The Maldives Monetary Authority (MMA) has introduced new regulations concerning the use of foreign currency and the operation of money-changing businesses in the Maldives. The newly implemented Regulation on Foreign Currency sets clear guidelines for transactions, foreign currency deposits, and exchange requirements, particularly focusing on businesses in the tourism sector. These regulations aim to enhance transparency in the financial sector, especially within the tourism industry, a key driver of the Maldives’ economy.
Currency of Transactions
According to the regulation, all transactions within the Maldives must be conducted in Maldivian Rufiyaa (MVR), with certain exemptions. These exemptions include payments to government entities, banks, financial institutions, remittance service providers, and tourism-related businesses. This provision applies to wages, rents, and services provided to tourists or foreign customers, ensuring that Rufiyaa remains the primary currency in most transactions.
Foreign Currency Deposits and Reporting
Tourism service providers must register with the MMA and submit detailed monthly reports on their foreign currency income by the 28th of the following month. Additionally, all foreign currency earnings must be deposited into a foreign currency account at a local bank within 87 days after the end of the month in which the income was received. This system ensures proper management of foreign exchange earnings within the Maldives’ banking system.
Foreign Currency Exchange Requirements
Tourism establishments are required to exchange a portion of their foreign currency income into Maldivian Rufiyaa based on tourist arrivals. Category A establishments, which include resorts, integrated resorts, resort hotels, and tourist vessels, must exchange USD 500 per guest, while Category B establishments, which include guesthouses and smaller hotels with fewer than 50 rooms, must exchange USD 25 per guest. This exchange must be completed through a local bank by the 28th day of the third month following the guest’s stay. Tourism operators facing insufficient foreign currency reserves for taxes or loans may apply to submit a lower amount of exchanged currency.
Penalties for Non-compliance
Businesses that fail to comply with the currency regulations, such as using foreign currency for prohibited transactions, could face fines ranging from MVR 10,000 to MVR 1 million. Other violations, such as failing to submit reports or foreign currency deposits on time, may also incur penalties within the same range. The MMA has emphasized the importance of adhering to these guidelines to avoid legal consequences.
Boosting Foreign Exchange Management
These regulations are part of the government’s broader effort to improve the management of foreign currency in the country and increase the foreign exchange available to businesses and the public. The MMA anticipates that the changes will significantly boost foreign currency exchanges within the tourism sector, potentially increasing the proportion of exchanged foreign currency from 3% to 15% of total tourism revenue.
