The Maldives has officially implemented the Foreign Currency Act as of 1 January 2025, marking a significant shift in how foreign currency transactions are managed, particularly within the tourism sector and high-revenue businesses. The new legislation, ratified by President Dr. Mohamed Muizzu in December 2024, replaces the long-standing Monetary Regulation of 1987 and introduces a streamlined approach to regulating foreign exchange inflows.
Under the new Act, businesses in the Maldives, particularly those within the tourism industry, are now required to convert a portion of their foreign currency earnings into the local currency, Maldivian Rufiyaa (MVR). The law categorises businesses into three distinct groups, each with specific conversion obligations.
- Category A:
- Includes resorts, integrated tourist resorts, and resort hotels.
- Must convert either USD 500 per tourist per month or 20% of their gross monthly foreign currency sales.
- Category B:
- Includes tourist vessels, tourist hotels, and guesthouses.
- Required to convert either USD 25 per tourist per month or 20% of gross monthly foreign currency sales.
- High-Income Entities:
- Businesses earning an annual foreign currency revenue of at least USD 15 million.
- Required to convert 20% of gross monthly foreign currency sales.
In an effort to manage foreign exchange liquidity, the Act mandates that businesses deposit their realised foreign currency earnings into local bank accounts within three months of the transaction month. For example, businesses that earn foreign currency in January 2025 must comply by 28 April 2025. Exemptions are provided for certain transactions involving government institutions, exported goods, or tourists, including those staying less than 24 hours or children under 12 years of age.
The Act also includes provisions for businesses facing financial hardship. Those unable to meet the required conversion levels while fulfilling other obligations, such as tax payments or debt servicing, can apply to the Maldives Monetary Authority (MMA) for special concessions on a case-by-case basis.
Non-compliance with the new regulations will result in penalties. Fines of up to 0.5% of unconverted amounts can be levied monthly, with unresolved fines after 90 days potentially leading to the suspension of business permits.
With the introduction of these measures, the Foreign Currency Act is designed to strengthen the country’s fiscal framework, reduce foreign exchange outflows, and ensure greater stability in the Maldivian economy. The MMA is set to oversee the implementation and ensure businesses comply with the new rules, as additional regulations and procedural details are expected in the coming months.
