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
Payments to non-resident contractors are sub - ject to withholding tax at the rate of 5%. Employee withholding tax See 5.1 Taxes Applicable to Employees/ Employers . Goods and services tax Under the Goods and Services Tax Act (Law 10/2011), businesses operating in the general sector are currently required to pay goods and services tax (GST) at the rate of 8% to the Mal - dives Inland Revenue Authority (MIRA) and busi - nesses operating in the tourism sector have to pay a tourism goods and services tax (T-GST) at the rate of 17% to MIRA. Businesses importing goods to the Maldives and suppliers of tourism goods and services have to register for GST. Businesses that do not fall within the criteria only have to register where the value of their taxable supplies exceed MVR1 mil - lion in the last 12 months or are expected to exceed MVR1 million in the next 12 months. Green tax Under the Tourism Act of the Maldives (Law 2/99) (the “Tourism Act”), the green tax, introduced by the Tourism 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. Tourists staying at tourist resorts have to pay USD12 a day. Tourists staying at hotels and tour - ist guesthouses that are located on inhabited islands and have less than 50 rooms have to pay USD6 a day.
Since 1 January 2025, children under two have been exempted from the green tax. OECD Two Pillar solution The Maldives is a member of the OECD/G20 Inclusive Framework on Base Erosion and Prof - it Shifting (BEPs) and has committed to imple - menting the OECD’s Two Pillar solution. While both pillars have been endorsed, domestic leg - islation to implement it has not been enacted yet. A mechanism to implement the Two Pillar solution is scheduled to be formulated in 2026. 5.3 Available Tax Credits/Incentives Tax Incentives Under the Special Economic Zone Act (SEZ Act) The SEZ Act classifies various zones, including industrial estates, export processing zones, free trade zones, enterprise zones, free ports, single factory export processing zones, centres provid - ing offshore financial services and high technol - ogy parks as special economic zones. Under the SEZ Act, zone developers 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 individuals 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 President, in specific circumstances, can exempt income from specific business projects or industries from tax.
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