The legal system of the Maldives is a combination of civil and common law traditions aligned with the principles of Islamic law. Under Section 10 of the Constitution of the Maldives, Islam is the state religion and all laws are based on it. This means no law which is inconsistent with the principles of Islam may be enacted. This hybrid system has enabled the Maldives to preserve its Islamic ethos while modernising its legal framework. While much of the legal framework is now covered by statutes, where there is a gap, it may be supplemented by Islamic law or common law, with precedence given to Islamic law.

The judicial system of the Maldives is organised into three tiers. The Supreme Court of the Maldives is the highest court in the country and has original jurisdiction, inherent jurisdiction, appellate jurisdiction and advisory jurisdiction. The Supreme Court’s decisions are final and binding on all other courts. Under the Supreme Court Regulation 2020, a Supreme Court decision may be reviewed in limited circumstances. These circumstances are where an applicant is able to show there has been a blatant disregard for the law or there has been a gross injustice.

The High Court of the Maldives is below the Supreme Court and has original jurisdiction and appellate jurisdiction. The High Court hears appeals from superior and lower courts and tribunals.

The third tier of the judicial system consists of first instance superior and lower courts along with tribunals. These include the Civil Court, the Criminal Court, the Family Court, the Juvenile Court, the magistrate courts, the Employment Tribunal and the Tax Appeal Tribunal. All courts apart from the magistrate courts have specific jurisdictions. The magistrate courts have jurisdiction to hear civil, family and criminal matters.

Approval of Foreign Investments

Foreign investments in the Maldives are currently governed by the Foreign Investment Act (Law 11/2024) (the “FI Act”), which came into effect on 3 December 2024. It repealed and replaced the previous Law on Foreign Investments (Law 25/1979) which was enacted in 1979. The FI Act establishes a new legal framework for regulating foreign direct investment in the Maldives, including provisions on eligible investment areas, approval procedures, investor rights and protections and conditions for the revocation of licences.

The FI Act requires all foreign investments to be approved regardless of the nature or type of investment. A licence has to be obtained before any foreign investment can be established in the country.

Criteria for Review

All foreign investments are subject to the criteria of review and considerations set out in the FI Act. There is no specific review processes mandated under the FI Act for specific investments.

The approval of foreign investments under the FI Act is subject to an assessment of several factors, including, but not limited to:

• the financial capacity of the investor;
• the investor’s eligibility for residence and entry into the Maldives;
• compliance with any conditions set out in regulations governing restricted sectors or investments subject to additional requirements;
• the extent to which the proposed investment may pose a risk to national security;
• the potential effect of the proposed investment on existing businesses within the relevant sector;
• the extent to which the investment is expected to generate employment opportunities and contribute to the development of human resources in the Maldives;
• the potential to increase the export of local products, goods or services as a result of the investment;
• the environmental impact of the proposed investment; and
• the potential for introducing and developing technology in the Maldives through the investment.

Eligibility

Under the FI Act, the following parties are eligible to invest in the Maldives.

The following foreign entities:

• companies with 100% foreign shareholders;
• companies with both Maldivian and foreign shareholders; and
• companies incorporated outside of the Maldives with 100% direct or indirect shareholding by Maldivians.

The following businesses incorporated in the Maldives:

• partnerships and companies consisting of shares held by foreigners; and
• companies re-registered in the Maldives under the Companies Act.

Joint ventures between Maldivians and foreigners, foreign NGOs and legal entities incorporated outside of the Maldives are also eligible to invest in the country.

Stages of Approval

The FI Act has introduced the following stages of obtaining approval for a foreign investment to establish in the Maldives under the FI Act.

• Submission of the foreign investment application: a formal application must be submitted to the Ministry of Economic Development and Trade (the “Ministry”) along with the required documentation relating to the investment, investor profile and proposed activity.
• Issuance of the no objection letter: following a review of the application, the Ministry may issue a letter of no objection to eligible applicants. This letter sets out the specific procedures the applicant must complete before the investment can proceed further.
• Issuance of the foreign investment licence: upon complying with the procedures and submitting the required documents, the Ministry issues a foreign investment licence to the investor, enabling them to legally engage in the approved business activity in the Maldives.
• Execution of the investment agreement: following the granting of the licence and the completion of the formalities, the Ministry enters into a foreign investment agreement with the foreign investor, formally regulating the terms and conditions of the investment.

Non-Compliance with the Approval Requirement

While the FI Act does not prescribe specific penalties for investing without prior approval, if an investor with an approved foreign investment engages in business activities outside the scope of the approved investment licence or in contravention of the FI Act or regulations, a penalty not exceeding 30% of the total value of the unapproved investment or business will be imposed on the investor.

Minimum Investment Requirements

Investors have to meet the minimum initial investment thresholds applicable to the specific business activity they intend to undertake. These thresholds vary depending on the sector and range from USD250,000 to USD5,000,000. For business activities that do not have a predefined investment amount, the terms can be negotiated with the authorities. As the regulations under the FI Act have not yet been published, sectoral investment requirements are currently governed by the Foreign Direct Investment Policy (the “FDI Policy”) which was published on 11 February 2020 and remain in force until the regulations come into force.

Foreign Shareholding

The maximum allowable percentage of foreign shareholding also varies depending on the type of business activity. Under the FDI Policy, foreign shareholdings may be between 40% and 100%, depending on the proposed activity. For business activities that do not have a specified minimum initial investment threshold, the applicable foreign shareholding percentage is not predetermined and may be subject to negotiation with the authorities.

Under the FI Act, investors have the right to challenge decisions made by the Ministry or any other government authority concerning their foreign investment. The Ministry has to establish a review committee to consider these matters. If the complaint involves a decision made by a committee member, that member will be excluded from the committee convened to review the matter.

If the investor’s complaint is not resolved through a decision of the Ministry, the investor has the right to refer the matter to the relevant court or pursue the dispute resolution process outlined in the investment agreement.

