Income Tax

Income Tax is levied under the Income Tax Act (Law Number 25/2019). The act was published in the Government Gazette on 17 December 2019 and taxation under the act is set to commence on 1 January 2020. However, remuneration will come within the purview of income effective 1 April 2020. The Business Profit Tax regime imposed under the Business Profit Tax Act would be repealed with the commencement of Income Tax.

Tax residents of Maldives are taxed on their worldwide income, whereas non-residents are taxed on the income derived from Maldives.


Tax Rates

Individuals

Tax bracket ( taxable income per tax year) Tax rate
Not exceeding MVR 720,000 0%
More than MVR 720,000 but not exceeding MVR 1,200,000 5.5%
More than MVR 1,200,000 but not exceeding MVR 1,800,000 8%
More than MVR 1,800,000 but not exceeding MVR 2,400,000 12%
More than MVR 2,400,000 15%

Employee withholding tax

Tax bracket (Remuneration subject to employee withholding tax per month) Tax rate
Not exceeding MVR 60,000 0%
More than MVR 60,000 but not exceeding MVR 100,000 5.5%
More than MVR 100,000 but not exceeding MVR 150,000 8%
More than MVR 150,000 but not exceeding MVR 200,000 12%
More than MVR 200,000 15%

Non-resident withholding tax

Type of income received by the non-resident Tax rate
Income specified in the section 55(a) of the Income Tax Act 10%
Reinsurance premium 3%

Persons other than individuals and banks

Tax bracket ( taxable income per tax year) Tax rate
Not exceeding MVR 500,000 0%
More than MVR 500,000 15%

Banks

25% of the taxable income per tax year


Income derived, from Maldives, by non-resident international transport operators

2% of the gross amount of income (specified in section 11(r) of the Income Tax Act) in a tax year

Forms

  • 19 Aug 20 : Annual Report and Statement of Donation - Template
  • 17 Aug 20 : How to complete Interim Return 2020 (MIRA 603)
  • 05 Aug 20 : MIRA 603 Interim Return 2020 (English) - Fillable
  • 05 Aug 20 : MIRA 603 Interim Return 2020 (English)
  • 23 Apr 20 : How to complete MIRA 601 (Employee Withholding Tax Return) and Information Sheet
  • 12 Mar 20 : MIRA 917 Change of Rate of Employee Withholding Tax (English)
  • 12 Mar 20 : MIRA 916 Election to Deduct Employee Withholding Tax (English)
  • 11 Mar 20 : MIRA 601 Employee Withholding Tax Information Sheet
  • 11 Mar 20 : MIRA 601 Employee Withholding Tax Return (English) (Version 20.1)
  • 23 Feb 20 : How to complete MIRA 607 (Application for Exemption under s.12(k) of the Income Tax Act)
  • View all

    Guides

  • 23 Sep 20 : How to complete Income Tax Registration form (MIRA 117, Version 20.1)(Dhivehi)
  • 17 Aug 20 : How to complete Interim Return (MIRA 603, Version 20.1)
  • 17 May 20 : Income Tax Guide: Non-monetary Benefits Provided to Employees (Exposure Draft)
  • 25 Apr 20 : Income Tax Guide: Employee or Independent Contractor? (Exposure Draft)
  • 23 Apr 20 : How to complete Employee Withholding Tax Return (MIRA 601, Version 20.1) and Employee Withholding Tax Information Sheet
  • 31 Mar 20 : Guide to non-resident withholding tax (NWT) [DRAFT]
  • 16 Mar 20 : Income Tax Khulaasaa Guide (English)
  • 18 Feb 20 : How to complete Application for Exemption under s.12(k) of the Income Tax Act form (MIRA 607, Version 20.1)
  • 06 Feb 20 : How to complete Income Tax Registration form (MIRA 117, Version 20.1)
  • 30 Jan 20 : How to complete Non-resident Withholding Tax Return (MIRA 602, Version 20.1)
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    Tax Rulings

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    Flyers and brochures

    Indicative Margin

    Section 7 of the Transfer Pricing Regulation (Regulation Number 2020/R-43) exempts the applicable entity from preparing transfer pricing documents for loan transactions undertaken with an associated party, if the loan amount does not exceed MVR 15 million, and the following indicative margin applied.


