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 that no law 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 those in which an applicant can show a blatant disregard for the law or there has been a gross injustice.

The High Court of the Maldives is subordinate to the Supreme Court and has both original 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 Drug Court, the magistrates’ courts, the Employment Tribunal and the Tax Appeal Tribunal. All courts, apart from the magistrates’ 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 became effective 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 It repealed and replaced the previous Law on Foreign Investments (Law 25/1979), which was enacted in 1979.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 that all foreign investments be approved, regardless of their nature or type. 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 review criteria and considerations set out in the FI Act. There is no specific review process 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 applicable to 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 to introduce and develop technology in the Maldives through the investment.

Eligibility

Under the FI Act, the foreign investment in the Maldives is open to:

• citizens of foreign countries;
• companies with 100% foreign shareholders;
• companies with both Maldivian and foreign shareholders;
• companies incorporated outside of the Maldives with 100% direct or indirect shareholding by Maldivians;
• partnerships and companies consisting of shares held by foreigners; and
• companies to be 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 for obtaining approval for a foreign investment in the Maldives.

• Foreign investment application: A formal application must be submitted to the Ministry of Economic Development, Transport and Trade (the “Ministry”) along with the required documentation, investor profile and proposed activity.
• 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 that the applicant must complete before the investment can proceed.
• Administrative fee: Upon receipt of the letter of no objection, the applicant is required to pay a non-refundable administrative fee for foreign investment to the Maldives Inland Revenue Authority (“MIRA”).
• Registration of business: Applicants must register the business with the Ministry after settling the foreign investment administrative fee.
• 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.
• Foreign investment agreement: Following the grant of the licence and completion of the formalities, the Ministry enters into a foreign investment agreement with the foreign investor, which formally regulates 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, non-compliance with the approval requirements will result in the foreign investment not being recognised. 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 must meet the minimum initial investment thresholds applicable to the specific business activity they intend to undertake. These thresholds vary by sector and range from USD250,000 to USD100,000,000. For business activities that do not have a predefined investment amount, the terms can be negotiated with the authorities. Sectoral investment requirements are currently governed by the New Foreign Investment Entry Requirements (the “FI Entry Requirements”), which were published on 8 October 2025.

Foreign Shareholding

The maximum allowable percentage of foreign shareholding varies depending on the type of business activity. Under the FI Entry Requirements, foreign shareholdings may range from 40% to 100%, depending on the proposed activity. For business activities without 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 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 business in the Maldives must register their business under one of these corporate structures. Unlike other forms of corporate structure, which can be utilised to conduct any type of business, co-operative societies can only be formed to meet 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 (Law 7/2023). Partnerships are regulated by the Partnership Act of the Maldives (Law 13/2011). There are regulations under the relevant Acts that also govern matters relating to each corporate entity. There is a distinct law relating to co-operative societies as well.

Companies

The following types of companies 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.

Public companies

The general public has 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. However, if the 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 incorporated under a Presidential Decree or by legislation and all shares are owned by the government.

Local authority companies

Local authority companies are incorporated by local councils to conduct business activities that benefit citizens under the secretariat’s regulatory remit.

Foreign investment companies

Any company where one or more shares are held by a foreign individual, a foreign company or a partnership is considered a foreign investment company in the Maldives. A foreign investment company can be either private or public. Foreign investment companies are subject to the FI Act. Specific designated sectors are open to foreign investment companies to conduct business with a 100% foreign shareholding, 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 must appoint an agent in the Maldives who is accountable to the Registrar of Companies for fulfilling all obligations under the Companies Act. The agent will be personally responsible for all actions taken against the re-registered entity under the Companies Act.

Liability of Company’s Members

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 serve as directors of 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. Once all requirements are met, registration is typically completed within one to two business days, after which a certificate of registration is issued. This certificate serves as definitive proof of registration under Maldivian law.

Reporting

All private companies in the Maldives must report the following changes to the Registrar of Companies to register them 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 the managing director of the company must be made within 15 days of the change.
• Changes to the authorised share capital of the company must be made 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 owners of the shares to the company. The company must verify the accuracy of this information and maintain a register of the beneficial owners of the company’s shares.

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 the company’s financial and strategic decisions will also be considered a significant beneficial owner.