The most common forms of corporate vehicles in the Maldives are companies and partnerships. Another form of vehicle used for conducting business is a co-operative society. Any person who wishes to conduct any business in the Maldives must register their business under one of these types of corporate structures. Unlike all other forms of corporate structures, which can be utilised to conduct any type of business, co-operative societies can only be formed to achieve common economic and social needs shared by a group of individuals within a society.

Companies registered in the Maldives, including re-registered foreign entities are regulated by the Companies Act. Partnerships are regulated by the Partnership Act of the Maldives (Law 13/2011). There are regulations made under the relevant Act which also regulate matters relating to each corporate entity. There is a distinct law relating to co-operative societies as well.

Companies

The following types of company can be incorporated in the Maldives.

Private companies

These are companies where shares are privately held and the sale of shares to the public is prohibited. The minimum number of shareholders in a private company is one and the maximum number is 50. There is no minimum share capital requirement for private companies.

Public companies

The general public have the right to subscribe to shares, debentures or bonds in publicly traded companies. The number of shareholders in a public company is unlimited. There is also no minimum share capital requirement for public companies. However, if the public company is going to be listed on the Stock Exchange before listing, they must have an issued and paid-up capital of at least MVR10 million.

State-owned companies

State-owned companies are companies incorporated under a Presidential Decree or by legislation and all the shares are owned by the government.

Local authority companies

Local authority companies are companies incorporated by local councils to conduct business activities which benefit citizens who are under the regulatory remit of the secretariat.

Foreign investment companies

Any company where one or more shares are held by a foreign individual or a foreign company or a partnership is considered a foreign investment company in the Maldives. A foreign investment company can be a private or public company. Foreign investment companies are subject to the FI Act. Specific designated sectors are open for foreign investment companies to conduct business with foreign shareholding of 100%, while restrictions such as foreign shareholding percentages apply in other areas.

Re-registered companies

Foreign registered companies including foreign registered co-operations, charities, foundations and other types of entities can re-register in the Maldives and conduct business operations. Like foreign investment companies incorporated in the Maldives, re-registered companies are subject to the same restrictions regarding the areas in which they can operate. Every re-registered company has to appoint an agent in the Maldives who is accountable to the Registrar of Companies in relation to fulfilling all obligations under the Companies Act. In addition, the agent will be personally responsible for all actions taken against the re-registered entity under the Companies Act.

Liability of Members of Company

The shareholders of the company are only liable towards the company:

• to the extent of the value of any unpaid shares held by them;
• in a manner clearly specified in the constitutional documents of the company; and
• any other manner specified in the Companies Act.

Directors

Only Maldivians are eligible to be directors in companies, with the exception of foreign investment companies, State-owned companies and public companies with government shareholdings.

At least one director must be resident in the Maldives. A person is generally considered to be residing in the Maldives if that person resides in the Maldives for 183 days or more within a 12-month period.

Partnerships

The following types of partnerships can be incorporated in the Maldives.

• General partnership: the liability of the partners is unlimited and the members are liable for all losses and debts of the partnership. In this form of partnership only individuals can become partners.
• Limited liability partnership: the liability of the partners is limited to the extent of any unpaid capital of the shares which they have subscribed to. Both individuals and corporate entities can become partners in this type of partnership.

In both general and limited liability partnerships, there are no legislative restrictions on the number of partners. The maximum number of partners will be determined in the partnership agreement.

To incorporate a private company or partnership, a name for the business needs to be reserved and the relevant documents specified in the relevant Act and regulations lodged with the Registrar of Companies.

The incorporation process can be completed online. If all requirements are satisfied, the registration will be completed within one to two business days and a certificate of registration will be issued. This will be conclusive evidence of the registration in line with the applicable laws of the Maldives.

Reporting

All private companies in the Maldives have to report the following changes to the Registrar of Companies to register the changes in the register maintained by the Registrar.

• Amendments to the memorandum or articles of association of the company within 30 days of adoption.
• Changes to the directors and managing director of the company within 15 days of the change.
• Changes to the authorised share capital of the company within 30 days of the change.
• Transfer of shares of the company, allotment of shares and any changes to the shareholding of the company within 15 days of the change.
• Charge over the shares of the company within 30 days of the creation.
• De-registration of the charge over the shares within 30 days of the release of the charge.

The director’s report and financial statements of the company need to be submitted to the Registrar within 15 days of the date of the annual general meeting of the company or within another deadline determined by the Registrar.

Disclosure Obligations

The shareholders of the company must provide the details of the beneficial owner of the shares to the company. The company has to verify the accuracy of this information and maintain a register of beneficial owners of the shares of the company.

Significant beneficial owners are considered members of the company and are considered to hold a minimum 25% shareholding in the company, whether directly or indirectly and possess voting and dividend rights corresponding to that shareholding. Anyone who has the right, whether directly or indirectly, to exert influence and control over financial and strategic decisions of the company will also be considered to be a significant beneficial owner.

The company also has to submit details of the significant beneficial owners to the Registrar of Companies within 30 days of receiving the information.

Private Companies

Private companies registered in the Maldives are managed by the board of directors of the company. All companies have to appoint a managing director from among its directors. The managing director will be a full-time officer of the company and will be responsible for the management of the company under the guidance of the board of directors.

The directors can use their discretion to delegate their powers, duties and responsibilities to a director’s committee, an individual director or an employee of the company, in a manner determined by the board of directors, provided the delegation is not prohibited by the company’s constitutional documents. Even with the delegation of the powers, the directors will still remain accountable for the actions of the delegate.

Partnerships

In all partnerships registered in the Maldives, a managing partner has to be appointed. The managing partner is responsible for managing and overseeing all matters relating to the partnership according to the partnership agreement.

Companies registered in the Maldives after registration acquire a legal personality which is distinct from, and separate to, that of its members, directors and officers. However, this is not absolute and the Companies Act states that if the company has committed a fraud and dishonest action and if the shareholders, directors or officers of the company have used the company for personal gain, the corporate veil of the company may be pierced and the directors, shareholders and officers of the company may be held personally liable.

Specific responsibilities are imposed on the directors of a company under the Companies Act. If the directors fail to comply with those responsibilities, they commit an offence and can be penalised.

