The Maldives Inland Revenue Authority (MIRA) has issued a regulation outlining the submission requirements for developers and investors operating within the country’s Special Economic Zones (SEZs). This follows the government’s recent Memorandum of Understanding with Dubai’s International Free Zone Authority (IFZA) signed on 12 May 2024, aiming to develop key economic hubs, including a financial services zone in K. Funadhoo near Malé and the Maldives Economic Gateway in Ihavandhippolhu in the north.
The regulation, pursuant to section 70(b) of the Special Economic Zones Act, sets out detailed procedures for submitting documentation to assess the economic impact of activities within these zones. The data collected will also be used to calculate the “tax expenditure” associated with incentives and benefits granted under the SEZ Act.
Key Documentation Requirements
SEZ developers and investors must submit an annual tax return or statement as specified by MIRA by 30th June of the following year. Additionally, they are required to provide:
- Audited Financial Statements
- Auditors Report
- Directors Report (applicable only to companies)
The regulation mandates that audited financial statements must follow an accrual basis of accounting. The presentation currency is determined by the entity’s functional currency: those operating in a currency other than the Maldivian Rufiyaa must report in United States Dollars, while entities using Maldivian Rufiyaa as their functional currency should prepare documents accordingly.
Furthermore, developers and investors within SEZs are required to maintain transfer pricing documentation for transactions with related entities, as stipulated in section 68(b) of the Income Tax Act.
Additional Reporting Obligations
Each SEZ’s Zone Superintendent, under the Board of Investments, is tasked with submitting quarterly reports to MIRA. These reports are due by the 15th of the month following each quarter and must include details on authorised developers and investors, as well as any revocations of permits.
The regulation also clarifies that information collected from SEZ entities will be shared with the Ministry of Finance for assessing tax expenditures, and this exchange of data will not be considered a breach of confidentiality.
The regulation came into effect on 28 October 2024, marking a significant step towards enhancing regulatory oversight in the country’s economic zones, particularly in light of recent international partnerships aimed at boosting the Maldives’ economic landscape.
