How to pay taxes in the Maldives
So, you are considering working or opening a business in the Maldives. One of the questions on your mind will probably be taxation. Do you need to pay income tax when working in the Maldives? What about business tax? How much will you need to pay? Find answers to all these and other questions in this article.
The Maldives are more than just a holiday travel destination. With over 50% of hospitality professionals in the country being expats and a large concentration of foreign hotels and resorts, it may just be the place where you may want to realise your aspirations. A favourable tax environment is a big plus as well.
Income tax
The first piece of good news is that there is no income tax for foreigners working in the Maldives. Expatriates working in the country are only subject to a 3% remittance tax for money transfers back home. Basically, your remittance tax will be charged when you make a transfer, just like ban charges ' you will not need to file any tax papers in the country. Instead, the bank will handle all the remittance procedures and file a monthly Remittance Tax Return with MIRA (Maldives Inland Revenue Authority). In order to comply with the regulations, all those who work in the country need to have a bank account and have their salaries transferred there.
Note that sending money back home via a bank transfer is the only legal way to get your earnings out of the Maldives. If you take the money with you in cash when you leave, you will also need to declare it at the airport and pay bank remittance. Sending your earnings with others travelling out of the country or carrying large amounts of cash in your luggage when exiting the country are both illegal and punishable by law.
You should, however, check about the double taxation regulations between the Maldives and your home country to find out whether you will still need to be paying taxes back home.
Business profit tax
A business profit tax is a tax charged on profits from all business activity carried out in the country. Thus, all the companies, partnerships as well as individuals residing in the Maldives and carrying out business activities in the country are subject to this tax. The tax rate for companies with annual income exceeding MVR 500,000 (over $32,000) is charged at 15% while companies getting their profits from outside the country are charged at the rate of 5%.
Plus, there is the Withholding Tax ' this tax is applicable to payments made to non-residents.
These payments include:
- rent, royalties or other payments incurred for the use of machinery, real estate or equipment for business purposes
- payments made for R&D
- payments made for the use of computer software
- payments of fees for management, technical or other services
The Withholding Tax is charged in the amount of 10%.
In general, the Maldives are considered a very favourable tax environment for both work and business. With relatively low tax rates and a very straightforward way to pay taxes, you should have no problem adjusting to the system.
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