There is also an obligation on the shareholders to disclose details about the beneficial owners and if they fail to disclose these details, they are considered to commit an offence and can be penalised.

The Companies Act also recognises situations where the company will be considered to be committing a criminal offence. These circumstances are where the company submits false information, submits forged documents to the Registrar of Companies or obstructs an inspection conducted by the Registrar of Companies or someone delegated by the Registrar of Companies.

Laws

Employment Act

The Employment Act of the Maldives (Law 2/2008) (the “Employment Act” as amended) is the law that determines the fundamental principles relating to employment in the Maldives as well as the rights and obligations of employers and employees and all other employment-related matters. The Employment Act applies to both private and public sector employees. The Employment Act also states that it will not apply to any other persons exempted from it by any other statute. At the time of writing, the only parties exempted from it are the police and armed forces.

Other related laws

Other employment-related laws are as follows.

• The Industrial Relations Act of the Maldives (Law 1/2024) (the “Industrial Relations Act”). This Act lays out a detailed framework relating to the formation of trade unions and employer organisations participating in these trade unions as well as mediation between workers, employees and employers. It applies to both public and private sector employees and employers, except for the parties exempted from the Act by any other statute and the police, armed forces and Presidential appointees.
• The Occupational Safety and Health Act of the Maldives (Law 2/2024) (the “Occupational Safety and Health Act”). This Act provides for matters relating to safeguarding workplaces and workers and employee health and safety. The Act provides that except for the parties exempted from the Act by any other statute it is applicable to both public and private sector employees, employers and independent contractors.
• The Prevention of Sexual Abuse and Harassment Act (Law 16/2014). This Act outlines what constitutes sexual abuse and harassment and the responsibilities of employers in preventing these acts in the workplace.

Regulations

There are regulations enacted in line with the Employment Act which have legal force. They provide more details regarding specific matters. The regulations currently in force are as follows.

• General Regulation on Employment (Regulation 2021/R-63). This provides details relating to redundancy, working hours and overtime of employees as well as salary payment and wages.
• Expatriate Employment Regulation (Regulation 2023/R-111). This provides details relating to the employment of expatriates.
• Employment Agency Regulation (Regulation 2022/R-63). This provides details relating to employment agencies.
• Service Charge Regulation (Regulation 2021/R-41). This provides details relating to the collection of a service charge from businesses and the distribution of a service charge among employees.

Precedents

The precedents set by higher courts in the Maldives relating to employment cases are considered the authority for deciding subsequent cases with similar facts. They also play a key role in determining the relevant employment relationship rules when the law or regulations are silent on the issue.

Employment Contract

The Employment Act requires the execution of an employment contract between the employer and employee. The employer may grant the rights to a greater extent than provided for in the Employment Act. Any provision in the employment contract that prevents or impedes any rights or benefits conferred to an employee by the Employment Act will be void.

Collective Bargaining Agreements

The recently enacted Industrial Relations Act allows for trade unions to initiate collective bargaining with employers by appointing representatives. Collective agreements reached after the collective bargaining must be registered with the director general of industrial relations and the terms of the agreements are binding on the parties to the agreements and are legally enforceable.

Form of Employment Contracts

Maldivian law requires a written employment contract to be executed between employers and employees. The Employment Act stipulates certain provisions have to be included in the employment contract.

Types of Employment Contracts

Employers in the Maldives may enter into any of these types of employment contract:

• indefinite term contract;
• definite term contract; and
• work-based or project-based contract.

Duration of Employment Contracts

The duration of a definite term employment contract will not exceed a maximum period of two years. If a definite term contract is extended so that the total duration of employment is more than two years or if it can be considered from the actions of both parties that a renewal or extension has occurred it will be considered an indefinite term employment contract.

An employment contract of definite term or specific to a certain type of work is also considered an indefinite term employment contract if the objective or result of the employment agreement is such that the employee has to continue carrying out duties and responsibilities which are usually and normally carried out at the place of work on a permanent basis.

Working Hours

An employee’s normal working hours must not exceed 48 hours a week. The normal working hours do not include any overtime an employee works. The Employment Act specifies particular categories of employees exempt from the normal working hour limitations.

Employees employed in specific sectors specified in the Employment Act may have to work two additional hours a day beyond the normal working hours limitation (as outlined in the employment agreement) provided they are compensated for the additional hours as overtime.

There is no limitation on the maximum number of hours an employee may have to work a day. However the minister designated to oversee the implementation of the Employment Act has the discretion to formulate a regulation that imposes a maximum number of hours an employee may have to work a day. As of now, no such regulation has been formulated.

The general rule is that employers are prohibited from requiring an employee to work for more than six consecutive days without granting a break of 24 hours. However, there are exceptions to this rule where employees working in specific sectors may have to work for more than six consecutive days without a break, provided they are granted rest days in lieu of every day worked beyond the six consecutive days which can be accumulated and utilised thereafter.

Overtime

Employers are prohibited from requiring employees to work overtime unless it is specified in the employment contract. Any work carried out as overtime must be paid at the following hourly rates.

• Overtime on a normal working day: 1.25 times an employee’s regular hourly wage.
• Overtime on a Friday or a public holiday: 1.5 times an employee’s regular hourly wage.

Termination of Employment Contracts

After the Employment Act came into force in 2008, the Maldives abolished employment at will. Currently, for an employment contract to be terminated, there must be a reasonable cause. Three types of dismissals are currently recognised in the Maldives.

• Dismissal with notice: this type of dismissal is allowed after showing appropriate cause as to failure to maintain work ethics or inability to carry out employment duties and responsibilities related to the proper functioning of their place of work even after measures have been taken to discipline the employee or upgrade skill deficiencies.
• Summary dismissal: this is where an employee is dismissed without notice when an employee’s work ethics are considered unacceptable and further continuation of employment is likely to be detrimental to the employer or to the workplace.
• Redundancy: this is considered as a reasonable cause for dismissal of an employee in the following circumstances:
1. closure of the business and services of the employer;
2. redundancy due to restructuring of the business; and
3. financial distress.

In the case of dismissal, the onus is always on the employer to show the cause.