    Associated party loan not exceeding MVR 15 million obtained or provided during the period Indicative Margin
    1 January 2020 to 31 December 2020 +1%

    If a taxpayer chooses to apply the indicative margin, the rate used should be the indicative policy rate published by the Maldives Monetary Authority plus the indicative margin above.

    FAQ

    1 - When did the Income tax Act become effective?

    The Income Tax Bill was signed into a law by the President on 17 December 2019. The taxation under the Act started on 1 January 2020. However, taxation of remuneration under the Act would start on 1 April 2020.

     

    2 - Who are the persons affected by the Income Tax Act?

    Residents of Maldives, and persons who are not residents or temporary residents but derives income from Maldives come within the purview of the Income tax Act.

     

    3 - What are the tax rates applicable to an individual under the Income Tax Act?

    Income Tax is charged on the taxable income of an individual as per the table below. 

    Tax brackets for taxable income derived in an accounting period Tax Rate
    Not exceeding MVR 720,000/-  0%
    More than MVR 720,000/- but not exceeding MVR 1,200,000/-  5.5%
    More than MVR 1,200,000/- but not exceeding MVR 1,800,000/-  8%
    More than MVR 1,800,000/- but not exceeding MVR 2,400,000/-  12%
    More than MVR 2,400,000/-  15%

     

    4 - What is employee withholding tax?

    The amount of tax deducted by an employer or payer from the remuneration payable to an employee, director of a company or partner of a partnership is referred to as the employee withholding tax.

     

    5 - When does the employee withholding tax commence?

    Since taxation of remuneration is due to commence on 1 April 2020, employee withholding tax will also commence on 1 April 2020.

     

    6 - How is the employee withholding tax different from the Income Tax?

    Employee withholding is a mechanism where the tax due on remuneration is deducted by the payer, before the remuneration reaches the employee, director or partner. Individuals would not double pay the amount of tax that had been already paid on remuneration through the withholding mechanism. Effectively there is no difference between employee withholding tax and Income Tax, except that an amount of tax on remuneration (income) is paid through the withholding mechanism in the case of employee withholding tax.

     

    7 - What are the employee withholding tax rates under the Income tax Act?
    Remuneration subject to withholding tax (per month)
     [Tax brackets]
     
    Tax Rate
    Not exceeding MVR 60,000  0%
    More than MVR 60,000 but not exceeding MVR 100,000  5.5%
    More than MVR 100,000 but not exceeding MVR 150,000  8%
    More than MVR 150,000 but not exceeding MVR 200,000  12%
    More than MVR 200,000  15%

     

    8 - How is "remuneration" defined?

    Remuneration includes salary, wages, allowances and benefits derived by an employee or director or partner as consideration for services rendered by the employee or director or partner. It also includes any compensation for loss of employment or service, restrictive covenant payment, and entry or exit inducement payment. Benefits include any fringe benefits, both cash and non-cash.

     

    9 - How is remuneration subject to [employee] withholding tax calculated?

    Remuneration subject to withholding tax is the amount of remuneration per month, after the deduction of the amount contributed to the Maldives Retirement Pension Scheme by the recipient of the remuneration.

    10 - I had been registered as a taxpayer with MIRA even before the Income Tax commenced. Am I required to register again under the Income Tax Act?

    If your registration as a taxpayer with MIRA was valid as of 1 January 2020, you are not required to apply for registration under the Income Tax Act. However, in that case, MIRA would register you under the Income Tax Act based on the information it has and notify you of your registration.

     

    11 - Are companies, partnerships, cooperative societies required to be registered under the Income Tax Act?

    Yes, companies, partnerships or cooperative societies are required to be registered under the Income Tax Act. However, the process is arranged in such a way that companies, partnerships or cooperative societies that are incorporated in the Maldives get registered under the Income Tax Act during the business registration process with the Ministry of Economic Development (MED), and therefore a separate form is not required to be submitted to MIRA for registration.

     

    12 - I am an individual doing business in the Maldives, and my business is registered with MED as a sole proprietorship. Am I required to be registered under the Income Tax Act?

