Foreign Currency Bill Submitted To Parliament
The Foreign Currency Bill was submitted to the People’s Majlis on 9 December 2024. A Draft Bill was previously published by the Maldives Monetary Authority on 26 November 2024.
The proposed legislation is intended to replace the Regulation on Foreign Currency1 which currently mandates parties registered for T-GST to deposit realised sales proceeds in foreign currency, and for tourism establishments to convert foreign currency at the stipulated rates to Maldivian Rufiyaa.
Changes to the Foreign Currency Conversion Obligation
The Regulation mandated tourism establishments to convert foreign currency based on the monthly tourist arrivals, with Category A Tourism Establishments obligated to convert USD 500 per tourist arrival and Category B Tourism Establishments obligated to convert USD 25 per tourist arrival.
As a significant new development, the Bill submitted to the People’s Majlis includes modifications to the conversion rates applicable for tourism establishments with an option to opt for conversion based on the gross monthly sales proceeds.
The Bill proposes that tourism establishments may fulfil their monthly conversion obligation based on either of the options detailed below.
| Category A
Tourism Establishments |
Category B
Tourism Establishments |
|
| Option 1 | Convert an amount equivalent to
USD 500 per tourist arrival |
Convert an amount equivalent to
USD 25 per tourist arrival |
| Option 2 | Convert 20% of the monthly gross sales proceeds received in foreign currency | |
Exempted Tourists
The following tourists are exempted in calculating the conversion obligation if the tourism establishments opt for tourist arrival-based conversions as per the Bill.
- Tourists who do not spend at least 24 hours at the establishment;
- Children below the age of 10 years;
- Tourists who stay at the establishment free of charge or on a complimentary basis;
- Visitors with special privileges granted by the government
Conversion Obligation for High-Income Earning Companies
Another major change included in the Bill submitted to the People’s Majlis is the change of threshold for high-income earning companies.
The draft published earlier by the MMA stated that entities not registered for T-GST and receive an annual income of at least USD 20 Million are required to convert 25% of their monthly revenue received in foreign currency.
However, the revised Bill now states that entities that receive an annual income of at least USD 15 Million and do not operate tourism establishments are required to convert 20% of their monthly gross sales proceeds. Financial institutions are excluded from this requirement.
Additional Changes
Further revisions are included in the Bill submitted to the Parliament including changes to the investigation process and the applicable penalties.
It has been proposed that the Bill will be effective from 1 January 2025 onwards. The Bill will become law once approved by the People’s Majlis and ratified into law by the President.