Severance Pay and Notice of Termination

Severance pay does not have to be paid to employees in the event of dismissal from employment. In the event of dismissal with notice, the employer has to give notice to the employees based on the employee’s length of service and the employer can terminate the employment immediately by paying the employee’s salary in lieu of any required period of notice together with any accrued holiday pay up to the date notice is given.

In the case of redundancy, no obligatory compensation or redundancy pay has to be paid to the employees who are made redundant. However, the Employment Act obliges the employer to give notice of dismissal to the employees being made redundant based on the employee’s length of service. The employer is granted discretion to pay the employee’s salary in lieu of the required notice.

Based on the employment duration, the notice period or payment in lieu of notice period is as follows.

• Less than one year: one month.
• Between one year and four years: a minimum of two months.
• More than four years: a minimum of three months.

Collective Redundancies

In the Maldives, the laws and regulations do not differentiate between collective redundancies and individual redundancies. The same procedure laid down in the relevant laws and regulations needs to be followed in conducting redundancies if it’s a single person redundancy or collective redundancy.

The Maldives High Court has set a precedent on the matter stating that as there are no laws or regulations that provide that redundancy procedures are different for individual redundancies and collective redundancies, unless limited by a law or by the employment agreement, the procedures laid out in the laws and regulations need to be fulfilled regardless of the number of persons being affected by the redundancy.

Before terminating any employees for redundancy, the employer has to notify the employees that there might be circumstances where an employee or employees might have to be made redundant or the decision to make the employees redundant has been made first. This notification will include the policy relating to the determination of the employees who will be dismissed. Before the dismissal of any employees for redundancy, the employer has to take measures to avoid termination or to minimise the number of employees affected, as much as the circumstances allow.

The employer also has to establish a policy outlining the criteria for determining the employees who will be made redundant and this policy has to be communicated to the employees. This policy, at the very least, has to consider:

• the service duration of the employee;
• the employee’s skills, education and experience required for the job;
• the employee’s attendance and disciplinary records; and
• the criteria for fulfilment of job duties or staff appraisal.

The employees who will be made redundant must be determined according to the policy and in good faith and in a fair manner.

There is no law in the Maldives that states it is mandatory for employees to be represented in employment-related matters. However, the Industrial Relations Act provides that employees can register trade unions and that they have the right to take part or not take part in the activities of the trade unions including the implementation of collective bargaining or strikes through trade unions.

Trade unions have the right to commence collective bargaining with employers and initiation will not be aimed at securing rights or gaining advantage for a particular individual in the union. Unions are generally restricted from utilising unions in a way that is not in the interests of members or where members have conflicting interests.

The employers have to commence collective bargaining negotiations if the union making the request represents the majority of the employer’s employees.

The Employment Act only mandates employees have to be informed by the employer in the event of a redundancy situation.

The Occupational Safety and Health Act mandates employees have to be informed by the employer in the following circumstances.

• Any health and safety policy amendments.
• Regularly updating the employees on safety measures relating to machinery, equipment, plants and other instruments used in the workplace by employees.

There are no circumstances where it is mandated employers have to consult employees.

Employee Withholding Tax

Under the Income Tax Act of the Maldives (Law 25/2019) (the “Income Tax Act”), employee withholding tax is applicable where an employer pays remuneration to an employee, whether in cash, annuities, in-kind benefits or any other form. Employers must deduct employee withholding tax from the gross amount of each payment made monthly at the following rates:

• 5.5% (if remuneration is more than MVR60,000 but less than MVR100,000);
• 8% (if remuneration is more than MVR100,000 but less than MVR150,000);
• 12% (if remuneration is more than MVR150,000 but less than MVR200,000); and
• 15% (if remuneration is more than MVR200,000).

Social Charges

Under the Pensions Act (Law 8/2009), both employers and employees have to contribute to the Maldives Retirement Pension Scheme. Both have to contribute a minimum of 7% of the pensionable wage (basic salary).

Participation in the Maldives Retirement Pension Scheme is mandatory for all local employees aged between 16 and 65. Foreign employees within the same age bracket have the option to voluntarily register and contribute to the Maldives Retirement Pension Scheme.

Taxes Applicable to Businesses

Income tax

Under the Income Tax Act, entities other than banks and individuals who are resident in the Maldives have to pay income tax at the rate of 15% where taxable income exceeds MVR500,000. For income tax purposes, a company is considered resident if it is incorporated, has its head office, or central management and control in the Maldives. Partnerships are considered resident if they are incorporated and have their head office in the Maldives.

Banks are taxed at a rate of 25% of their taxable income.

Non-resident withholding tax

Under the Income Tax Act, income derived from the Maldives by non-residents is subject to a tax rate of 10% on the gross amount of income received by them. Non-resident withholding tax is payable on rent in relation to immovable property situated in the Maldives, royalties, interest, dividends, fees for technical services, commissions paid in respect of services supplied in the Maldives and insurance premiums paid to insurers.

Payments to non-resident contractors are subject to withholding tax at the rate of 5%.

Employee withholding tax

See 5.1 Taxes Applicable to Employees/Employers.

Goods and services tax

Under the Goods and Services Tax Act (Law 10/2011), businesses operating in the general sector are currently required to pay goods and services tax (GST) at the rate of 8% to the Maldives Inland Revenue Authority (MIRA) and businesses operating in the tourism sector have to pay a tourism goods and services tax (T-GST) at the rate of 17% to MIRA.

Businesses importing goods to the Maldives and suppliers of tourism goods and services have to register for GST. Businesses that do not fall within the criteria only have to register where the value of their taxable supplies exceed MVR1 million in the last 12 months or are expected to exceed MVR1 million in the next 12 months.

Green tax

Under the Tourism Act of the Maldives (Law 2/99) (the “Tourism Act”), the green tax, introduced by the Tourism Act, applies to tourists staying in various types of accommodation such as tourist resorts, integrated tourist resorts, resort hotels, tourist hotels, hotels, tourist guesthouses and tourist vessels. It is the responsibility of the establishment operator to collect the green tax from tourists and remit it to MIRA.