    Yes, individuals carrying on business through a sole proprietorship are also required to register under the Income Tax Act. However, like corporate entities, such individuals are not required to submit a separate form to MIRA for registration, as it is done during the business registration process with the MED.

     

    13 - If a foreign national stays in the Maldives for more than a half year, would that individual be considered as a resident for the purpose of the Income Tax?

    If a foreign national stays legally in the Maldives for 183 days or more, and is not married to a citizen of the Maldives, that individual would be considered as a temporary resident for the purpose of the Income Tax.

    14 - How does the taxation of a resident differ from that of a temporary resident?

    The main difference is that, a resident would be taxed on income derived from both the Maldives and elsewhere, while a temporary resident would be taxed only on income derived from the Maldives.

     

    15 - Who is a non-resident?

    A non-resident is a person who is neither a resident nor a temporary resident.

     

    16 - Temporary residents and non-residents are taxed only on the income derived from the Maldives. How does one differ from the other?

    Persons carrying on business in the Maldives are required to deduct non-resident withholding tax from certain payments made to a non-resident, while this requirement is not there when a payment is made to a temporary resident.

     

    Banks and non-banking financial institutions approved by the Commissioner General

    Banks and non-banking financial institutions are those approved by the Commissioner General for the purpose of Section 22 of the Income Tax Act (Law Number 25/2019). In computing your taxable income, you may deduct in full the interest you pay to such banks and non-banking financial institutions. Interest paid to approved International Financial Institutions (IFIs) are deductible only if the relevant IFI was approved on or before the due date of filing your return specified in Section 41 of the Income Tax Act.


    Banks and non-banking financial institutions approved by the Commissioner General are:

    1. Any bank that has been granted a banking license by the central bank of the country of operation of that bank

    2. Any housing finance company or leasing finance company licensed by the central bank or their regulatory body of the country of operation of that housing finance company or leasing finance company

    3. The following IFIs and agencies controlled by such institutions:

    Name Approved Date
    1.World Bank1 January 2020
    2.International Monetary Fund (IMF)1 January 2020
    3.Asian Development Bank (ADB)1 January 2020
    4.Islamic Development Bank (IDB)1 January 2020
    5.European Investment Bank (EIB)1 January 2020
    6.European Bank for Reconstruction and Development (EBRD)1 January 2020
    7.Nordic Investment Bank (NIB)1 January 2020
    8.OPEC Fund for International Development (OFID)1 January 2020
    9.Deutsche Investitions- und Entwicklungsgesellschaft (DEG)1 January 2020
    10.Groupe Agence Française de Développement (AFD)1 January 2020
    11.Asian Infrastructure Investment Bank (AIIB)1 January 2020

    If you wish to add an IFI to the list of IFI, you may request the Commissioner General of Taxation in writing.

    Please refer to Chapter 7 of the Income Tax Regulation (Regulation Number 2020/R-21) for further details.


    Charitable Organizations approved by the Commissioner General

    A body or association that wishes to be listed as a charitable organization approved by the Commissioner General must submit MIRA 103 form, in accordance with the chapter 6 of the Income Tax Regulation.

