The Maldives Inland Revenue Authority (MIRA) has announced a crucial amendment to the Income Tax Regulation, mandating individuals and businesses earning in foreign currencies to make their tax payments in US dollars.
MIRA states the latest amendment, which marks the fifth change to the regulation, aims to streamline tax compliance for foreign currency earners and bring the Maldives in alignment with international financial practices.
Under the new amendment, individuals and businesses whose functional currency is not Maldivian Rufiyaa (MVR) must now submit their income tax and interim payments in US dollars. This means that income tax returns and payments must be made in the same currency in which the income is earned.
Moreover, non-residents earning income in foreign currencies must also comply with the new rules, with provisions regarding withholding tax and capital gains withholding tax coming into effect from October 31.
According to MIRA, the move is expected to simplify the tax reporting process for expatriates and Maldivian residents earning income abroad, ensuring smoother compliance with international tax standards. Additionally, it is seen as part of the government’s strategy to address the nation’s ongoing dollar shortage by increasing foreign currency retention.
The recent regulatory update also follows a decision by the Maldivian Cabinet, which ruled that companies earning in foreign currencies must settle pension contributions and customs duties in US dollars.
This amendment represents a significant shift in the Maldives’ tax policy and is part of broader efforts to improve foreign currency management and address ongoing challenges related to foreign exchange reserves.