Tourists staying at tourist resorts have to pay USD12 a day. Tourists staying at hotels and tourist guesthouses that are located on inhabited islands and have less than 50 rooms have to pay USD6 a day.

Since 1 January 2025, children under two have been exempted from the green tax.

OECD Two Pillar solution

The Maldives is a member of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPs) and has committed to implementing the OECD’s Two Pillar solution. While both pillars have been endorsed, domestic legislation to implement it has not been enacted yet. A mechanism to implement the Two Pillar solution is scheduled to be formulated in 2026.

Tax Incentives Under the Special Economic Zone Act (SEZ Act)

The SEZ Act classifies various zones, including industrial estates, export processing zones, free trade zones, enterprise zones, free ports, single factory export processing zones, centres providing offshore financial services and high technology parks as special economic zones. Under the SEZ Act, zone developers are guaranteed the following incentives:

• relief from import duty on capital goods;
• relief from GST for the first ten years; and
• relief from withholding tax for the first ten years.

The SEZ Act provides similar concessions to individuals investing in SEZs with the extent of these benefits depending on the industry and type of investment.

Special Exemptions Provided Under the Income Tax Act

Under Section 12-1 of the Income Tax Act, the President, in specific circumstances, can exempt income from specific business projects or industries from tax.

The determination of eligible projects or industries is made by the President, with advice from the Cabinet of Ministers and published in the government gazette.

Exemptions are granted for a specific period and take factors such as revenue impact, economic and social impact and the attainability of objectives into account.

A list of exempted persons and the reasons for exemption need to be published in the government gazette.

Foreign Tax Credit

Under Section 72 of the Income Tax Act, residents paying taxes abroad can either deduct the amount of foreign tax paid or the tax payable in the Maldives on the net foreign sourced income, whichever is lower.

Deductions are applied separately with respect to each type of income and each country or territory from which each type of income was derived.

Deductions must be claimed within two years after the end of the accounting period and adjustments can be made within two years of any tax payable adjustments.

Tax Treaties

Tax credits are also applicable under any double tax avoidance agreements (DTAAs) and are deducted in line with the provisions of the Tax Administration Act of the Maldives (Law 3/2010) (the “Tax Administration Act”).

The Maldives has signed DTAAs with the UAE, India and Bangladesh and all three are currently effective. The Maldives is also a party to the SAARC Limited Multilateral Agreement on Avoidance of Double Taxation and Mutual Administrative Assistance in Tax Matters, which came into force on 1 January 2012 in the Maldives.

A DTAA with Malaysia, which was signed on 24 May 2023 has not yet come into force. Most recently, on 26 May 2025, a DTAA was signed with Hong Kong. However, ratification is still pending.

Tax consolidation for the purposes of tax calculation and deduction by a group entity is not available under the tax laws in the Maldives.

Under the Income Tax Regulation (Regulation 2020/R-21), each entity in the group has to prepare and submit separate income tax returns. Parent companies have to submit consolidated accounts including their subsidiary companies, as they are considered group entities under the Income Tax Regulation. However, under the Income Tax Act, group entities have to divide the tax-free threshold of MVR500,000 among themselves, for the purpose of determining the tax bracket for taxable income as a group. Companies within a group cannot therefore benefit from the tax-free threshold as individual companies, as they are grouped together to calculate the taxable bracket.

Thin capitalisation rules are implemented in the Maldives in line with Section 71 of the Income Tax Act.

Where the total amount of interest paid, exceeds the interest capacity of a person (30% of a person’s tax EBITDA) for that period, the excess amount cannot be deducted in the computation of taxable profit of that person for that period, except where interest is paid to a bank licensed under the Banking Act of the Maldives (Law 24/2010) (the “Banking Act”) or to an insurance business or finance leasing business or housing finance business licensed under the Monetary Authority Act of the Maldives (Law 6/1981) (the “Monetary Authority Act”).

The following taxpayers are exempt from the thin capitalisation rules.

• Commercial banks licensed under the Banking Act.
• Insurance businesses or finance leasing businesses or housing finance businesses or non-banking financial institutions licensed to conduct financing business under the Monetary Authority Act.
• Persons categorised as micro, small or medium-sized businesses under the Law on Small and Medium Enterprises (Law 6/2013).
• State-owned enterprises (SOEs), in which the government of the Maldives holds a majority of the ordinary share capital directly.

Under Section 67(a) of the Income Tax Act, where an arrangement or transaction is entered into between parties in the following circumstances, the taxable income will be computed in line with the arm’s length terms, irrespective of the actual terms of the arrangement or transaction.

• The arrangement or transaction was entered into between two persons who were associates.
• The terms on which the arrangement or transaction was entered into between the persons were not arm’s length terms.
• If the income of one person involved in the transaction would be higher than under arm’s length conditions.
• If any deduction given to one person would be lower than under arm’s length conditions.
• If any loss incurred by one person would be less than under arm’s length conditions.
• If any tax credits available to one person would be less than under arm’s length conditions.

General Anti-Avoidance Rule (GAAR)

Section 66(a) of the Income Tax Act grants the Commissioner General of Taxation the authority to invalidate any arrangement or transaction, where the Commissioner has reasonable grounds to suspect that an arrangement or transaction was entered into for the purpose of tax avoidance or to reduce tax liability either by issuing an assessment under Section 39 of the Tax Administration Act or by other means.

Reasonable grounds for action by the Commissioner General highlighted under Section 128-1 of the Income Tax Regulation include:

• the carrying out of a transaction which lacks a bona fide commercial purpose;
• the carrying out of a transaction which lacks economic substance;
• the abuse of organisational form; and
• the recharacterisation of an arrangement or transaction.

Tariffs are governed in the Maldives by the Export Import Act (Law 31/1979) (the “Export Import Act”), which is implemented and enforced by the Maldivian Customs Service. Tariff rates are generally applied uniformly based on the type of goods, while preferential rates and exemptions may apply to some countries under free trade agreements (FTAs). The tariff rates in the Maldives are generally between 0% and 400%.

Goods and Applicable Tariffs

A general list of goods subject to the highest tariff rates is as follows.