    List of the Charitable Organizations approved by the Commissioner General

    Association Name Registration No Valid From Valid To
    1 - E.P.S Foundation MIRA103/2020/11 19 Oct 20 30 Jun 21
    2 - Society for Awareness Fostering & Enlightment MIRA103/2020/12 19 Oct 20 30 Jun 21
    3 - Navaara Bahthirees MIRA103/2020/10 08 Sep 20 30 Jun 21
    4 - Guesthouse Association of Maldives MIRA103/2020/09 14 Jul 20 30 Jun 21
    5 - Justice Initiative MIRA103/2020/08 11 Jun 20 30 Jun 21
    6 - The Maldives National University Student’s Union (MNUSU) RGS/NGO/2020/06 25 Feb 20 30 Jun 21
    7 - Laamu Youth Development MIRA103/2020/05 18 Feb 20 30 Jun 21
    8 - Care for Our People and Environment (COPE) MIRA103/2020/04 18 Feb 20 30 Jun 21
    9 - Maldivian Community Foundation MIRA103/2020/01 30 Jan 20 30 Jun 21
    10 - Jamiyyathul Ulaama RGS/NGO/2019/31 31 Dec 19 30 Nov 20
    11 - Dhivehi Raajjeyge Israhvehinge Jamiyya RGS/NGO/2019/29 31 Dec 19 30 Nov 20
    12 - Architects Association Maldives RGS/NGO/2019/30 31 Dec 19 30 Jun 21
    13 - Tennis Association of Maldives RGS/NGO/2019/28 30 Dec 19 30 Nov 20
    14 - Women in Tech Maldives RGS/NGO/2019/27 11 Dec 19 30 Jun 21
    15 - Navaranna Foundation MIRA103/2019/20 08 Dec 19 30 Nov 20
    16 - Football Association of Maldives MIRA103/2019/19 01 Dec 19 30 Nov 20
    17 - Save the Beach Maldives MIRA103/2019/18 12 Nov 19 30 Nov 20
    18 - Benefit MIRA103/2019/15 14 Oct 19 30 Nov 20
    19 - Fonadhoo Zuvaanunge Rooh MIRA103/2019/16 14 Oct 19 30 Nov 20
    20 - Dhivehi Sifainge Club MIRA103/2019/14 14 Oct 19 30 Jun 21
    21 - Hemophilia Society of Maldives MIRA103/2019/17 14 Oct 19 30 Nov 20
    22 - Maldives Family Foundation MIRA103/2019/13 03 Oct 19 30 Jun 21
    23 - Baa Goidhoo Sports and Youth Development Society MIRA103/2019/12 04 Aug 19 30 Jun 21
    24 - Watercare RGS/NGO/2019/11 10 Jul 19 30 Nov 20
    25 - Music House MIRA103/2019/10 09 Jul 19 30 Jun 21
    26 - Public Interest Law Centre RGS/NGO/2019/09 23 Jun 19 30 Jun 21
    27 - Junior Chamber International Addu (Maldives) MIRA103/2019/07 29 Apr 19 30 Nov 20
    28 - Naifaru Juvenile MIRA103/2019/08 29 Apr 19 30 Nov 20
    29 - SME and Entrepreneurs Federation of Maldives (SEFM) RGS/NGO/2019/06 24 Mar 19 30 Nov 20
    30 - Club Mugoo Sports MIRA103/2019/04 04 Mar 19 30 Jun 21
    31 - Association of Lady Entrepreneurs MIRA103/2019/05 04 Mar 19 30 Nov 20
    32 - Maldivian Network for Empowering Women MIRA103/2019/03 14 Feb 19 30 Nov 20
    33 - LFC Supporters Club of Maldives MIRA103/2019/02 05 Feb 19 30 Jun 21
    34 - Falcon Youth & Recreation MIRA103/2019/01 06 Jan 19 30 Nov 20
    35 - Maldives Association of Human Resource Professionals MIRA103/2018/15 09 Aug 18 30 Nov 20
    36 - Small Island Geographic Society MIRA103/2018/12 04 Jul 18 30 Nov 20
    37 - International Center for Environment, Development and Operational Research (ENDEVOR)- Maldives MIRA103/2018/06 07 Jun 18 30 Nov 20
    38 - Decagan Sports MIRA103/2018/10 04 Jun 18 30 Nov 20
    39 - Customs Recreation Club MIRA103/2018/08 03 May 18 30 Nov 20
    40 - Hulhudhuffaaru Zuvaanunge Rooh MIRA103/2018/03 13 Feb 18 30 Nov 20
    41 - Family Legal Clinic MIRA103/2018/02 12 Feb 18 30 Nov 20
    42 - Bicycle Association of Maldives RGS/NGO/2017/46 04 Dec 17 30 Nov 20
    43 - Maldives Computer Society MIRA103/2017/26 21 Nov 17 30 Nov 20