Companies are required 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 their boards of directors. All companies have to appoint a managing director from among their directors. The managing director will be a full-time officer of the company and will be responsible for its management under the guidance of the board of directors.

The directors may delegate their powers, duties and responsibilities to a director’s committee, an individual director or an employee of the company, as determined by the board of directors, provided the delegation is not prohibited by the company’s constitutional documents. Even with the delegation of powers, the directors will 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 acquire a legal personality upon registration, distinct from that of their 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 shareholders, directors 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 them, they commit an offence and can be penalised.

There is an obligation on shareholders to disclose details of beneficial owners and if they fail to do so, they are considered to have committed an offence and can be penalised.

The Companies Act recognises situations in which a company will be considered to be committing a criminal offence. These circumstances arise when 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 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 for the formation of trade unions and employer organisations participating in such unions, as well as for 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 applies 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 on employees’ redundancy, working hours and overtime, as well as salary and wages.
• Expatriate Employment Regulation (Regulation 2025/R-120). 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 on the collection of a service charge from businesses and its distribution 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 that certain provisions must be included in the employment contract.

Types of Employment Contracts

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

• 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 implied from the actions of both parties that a renewal or extension has occurred, it will be considered as 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 that an employee works. The Employment Act specifies particular categories of employees exempt from the normal working hour limitations.

Employees in sectors specified in the Employment Act may be required to work two additional hours per day beyond the normal working hours limit (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 work in a day. However, the minister designated to oversee the implementation of the Employment Act has the discretion to formulate a regulation imposing a maximum number of hours per 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: employees working in specific sectors may be required to work more than six consecutive days without a break, provided they are granted rest days in lieu of each 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 is allowed after showing appropriate cause for failure to maintain a work ethic or inability to perform employment duties and responsibilities related to the proper functioning of their place of work, even after implementation of measures to discipline the employee or address skill deficiencies.
• Summary dismissal: This is where an employee is dismissed without notice when their work ethic is deemed unacceptable and continuing employment is likely to be detrimental to the employer or the workplace.
• Redundancy: This is considered a reasonable cause for dismissal 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.

The onus is always on the employer to show cause for dismissal.

Severance Pay and Notice of Termination

Severance pay need not be paid to employees upon dismissal. In the event of dismissal with notice, the employer must 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 mandatory compensation or redundancy pay is required to be paid to 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 minimum notice period or payment in lieu of notice period is as follows.

• Less than one year: two weeks.
• Between one year and five years: one month.
• More than five years: two months.

Collective Redundancies

In the Maldives, the laws and regulations do not differentiate between collective and individual redundancies. The same procedure laid down in the relevant laws and regulations needs to be followed for both.

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 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 must notify the employees that there may be circumstances in which one or more employees may have to be made redundant or that the decision to make the employees redundant has already been made. This notification will include the policy relating to the determination of which employees will be dismissed. Before dismissing any employees for redundancy, the employer must take measures to avoid termination or minimise the number of employees affected, as far as circumstances allow.

The employer must establish a policy outlining the criteria for determining which employees will be made redundant and this policy must be communicated to 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 the 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 participate in or refrain from participating 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 ways that are not in the interests of members or where members have conflicting interests.

Employers must commence collective bargaining negotiations if the union making the request represents a majority of the employer’s employees.

The Employment Act only mandates that employees be informed by the employer in the event of redundancy.

The Occupational Safety and Health Act mandates that the employer inform employees in the following circumstances:

• any health and safety policy amendments; and
• regularly updating employees on safety measures related to machinery, equipment, plants and other instruments used in the workplace.

There are no circumstances in which employers are mandated 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 must contribute at least 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 in the same age bracket may 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 must pay income tax at a rate of 15% if 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.

Capital gains tax

Under the Income Tax Act, the Maldives does not impose a separate capital gains tax. Instead, gains arising from the disposal of movable, immovable, intellectual or intangible property are treated as part of taxable income and are subject to income tax at 15%. Capital gains may arise from, among other things, the disposal of immovable property situated in the Maldives, shares or interests in entities whose value derives from Maldivian immovable property and other business or investment assets.