• Tobacco and related products:
1. general tobacco and tobacco products: 200%;
2. cigarettes: 50% + MVR8 per cigarette;
3. Bidi (traditional cigarettes): 50% + MVR8 per Bidi;
4. flavoured chemicals for e-cigarettes and tobacco: 50% + MVR8 per ml;
5. heated tobacco products and sticks: 50% + MVR8 per stick;
6. electronic devices (e-cigarettes, vaping devices, tobacco heating products): 200%; and
7. paper used for rolling cigarette/bidi: 200%.
• Other products:
1. non-biodegradable plastic bags and sacks: 400%;
2. drinking straws: 400%;
3. single use/disposable plastic items (eg, plates, cutlery): 200%;
4. used passenger vehicles (cars, jeeps, vans): 200%;
5. other passenger transport vehicles (excluding cars, jeeps, vans, motorcycles, auto-cycles): 150%;
6. chemicals with hydrochlorofluorocarbons: 100%;
7. new passenger vehicles (cars, jeeps, vans): 100%;
8. auto-cycles and motorcycles: 100%; and
9. pork and pork products: 50%.

Value-Based Tariff Rates

Notwithstanding the general rates specified in the Export Import Act, for goods with a CIF value per unit exceeding MVR6,425,000, the following tiered rates apply:

• CIF value per unit between MVR6,425,000 and MVR12,850,000: 13%;
• CIF value per unit between MVR12,850,000 and MVR25,700,000: 7%;
• CIF value per unit between MVR25,700,000 and MVR38,550,000: 5%; and
• CIF value per unit between MVR38,550,000: 4%.

General Exemptions

The following items are exempt from tariffs:

• personal items and duty free allowances determined by the President;
• goods imported for re-export;
• biodegradable and non-biodegradable variants of plastic bags, sacks, films, sheets, tube rolls, polyurethane, prefabricated greenhouse units, water system pipes and hydroponic/drip irrigation pipes;
• renewable energy vehicles, machinery and equipment;
• renewable energy generation equipment;
• items and fish imported for fish processing and value addition;
• items and raw materials for poultry production expansion;
• agricultural items listed by the Ministry of Agriculture and Animal Welfare of the Maldives; and
• diesel exemptions for fishing vessels operating within Maldivian waters and for electricity generation by registered public utilities.

Partial Exemptions

Under the Export and Import Act, a duty exemption of 50% is granted for items imported via regional sea and air ports outside the Malé area, except for:

• tobacco products and substitutes (including e-cigarettes and components);
• alcoholic beverages; and
• pork and products containing pork.

This partial exemption under the Export and Import Act only applies to goods stored on or cleared through the regional port’s associated island.

Exemptions Granted by the President

Under the authority granted by the Export Import Act, the President can decide to fully or partially exempt import duties on goods imported for activities considered economically beneficial to the Maldives. These exemptions apply to:

• activities aimed at reducing imports and increasing exports;
• activities that introduce and promote technologies not currently available in the Maldives;
• activities that expand the country’s core economic sectors, generate business and employment opportunities, and improve overall living standards;
• activities that enhance foreign currency inflows into the Maldives;
• new or uncommon economic activities that contribute to diversifying the Maldivian economy;
• activities that support the growth of small and medium-sized enterprises; and
• entirely new ventures in the tourism sector or capital expenditure and renovation projects for existing tourism investments, where costs exceed 25% of the original investment value.

FTAs

The Maldives is a party to the South Asian Free Trade Agreement (SAFTA) which has been effective since 2006. Under SAFTA, the Maldives allows lower tariff rates on specific goods imported from countries in the region.

The free trade agreement between the Chinese government and the government of the Maldives (the “China-Maldives FTA”) which was ratified in 2017 has been implemented since 1 January 2025. The China-Maldives FTA provides distinct tariff treatments for goods imported from China.

• Category A: goods on which all tariffs will be eliminated starting from 1 January 2025.
• Category B: goods on which tariffs will be eliminated over a five-year period.
• Category C: goods on which tariffs will be eliminated over an eight-year period.
• Category E: goods on which tariffs will remain at “base rates”.

The Maldives introduced the Competition Act (Law 11/2020) (the “Competition Act”) in 2020 and it officially came into force on 31 August 2021. The Competition Act defines a “merger” as:

• the merger of two or more legal entities that were previously independent; and
• the acquisition of direct or indirect control over all or part of the assets and goodwill of an entity through a joint venture agreement.

The Competition Act states the criteria to determine whether a merger infringes the principles of mergers under the Competition Act to be formulated and published by the Ministry within six months from the date on which the Competition Act came into force. However, the Ministry has not published any such criteria to date, leaving uncertainty over what it considers an anti-competitive merger either in terms of revenue or market share.

Unlike other jurisdictions, the existing legal framework for merger control in the Maldives does not mandate notification of mergers to the Minister of Economic Development and Trade or provide an option for voluntary notification of mergers. However, this may change once the necessary regulation for merger control is published by the Ministry.

Where a merger contravenes the Competition Act’s provisions, the Minister of Economic Development and Trade has the authority to issue an order to amend a merger agreement and levy a fine of between MVR10,000 and MVR100,000. Following the Ministerial Order, the Registrar of Companies reserves the right to deny any service to the parties involved that could aid the execution of the merger agreement.

The Competition Act prohibits business agreements or conduct that hinders, limits or distorts competitive practices within a market. The Competition Act considers the following types of agreements or conduct to be anti-competitive practices:

• price fixing;
• market divisions and customer allocations;
• intentional limitation in production of goods and development of technology;
• refusal to sell or deal with certain parties; and
• control of investments.

If the Ministry determines that a business has exploited or abused its dominant position in the market, it has the authority to impose a fine of between MVR10,000 and MVR100,000.

The Ministry has not taken any enforcement action against businesses for an anti-competitive agreement or practice to date.

The Competition Act assesses whether or not a party holds a dominant position based on:

• the nature of the market it is operating in;
• its share and power in the market; and
• the significant control it has over the market.