    44 - Jamiyyathul Islam MIRA103/2017/24 12 Oct 17 30 Nov 20
    45 - Zurash Foundation MIRA103/2017/18 17 Aug 17 30 Nov 20
    46 - Maishan Sports and Recreation MIRA103/2017/13 29 May 17 30 Nov 20
    47 - Male' Sports Club MIRA103/2017/10 30 Mar 17 30 Nov 20
    48 - Evidence Based Practice Health Champions Maldives RGS/NGO/2016/21 02 Jul 16 30 Nov 20
    49 - Kihaadhoo Development Society (Kids) MIRA103/2016/13 17 May 16 30 Nov 20
    50 - Hope For Women MIRA103/2016/11 28 Mar 16 30 Nov 20
    51 - Foundation of Eydhafushi Youth Linkage (Feyli) MIRA103/2016/08 22 Mar 16 30 Nov 20
    52 - Ekuveri Club MIRA103/2016/07 28 Feb 16 30 Jun 21
    53 - Foundation For a Better Future MIRA103/2016/02 17 Jan 16 30 Jun 21
    54 - Parley Maldives MIRA103/2015/13 26 Nov 15 30 Nov 20
    55 - Women on Boards MIRA103/2015/06 05 May 15 30 Nov 20
    56 - Island Development & Environmental Awareness Society MIRA103/2014/20 25 Jan 15 30 Nov 20
    57 - Faaf Magoodhoo Zuvaanunge Club MIRA103/2014/2 13 Nov 14 30 Nov 20
    58 - Mahaldheeb Foundation MIRA103/2014/15 24 Sep 14 30 Nov 20
    59 - Jamiyyathul Falaah MIRA103/2013/28 16 Dec 13 30 Nov 20
    60 - V.A.M FOUNDATION MIRA103/2013/20 03 Sep 13 30 Nov 20
    61 - Coastline Foundation MIRA103/2013/18 20 Jun 13 30 Nov 20
    62 - Cancer Society of Maldives MIRA103/2013/15 14 May 13 30 Nov 20
    63 - Eco Youth MIRA103/2012/60 16 Dec 12 30 Jun 21
    64 - Islamic United Foundation for Asaas Vinavi and Iyaar MIRA103/2012/50 08 Oct 12 30 Nov 20
    65 - Transparency Maldives MIRA103/2012/55 08 Oct 12 30 Jun 21
    66 - Maldives National Association of Construction Industry (MNACI) MIRA103/2012/50 01 Oct 12 30 Nov 20
    67 - Project Hope MIRA103/2012/39 09 May 12 30 Jun 21
    68 - Tiny Hearts of Maldives MIRA103/2012/35 09 May 12 30 Jun 21
    69 - Society For Health Education MIRA103/2012/31 07 May 12 30 Nov 20
    70 - Care Society MIRA103/2012/07 07 May 12 30 Nov 20
    71 - Maldivian Red Crescent MIRA103/2012/15 07 May 12 30 Nov 20
    72 - Muslimunge Gulhun MIRA103/2012/05 07 May 12 30 Jun 21
    73 - Sun Siyam Care MIRA103/2012/12 07 May 12 30 Jun 21
    74 - Villa Foundation MIRA103/2012/11 07 May 12 30 Nov 20
    75 - Maldives Autism Association MIRA103/2012/08 18 Apr 12 30 Nov 20
    76 - Advocating the Rights of Children (ARC) MIRA103/2012/04 05 Apr 12 30 Nov 20
    77 - Aged Care Maldives MIRA103/2012/13 05 Apr 12 30 Jun 21
    78 - Maldives Girl Guide Association MIRA103/2012/01 05 Apr 12 30 Jun 21
    79 - Alifulhu Thuthu Foundation MIRA103/2012/17 05 Apr 12 30 Jun 21
    80 - Diabtetes Society of Maldives MIRA103/2012/19 05 Apr 12 30 Jun 21
    81 - Islaamee Eheetherikamuge Gulhun MIRA103/2012/02 05 Apr 12 30 Jun 21
    82 - Journey MIRA103/2012/20 05 Apr 12 30 Jun 21
    83 - Jamiyyath Salaf MIRA103/2012/26 26 Mar 12 30 Jun 21

    International Accounting Standards approved by the Commissioner General

    These are the international accounting standards approved by the Commissioner General for the purpose of Section 13(b) of the Income Tax Act.

    Name
    1.International Financial Reporting Standards (IFRS)
    2.International Financial Reporting Standards for Small and Medium sized Entities (IFRS for SMEs)
    3.International Accounting Standards (IAS)
    4.Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Standards