- President Muizzu ratified seven laws covering foreign currency, taxation, land, transport and fisheries in one ceremony.
- From 1 September, Category A resorts must convert 40 per cent of monthly gross sales through MMA-licensed banks, and selling foreign currency outside MMA rates becomes an offence with fines up to MVR 5 million.
- A GST amendment extends the 17 per cent Tourism GST to services sold through offshore booking platforms and foreign tour operators under the destination principle.
A broad expansion of state regulation across foreign currency, taxation, land, transport and fisheries has moved into law after President Dr Mohamed Muizzu ratified seven pieces of legislation in a single ceremony on Monday.
The package includes some of the most consequential and disputed economic measures considered by Parliament this year, particularly the requirement for resorts to convert 40 per cent of their monthly revenue and new restrictions targeting the black market for foreign currency. It also brings offshore tourism intermediaries into the Maldivian tax system and grants wider administrative powers to the Maldives Inland Revenue Authority (MIRA).
The foreign currency amendment, which takes effect on 1 September, removes the option for Category A tourism establishments to convert USD 500 per tourist. Resorts must instead convert 40 per cent of their monthly gross sales through a bank licensed by the Maldives Monetary Authority (MMA).
Category B establishments may convert either USD 25 per tourist or 20 per cent of their monthly gross sales. Businesses outside tourism that earn more than USD 25 million annually in foreign currency will also be required to convert 40 per cent of monthly gross sales, although the requirement is reduced to seven per cent for businesses that are entirely Maldivian-owned.
The required funds must be deposited into a foreign currency account at an MMA-licensed bank and converted by the 28th of the following month.
The amendment also makes it an offence to sell or attempt to sell foreign currency outside rates or bands determined by the MMA. Its definition of advertising and promotion extends to publishing or circulating exchange-rate information when it is used to advertise, encourage or facilitate unauthorised transactions.
Individuals may be fined between MVR 25,000 and MVR 1 million for unlawful foreign currency transactions. Advertising or promoting such transactions carries fines of up to MVR 500,000 for individuals, while legal persons may face penalties ranging from MVR 100,000 to MVR 5 million.
The provisions attracted objections from opposition figures concerned about their possible effect on media reporting and public discussion of black market rates. The Maldives Association of Tourism Industry also opposed the 40 per cent conversion requirement, arguing that resorts already face substantial expenses and debt obligations denominated in US dollars.
A second tourism-related measure extends the 17 per cent Tourism Goods and Services Tax to qualifying services sold through offshore booking platforms, foreign tour operators and overseas travel agents.
The GST amendment applies the destination principle, under which relevant services are taxed according to where they are consumed rather than where the supplier is established. Its scope includes inbound tourism products connected to accommodation, meals, transportation and other services supplied to visitors travelling to the Maldives.
The government has estimated that bringing foreign tourism intermediaries into the tax system could generate more than MVR 1.6 billion annually. However, the Maldives Association of Travel Agents and Tour Operators raised concerns about limited industry consultation, the complexity of international tourism distribution networks and the practical difficulty of enforcing registration requirements against overseas businesses without a permanent presence in the country.
The GST amendment is now in force, with the government required to publish the necessary regulatory changes within 30 days.
Two further amendments expand the state’s tax collection framework. The Income Tax Act amendment doubles the withholding tax on payments to non-resident contractors undertaking construction projects from five per cent to 10 per cent. The deduction will represent the contractor’s full and final tax liability, while a revised definition of non-resident contractors is intended to simplify return filing.
The Tax Administration Act amendment gives MIRA broader powers over audits, investigations and the recovery of outstanding taxes. The Commissioner General of Taxation may require any party holding information needed to administer tax laws to provide it to MIRA.
The legislation also introduces additional tax offences and penalties, provides for penalty payments through instalment arrangements and expands rules covering joint examinations with foreign tax authorities, Country-by-Country Reporting and the Common Reporting Standard. Non-compliance with CRS obligations may result in fines of up to MVR 250,000.
Beyond taxation, the President ratified a new law governing the use of uninhabited islands and standalone lagoons. The legislation replaces the uniform rent of 10 laari per square metre with rates based on the purpose of the lease.
Annual rent will be MVR 3 per square metre for industrial and economic activities, MVR 2.50 for fisheries and agriculture, and MVR 2 for social purposes. Islands granted under the traditional ‘varuvaa’ arrangement will carry an annual fee of MVR 2 per square metre.
The President will designate islands and lagoons for different purposes, while councils will generally allocate uninhabited islands within their jurisdiction. Exceptions apply to islands allocated for tourism, industrial development or state purposes. The law will take effect after 30 days and replace the Uninhabited Islands Act of 1998.
The new Land Transport Act introduces another major structural change, designating the Greater Malé region as a Registration and Traffic Management Controlled Zone. A Greater Malé Transport and Mobility Office will oversee the area’s transport system for an initial three-year period, with powers covering vehicle quotas, traffic management and public transport.
The law also limits the operation of most vehicles to 20 years from their date of manufacture. Vehicles already exceeding that age will receive a three-year transition period. Opposition MPs objected during the bill’s passage to provisions transferring some transport powers and related revenue from councils to central authorities.
A National Road Safety Council and a dedicated transport development fund will also be created. The Act comes into force after 30 days, repealing the existing Land Transport Act and the Maldives Pedestrian Act.
The fisheries amendment completes the seven-law package. It expands the regulation of fishing and aquaculture in protected areas, creates a legal basis for specialised fishing harbours and requires new rules for recreational and sport fishing.
It also revises the leasing framework for aquaculture areas and strengthens procedures for responding to illegal fishing by foreign vessels, including matters involving the responsibilities of their flag states. Fisheries authorities have 60 days to revise existing regulations and prepare the additional rules required under the amendment.
Four of the seven laws have taken effect immediately, while the foreign currency amendment begins on 1 September. The island leasing and land transport laws will follow after 30 days, shifting the focus from Parliament to how regulators and ministries implement one of the government’s widest-ranging legislative packages of the year.