Actions such as predatory pricing, imposing unfair prices, refusing to deal with certain parties, limiting production of goods or development of technology to the detriment of consumers, imposing unnecessary obligations which have no commercial use or are not material to the subject of the contract or imposing differing conditions to trading parties to block their entry or operation in the market could all amount to abuses of a dominant position.

If the Ministry determines that a business has abused its dominant position in the market, it may impose a fine of between MVR10,000 and MVR100,000.

However, these enforcement powers are yet to be used by the Ministry.

There is currently no patents legislation in the Maldives. There is therefore currently no process by which a patent owner can register their patent in the country.

There is currently no trade mark-specific legislation in the Maldives although a trade mark bill is currently being drafted by the Ministry. Despite this, a limited trade mark registration system is operational in the Maldives.

Limited System of Registration

As a matter of practice, a business may register a trade mark with the Ministry on the basis of a business name registered by the business before they register the trade mark. However, only businesses incorporated or re-registered in the Maldives may register these trade marks in the Maldives.

Under Section 12(a) of the Business Registration Act, any business activity may only be undertaken in the Maldives by a registered business entity after registering a business name under which the business activity will be undertaken. Under the Business Registration Act, the Registrar of Business can refuse to register any name. They can do so in the following situations.

• Where the name is already registered by another business or the name is believed to be similar to a name already registered.
• Where the name is registered as a trade mark by another party.
• Where the name is a famous name outside of the Maldives and the registration of the business name may mislead the public into wrongfully believing that the name is associated with the famous business carried on outside the Maldives.
• Where the name contravenes acceptable community standards.
• Where the name, without using any additional word or phrase, depicts only a matter, place or thing that cannot be owned by a single party.
• Where the name as determined by judgment of a court of law is prohibited from use as a business name.
• Where the name is reserved to another party.
• Where the name is a type of name that cannot be registered for reasons prescribed in regulation.

Given that the registration of a business name must precede the registration of a trade mark, these restrictions will apply when registering a trade mark as well.

Registration Process

Applications can be made online to reserve a business name and then to register a business name via the oneGov portal after the prescribed fee has been paid. The current prescribed fee is MVR100 per business name registered. The registration process usually takes one to two business days. The registration of the business name will be valid for the entirety of the business entity’s registration.

Applications can be made online to register or renew a trade mark via the oneGov portal after the prescribed fee has been paid. Trade marks may be registered for the period specified in the application, provided that the minimum period is 12 months. A non-refundable fee of MVR50 a month is currently payable. The registration process usually takes one to two business days.

Publication of Cautionary Notices

As a matter of practice, international businesses and trade mark owners and parties that are not incorporated nor re-registered in the Maldives in line with the Business Registration Act, from time to time publish a trade mark cautionary notice, announcing to the general public in the Maldives that a particular trade mark is owned by the business or trade mark owner and caution against trade mark infringement. Even though this is a very common practice, this itself does not afford legal protection against infringement or guarantee protection from unauthorised use of the trade mark in the Maldives. Publication of cautionary notices is not the same as registering a trade mark.

However, the publication of trade mark cautionary notices can be used as evidence to support complaints made by trade mark owners/licensees to the MED under the Business Registration Act, against a business entity registered in the Maldives that has registered, or is using, a business name in contravention of the rights of the trade mark owner or licensee.

Remedies

If a business entity registered in the Maldives has registered, or is using, a business name in contravention of the rights of a trade mark owner/licensee, the Business Registration Act provides an opportunity for the parties concerned to submit a complaint to the MED requesting it change the business name if the period of using the business name after registration of the business entity has not exceeded 12 months. If the Registrar of Business gives notice to the party to which a business name is registered or reserved to change the name, the party must do so within a period of one month from the date of notice.

If the party does not abide by the notice, the Registrar of Business can cancel the business registration of the party.

There is no specific industrial design legislation in place in the Maldives. However, industrial designs are generally believed to be protected under the Copyrights and Related Rights Act of the Maldives (Law 23/2010) (the “Copyrights Act”). Please see 7.4 Copyright.

The Copyrights Act and the Regulation on the Registration of Copyright and Related Rights of the Maldives (Regulation 2011/R-16) (the “Copyright Registration Regulation”) protects copyrights and related rights in the Maldives and stipulates actions and penalties against copyright infringement.

Application

The Copyrights Act generally protects literary and artistic works, performances, audio recordings and broadcasts produced in the Maldives.

Literary and artistic works

The Copyrights Act protects the following.

• Works produced by citizens and residents in the Maldives.
• Works produced by authors protected under any international convention ratified by the Maldives or under any international agreement entered into by the Maldives.
• Audio-visual works made by producers who are resident in the Maldives or by regional offices established in the Maldives.
• Architectural and artistic works produced in the Maldives.

Artists

The Copyrights Act protects the following artists.

• Artists who are citizens.
• Non-citizen artists whose:
1. performance was made within the territory of the Maldives;
2. performance has been included in an audio recording protected under the Copyrights Act; or
3. performance was not a fixation in an audio recording but is still a performance included in a broadcast protected under the Copyrights Act.

Audio recordings

The Copyrights Act protects audio recordings:

• produced by citizens;
• first produced at a fixed location in the Maldives: and
• first published in the Maldives.

Broadcasts

The Copyrights Act protects:

• broadcasts of organisations that have established regional offices in the Maldives; and
• broadcasts from transmitters installed in the Maldives.

In addition, the Copyrights Act will afford the same protection afforded to works, artists, producers of audio recordings and broadcasting organisations under international conventions and agreements which the Maldives is a party to.

Protection

The following types of works are protected under the Copyrights Act.

• Original literary works, original musical works and original artistic works, particularly:
1. books, pamphlets, articles and other writings;
2. academic, literary and artistic speeches and addresses;
3. drama, musicals, stage performances, choreography, steps and other presentations and other works for stage productions;
4. poems, songs, tunes and other musical products;
5. feature films, documentary films, drama, video songs and other video-visual presentations and works;
6. works of art and architecture;
7. photographic works;
8. works of applied arts;
9. illustrations, charts, plans, sketches and 3D works related to geography, topography, architecture or science; and
10. computer programmes (without considering how the programme was written or the format of the programme).
• Audio recordings.
• Broadcasts made via satellite, internet and cable.
• Derivative works such as translations, adaptations, arrangements and other transformations or modifications of works, as well as collections of works, collections of data (databases) in whatever form and collections of expressions of folklore that are original by selection or arrangement.

