The Maldives Inland Revenue Authority (MIRA) has announced amendments to the Income Tax Rules, requiring individuals and companies earning in foreign currencies, particularly in U.S. dollars, to pay taxes directly in dollars. The changes, gazetted on Thursday, are part of the government’s effort to increase dollar income in the economy.
Under the amended rules, individuals and entities earning in any currency other than Maldivian Rufiyaa (MVR) must now pay tax in U.S. dollars. Those earning in other foreign currencies will also be required to prepare tax statements in dollars. This new regulation will come into effect for tax statements submitted after October. However, the amendment does not apply to the first interim tax statements of the current year.
The decision to levy direct dollar tax on companies was made at a cabinet meeting held in August. Attorney General Ahmed Usham said after the meeting that while some companies earning in U.S. dollars currently pay their taxes in MVR, this will no longer be the case once the law and regulations are fully implemented.
“The Cabinet decided that companies earning in dollars should pay taxes in dollars. Currently, corporate income tax is being paid in MVR in some cases. We will change this by amending the necessary laws and regulations”, Usham said.
The new measures are seen as part of the government’s broader strategy to stabilise the country’s dollar reserves and enhance the collection of foreign currency to address fiscal challenges.