MMA Publishes a New Foreign Currency Bill
The Maldives Monetary Authority (MMA) has published a Foreign Currency Bill for public consultation on 26 November 2024. When enacted into law, the Bill will replace the current Regulation on Foreign Currency 1 (the “Regulation”).
The Bill generally includes similar provisions as stated in the Regulation with foreign currency deposit and conversion requirements remaining in place with modifications. We have earlier published a Client Advisory detailing the relevant provisions of the Regulation (available here).
Foreign Currency Conversion Obligation
There are no major changes brought to the conversion obligations applicable to tourist resorts. However, the exceptions detailed below will be applicable in the calculation of the total amount of their conversion obligations.
Parties with Conversion Obligations
The Bill is set to introduce changes to both the categorisation of tourist establishments and the parties that have obligations to convert their foreign currency earnings. In this regard:
- Hotels operating in inhabited islands have been categorised as Category B tourist establishments and will be required to convert USD25 per tourist arrival, while resort hotels will still be considered as Category A tourist establishments subject to the USD500 per tourist conversion obligation;
- Tourist vessels will be considered as a Category B tourist establishment and will be required to convert an amount equivalent to USD25 per tourist arrival; and
- Parties that are not registered for TGST that earn an annual income in foreign currency equivalent to at least USD20 Million will be required to convert an amount determined by the MMA in future regulations. The Bill states that this amount will be capped at 25% of the monthly revenue of the party.
The Bill also states that vessels registered outside of the Maldives will be exempted from the requirements under the Bill.
Exceptions Applicable for the Conversion Obligations of Tourist Establishments
Under the Bill, the following types of tourists staying at tourist establishments will be excluded in calculating the total amount required to be converted by the establishment in any given month:
- Tourists who do not spend at least 24 hours at the establishment;
- Toddlers under the age of 2; and
- Tourists who stay at the establishment free of charge or on a complimentary basis.
Deposit Requirement
Under the Regulation, parties registered for TGST are required to deposit monthly foreign currency sales proceeds within the stipulated period.
As a new change proposed in the Bill, in addition to parties registered for TGST, parties that receive an annual foreign currency revenue of USD20 Million (or equivalent) and are not registered for TGST would be required to register with the MMA and deposit their foreign currency sales proceeds as provided in the Bill.
Foreign currency transactions
The Bill maintains that foreign currency transactions in Maldives are prohibited subject to exempted transactions.
The exempted transactions remain largely unchanged with similar exemptions granted to foreign currency earning businesses to transact in foreign currencies.
As a new development, the Bill defines foreign currency earning businesses as any business that receives income in a foreign currency regardless of the amounts received.
Enforcement
The Bill is set to empower the MMA to employ the assistance of the MIRA in the investigation of parties that do not comply with the Bill.
In this regard, the Maldives Inland Revenue Authority (MIRA) is empowered to utilise all of its powers set out in Chapter 3 (Audit and Investigation Powers) of the Tax Administration Act 2 for the purposes of such investigations.
The Bill also intends to significantly increase the amounts that the MMA can impose as fines for non-compliance. In this regard, the following enforcement measures have been stated in the Bill:
| Breach | Penalties |
| Parties in breach of their deposit and/or transfer requirements | Fine of 0.05% of the monthly realised sales proceeds.
The MMA may also at its discretion impose a fine of an amount not exceeding 0.05% of the monthly realised sales proceeds for each day until compliance. |
| Parties in breach of their conversion obligations | Fine of 0.1% of the monthly realised sales proceeds.
The MMA may also at its discretion impose a fine of an amount not exceeding 0.1% of the monthly realised sales proceeds for each day until compliance. |
| Other breaches | A fine of an amount between MVR10,000 and MVR1,000,000 proportional to the gravity of the breach. |
Implementation of the New Changes
The Bill currently provides that the new changes will be in place from 1 January 2025 onwards with the relevant provisions of the Regulation to be in effect until 31 December 2024.
Submission of Comments
MMA has announced that comments to the Bill are to be submitted to the MMA by 1 December 2024, 2pm.
