, equipment, plants and other instruments used in the workplace by employees. There are no circumstances where it is mandat - ed employers have to consult employees. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers Employee Withholding Tax Under the Income Tax Act of the Maldives (Law 25/2019) (the “Income Tax Act”), employee with - holding tax is applicable where an employer pays remuneration to an employee, whether in cash, annuities, in-kind benefits or any other form. Employers must deduct employee with - holding tax from the gross amount of each pay - ment made monthly at the following rates: • 5.5% (if remuneration is more than MVR60,000 but less than MVR100,000); • 8% (if remuneration is more than MVR100,000 but less than MVR150,000); • 12% (if remuneration is more than MVR150,000 but less than MVR200,000); and • 15% (if remuneration is more than MVR200,000).
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