Registration

The apex legislation governing registration of businesses in the Maldives is the Business Registration Act.

The Business Registration Act (Law No.: 18/2014) requires every person carrying on business in the Maldives to register a business entity in one of the prescribed forms for

Registration specified below:

1. i) Company under the Maldives Companies Act (Law No.: 10/96); or ii) Partnership under the Partnership Act (Law No.: 13/2011); or iii) Cooperative Society under the Cooperative Societies Act (Law No.: 3/2007); or iv) Sole Proprietor under the Sole Proprietorship Act (Law No.: 19/2014)
2. A) COMPANY

A company is a business entity established pursuant to the Companies Act (Law no.10/96). In addition to locally incorporated companies, the Companies Act allows for re-registration and establishment of branches of foreign companies in the Maldives.

There are two main types of companies incorporated in the Maldives: i) Private limited company: Any two or more persons may as prescribed in the Companies Act, having the liability of its members limited, form a private company. A company can be incorporated as a private company if its Memorandum or Articles declares it as such. Shares may only be transferred in accordance with its Articles of Association and the number of members

Tax

Maldives Inland Revenue Authority (MIRA) established as a separate and independent legal entity under the Tax Administration Act (Law No.: 3/2010) is the sole authority responsible for enforcement and implementation 8. of tax policies in the Maldives.

The principal means of taxation in the Maldives are business profit tax and goods and services tax. There is no personal income tax in the Maldives.

Companies, Partnerships and other Persons 15 %

Withholding tax 10 %

Withholding tax is applicable to the following types of payments made to non-residents: Goods and Services Tax (GST) is a tax charged on the value of goods and services supplied in the Maldives. GST is charged under the Goods and Services Tax Act (Law Number 10/2011).

The Act makes a clear distinction between suppliers of tourism goods and services and suppliers of other (general) goods and services. Registration is compulsory if the value of goods and services supplied by the business exceed MVR 1 million (approx. USD 64,850) per annum.

However, importers of goods to the Maldives and suppliers of tourism goods and services are required to register even if the value of their supplies does not exceed the MVR 1 million threshold.

1. Rent, royalties and any other such consideration for the use of plant, machinery, equipment or other property for the purposes of a business;
2. Payments made for carrying out research and development;

• Payments made for the use of computer software;

1. Payment of fees for management, personal or technical services and any other commission or fee not constituting income from any employment;
2. Payments made in respect of performances by public entertainers; vi) Rent in respect of the viewing in Maldives of cinematographic films (whatever the format of the film).

GOODS AND SERVICES TAX (GST)

Goods and Services Tax (GST) is a tax charged on the value of goods and services supplied in the Maldives. GST is charged under the Goods and Services Tax Act (Law Number 10/2011). The Act makes a clear distinction between suppliers of tourism goods and services and suppliers of other (general) goods and services.

Registration is compulsory if the value of goods and services supplied by the business exceed MVR 1 million (approx. USD 64,850) per annum. However, importers of goods to the Maldives and suppliers of tourism goods and services are required to register even if the value of their supplies does not exceed the MVR 1 million threshold.

1. Rent, royalties and any other such consideration for the use of plant, machinery, equipment or other property for the purposes of a business;
2. ii) Payments made for carrying out research and development;

• iii) Payments made for the use of computer software;

1. iv) Payment of fees for management, personal or technical services and any other commission or fee not constituting income from any employment;
2. v) Payments made in respect of performances by public entertainers;
3. vi) Rent in respect of the viewing in Maldives of cinematographic films (whatever the format of the film). 8.2 GOODS AND SERVICES TAX (GST) The Act imposes a GST at the rate of 6% for general goods and services and a rate of 12% for tourism sector goods and services.

• There are certain categories of goods and services, which are zero-rated from GST. These include the following:
  1. Essential goods (List of essential goods referred here is included in the Annex of this guidebook)
  2. Goods and services exported from the Maldives;
  3. Sale of a going concern

OTHER TAXES

1. GREEN TAX

Green Tax will be levied at a flat rate of USD 6 per tourist per day at tourist resorts, tourist hotels and tourist vessels, and USD 3 per day of stay from tourist guest-houses. Green Tax liable tourist establishments will be automatically registered for Green Tax, in the name of the operating license holder, from the date on which the Ministry of Tourism issues the operating license.

1. TOURISM LAND RENT

Tourism Land Rent in Maldives is payable under the Second Amendment to the Maldives Tourism Act (Law No.: 20/2010). Tourism land rent is based on the land area of islands and plots of land leased out from the government for the purpose of developing and operating tourist establishments. The following are considered as tourist establishments for the purposes of land rent:

1. Tourist resorts
2. Tourist hotels

• Tourist guest houses

1. DUTY FREE ROYALTY

Duty Free Royalty is levied under the Act Governing Duty Free Areas in the Maldives (Law No.: 9/81). All duty free shops in the Maldives are liable to pay a monthly royalty calculated as a percentage of sales.