Under the Copyrights Act, works are protected by the sole fact of their creation, irrespective of their mode or form of expression, or their content, quality and purpose. Protection under the Copyrights Act will only extend to originally created products or works. The following are not protected.

• Any idea, procedure, system, method of operation, concept, principle, discovery or mere data, even if expressed, described, explained, illustrated or embodied in a work.
• Any official text of a legislative, administrative or legal nature as well as any official translation of those documents.

Copyright Duration

The economic and moral rights over works are generally protected for the life of the author plus 70 years after the death of the author.

In the case of co-authorship or joint authorship, the economic and moral rights are protected for the life of the last surviving author plus 70 years after the death of the last surviving author.

For collective works, other than works of applied art and audio-visual work, the economic and moral rights are protected for 70 years from the date on which the work was either made, first made available to the public or first published, whichever date is latest.

For works published anonymously or under a pseudonym, the economic and moral rights are protected for 70 years from the date the work was either made, first made available to the public or first published, whichever is the latest date.

For works of applied art, the economic and moral rights are protected for 35 years from the making of the work.

Registration of Copyright

Under the Copyrights Act it is not compulsory to register the works with the relevant government authority in order to gain protection. However, parties may apply to register the works with the Ministry. Registration helps a copyright holder in legal proceedings prove that the work in question is their creation.

Copyrights may be registered after the prescribed application form has been submitted to the Ministry and the prescribed fee has been paid. A non-refundable fee of MVR1,000 is currently payable. The registration process usually takes two business days.

Remedies 

Right to file action in the court to protect rights

A copyright owner has the right to file for legal action in a relevant court of law if the owner’s rights protected under the Copyrights Act have been infringed or if it is reasonably believed the rights will be infringed. In an action of this nature, the copyright owner may request the court make orders to stop the infringement, compensate the copyright owner for losses suffered or being suffered or protect the ownership rights of the copyright owner. In this regard, the court has the power to make:

• orders against the infringing party or any party with the power to do so, to either take or refrain from taking action(s) in order to stop the infringing activity;
• other lawful orders under applicable laws and regulations;
• orders against the infringing party to compensate the copyright owner for costs incurred in seeking compensation, for the benefit gained by the infringing party from the infringement and for direct and indirect loss of income or reputation suffered by the copyright owner;
• fines of between MVR10,000 and MVR100,000 as a penalty against the infringing party depending on the gravity of the action and wilful action or negligence of the infringing party and to award the amount of the fine to be paid to the copyright owner;
• orders either to return to the copyright owner, or destroy, or remove from the business market, all infringing works and copies; or
• orders against the alleged party to take or refrain from taking action(s) in order to stop the infringement of a copyright owner’s rights being infringed in the future.

In the event of infringement of moral rights granted under the Copyrights Act, the author granted with the moral rights or any person lawfully representing the author may claim damages for loss of reputation or income.

In addition, unless an exclusive licence agreement states otherwise, exclusive licensees enjoy the same rights afforded to copyright owners under the Copyrights Act against infringement of rights protected by the Copyrights Act.

Criminal responsibility

If any action infringing a right granted under the Copyrights Act has been considered a criminal offence under the Copyrights Act or the Maldives Penal Code (Law 9/2014), any party has the right to submit the infringing action to the competent investigating authorities for investigation. If the investigating authorities receive this type of report or are aware of the infringing activity, they must thoroughly investigate the matter and take action in line with the applicable law.

If any action prohibited under the Copyrights Act has been considered a criminal offence under the Copyrights Act or the Maldives Penal Code (Law 9/2014), in addition to civil sanctions permitted under the Copyrights Act, the Copyrights Act does not prevent criminal proceedings from being brought against the infringing party under the Maldives Penal Code (Law 9/2014).

Criminal sanctions under the Copyrights Act

A party taking any action that negatively affects any right protected under the Copyrights Act or takes action knowing that it would result in loss to the copyright owner is committing an offence, which is punishable by the imposition of a penalty between MVR50,000 and MVR 300,000 depending on the gravity of the action. When imposing the penalty, the court must take the loss incurred or that may be suffered by the owner of the protected right into account. If a party convicted of an offence, repeats the offence, the court has the right to double the penalty for each instance of repetition.

As explained in 7.4 Copyright, software and databases are already protected under the Copyrights Act. There are currently no laws in the Maldives that cover other forms of IP.

Section 24 of the Constitution of the Maldives states that everyone has the right to have their personal and family life, their home and their private communications respected. It also states everyone must respect these rights. Apart from this fundamental right enshrined in the Constitution, the Maldives hasn’t enacted general legislation on privacy and personal data protection to date. However, please see 9.1 Upcoming Legal Reforms.

See 8.1 Applicable Regulations.

See 8.1 Applicable Regulations. No legal entity currently has responsibility for data protection regulation.

The government of the Maldives has proposed a bill to amend the existing Civil Aviation Act (Law 2/2001). The bill is currently being reviewed at committee stage, and if approved, will introduce a comprehensive and modern legal framework that ensures effective regulation and oversight of all aspects of civil aviation in the Maldives. The key areas of the proposed bill include:

• updated safety and security standards to align the regime in the Maldives with international civil aviation treaties;
• enhanced regulatory mechanisms to reflect current global aviation practices;
• a new legal framework to enable aviation accidents and incidents to be investigated.

As part of the core pillars comprising the government of the Maldives 2.0 initiative to transform the Maldives into a digital Maldives, a Personal Data Protection Bill and a Cyber Security Bill have been submitted to the Attorney-General’s Office. The government is currently working on drafting a Digital Identity Bill for the Maldives, a critical component of digital transformation, which is expected to be completed in July 2025. These bills are planned for submission to Parliament this year.