All parties wishing to conduct duty free businesses in the Maldives are required to register with the Ministry of Economic Development and obtain a license in respect of each duty free shop. For royalty purposes, duty free shops have to be registered with the MIRA once they are granted with the license to operate by the Ministry of Economic Development.

1. BANK PROFIT TAX

Tax on profits of banks operating in the Maldives is levied under the Bank Profit Tax Act (Act No. 9/85) and administered through the Bank Profit Tax Regulation. For Bank Profit Tax purposes, all commercial banks operating in the Maldives would be registered with the MIRA once they are granted with the license to operate by the Maldives Monetary Authority.

1. REMITTANCE TAX

Banks and money transfer agencies are required to collect a 3% remittance tax on money transferred out of the country by foreigners employed in the Maldives. Employers are required to ensure that their expat employees maintain an account at a local bank and that all remuneration due to those expat employees is deposited into those accounts.

Legal

A “foreign person” means every person who is not a Maldivian citizen as explained in Article 9 of the Maldives constitution, and includes companies, partnerships, clubs, societies, and business entities registered overseas.

Article 9 of the Maldivian Constitution

1. i) The following persons are citizens of the Maldives:

(a) Citizens of the Maldives at the commencement of this Constitution.

(b) Children born to a citizen of the Maldives; and

(Foreigners who, in accordance with the law, become citizens of the Maldives.

1. ii) No citizen of the Maldives may be deprived of citizenship.

iii) Any person who wishes to relinquish his citizenship may do so in accordance with law.

1. iv) Despite the provisions of article (i) a non-Muslim may not become a citizen of the Maldives.

In accordance with the applicable laws and regulations, a foreign person may choose, either to set up a company, partnership, re­register a company incorporated in a foreign jurisdiction or establish a branch of a foreign legal entity by incorporating or re-registering a business in the Maldives.

Currently, there are 2 regimes available for foreign investors to establish their business in the Maldives.

normal regime governed under the

1. Foreign Investment Law
2. ii) Special Economic Zone (SEZ) regime

governed under the Special Economic

Zones Law

The Business Registration Act (Law No.: 18/2014) lists out the following criteria under which foreign persons are allowed to carry out business in the Maldives under this regime.

1. i) It is a professional service either in

the field of law, healthcare, accounting, taxation, financial services; or

1. ii) If the business activity is not a professional service stated in sub-paragraph (i), the share capital of the business exceeds one million United States Dollars and makes a security deposit of One Hundred Thousand United State Dollars to an agency determined by the Maldives Government; or iii) It is a wholesaler; or
2. iv) It shall have a certificate of

creditworthiness issued from a bank approved by the Maldives Government; and

1. v) It is not a retailer, engaged in small business or any kind of retail trade.

Subject to fulfilling the above criteria, a foreign

person will need to be registered as a Company under the Maldives Companies Act (Law No.: 10/96) or as a Partnership under Partnership Act (Law No.: 13/2011).Maldives Companies Act also allows re-registration of companies incorporated under foreign jurisdictions and establishment of branches of foreign companies.

FOREIGN INVESTMENT REGISTRATION PROCEDURE

Noted below is a step-by-step guide on obtaining approval for a foreign investment request, and the subsequent registration process that is required to establish a business entity under the normal regime governed under the Foreign Investment Law

STEP 1 Lodge Foreign Investment Application at the Ministry of Economic Development

• Application for a Foreign Investment is available from the Ministry’s website; www.trade.gov.mv.
• Walk-in meetings are available at Foreign Investment Registry Unit located at 4th floor, Velaanaage Building for all foreign investors, who may wish to discuss their proposal, prior to applying.

STEP 2 Getting the Foreign Investment approval

• An approval will be granted for the requested proposal in consultation with relevant government stakeholders and in accordance with the applicable laws and regulations.
• The standard processing time is 3 working days. However, in cases where relevant line Ministries need to review the applications further, it may take 10-14 days for a decision on the application.

STEP 3 Registration of a business entity

• At the stage of lodging the foreign investment application, a decision will need to be made on the type of business entity to register the business subject to getting approval for the proposed business. The options available include Company, Partnership, or re-registering a company, which has been duly incorporated in another jurisdiction.
• Application forms for registering as a legal entity are available from the Ministry’s website www.trade.gov.mv. and such applications can also be lodged online via business.egov.mv

STEP 4 Sign the Foreign Investment Agreement

• Upon registering as a business entity, a Foreign Investment Agreement (FIA) must be signed with the Ministry of Economic Development. This Agreement outlines the terms and conditions related to carrying out the specific business in the Maldives. For tourism sector investments, the said FIA need not be signed with the Ministry of Economic Development. In such instances, where, land is acquired through the government, a land lease agreement is signed with the Ministry of Tourism

STEP 5 Obtain licenses and permits

• Depending on the type of business activity undertaken, an operating license or permit may need to be obtained to commence operations.
• Please refer to the section on Business Licenses for more details.