Non-resident withholding tax

Under the Income Tax Act, income derived from the Maldives by non-residents is subject to a 10% tax on the gross amount of income received. 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%.

Capital gains withholding tax

Under the Income Tax Act, gains derived by non-residents from the disposal of certain assets are subject to capital gains withholding tax at 10% of the gross payment. This applies in particular to disposals of immovable property situated in the Maldives and to offshore indirect transfers, where more than 50% of an entity’s value is derived from Maldivian immovable property. The obligation to withhold and remit the tax lies primarily with the payer or acquirer of the asset, with secondary liability rules applying where the payer fails to comply.

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 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.

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.

Tourism establishments must pay USD12 daily per guest, while tourist hotels and guesthouses with fewer than 50 rooms must pay USD6.

OECD Two Pillar solution

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

The Maldives has not introduced a domestic top-up tax (Qualified Domestic Minimum Top-up Tax or QDMTT). Consequently, there is no domestic top-up tax that has been granted or is expected to be granted, safe harbour status on the OECD central record at this stage.

As a result, any top-up tax applicable to Maldivian entities within the scope of multinational groups would currently be collected in other jurisdictions under the Pillar Two rules, once those rules are effective elsewhere.

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 into account factors such as revenue impact, economic and social impact and the attainability of objectives.

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

Foreign Tax Credit

Under Section 72 of the Income Tax Act, residents paying taxes abroad can deduct either the 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, Bangladesh and Malaysia and all four are currently in effect. 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 Hong Kong, which was signed on 26 May 2025, has not yet come into force.

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 must submit consolidated accounts, including their subsidiaries, as they are considered group entities under the Income Tax Regulation. However, under the Income Tax Act, group entities must divide the tax-free threshold of MVR500,000 among themselves to determine the tax bracket for the group’s taxable income. Companies within a group cannot therefore benefit from the tax-free threshold as individual companies, as they are grouped together for tax purposes.

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, finance leasing businesses, 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 directly holds a majority of the ordinary share capital.

Under Section 67(a) of the Income Tax Act, if an arrangement or transaction is between associates and the terms are not arm’s length terms, taxable income will be computed based on arm’s length terms. This applies where the actual terms result in higher income, lower deductions, lower losses or lower tax credits for any person involved.

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:

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

Tariffs in the Maldives are governed by the Export Import Act (Law 31/1979) (the “Export Import Act”), which is implemented and enforced by the Maldives 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 generally range from 0% to 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 cigarettes/bidis: 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 may decide to fully or partially exempt goods from import duties when 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”), ratified in 2017, has been in effect 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 became effective 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 that the criteria to determine whether a merger infringes the principles of mergers under the Competition Act are 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, in terms of either 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, Transport and Trade, nor does it provide an option for voluntary notification. However, this may change once the necessary merger control regulation is published by the Ministry.

Where a merger contravenes the Competition Act’s provisions, the Minister of Economic Development, Transport 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 the production of goods and the 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 market position, 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 have yet to be used by the Ministry.

There is currently no patent legislation in the Maldives. Therefore, currently, there is no process by which a patent owner can register their patent in the country.

The Trademark Act (Law 19/2025) (“Trademark Act”) was enacted on 11 November 2025 and will come into force on 11 November 2026. Until then, a limited trade mark registration system is operational in the Maldives. Please see 9.1 Upcoming Legal Reforms.

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 (Law 18/2014) (“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 in the following situations.

• Where the name is already registered by another business or 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 for another party.
• Where the name is a type of name that cannot be registered for reasons prescribed in the 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, then to register it via the oneGov portal after the prescribed fee has been paid. The current prescribed fee is MVR100 per registered business name. The registration process usually takes one business day. 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 business day.

Publication of Cautionary Notices

As a matter of practice, international businesses and trade mark owners and parties that are not incorporated or 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, it does not, by itself, 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 Ministry 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 Ministry, requesting an order to 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 comply with the notice, the Registrar of Business may cancel the party’s business registration.

There is no specific industrial design legislation in place in the Maldives. However, industrial designs are generally considered 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”) protect copyrights and related rights in the Maldives and prescribe actions and penalties for 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 as that afforded to works, artists, producers of audio recordings and broadcasting organisations under international conventions and agreements to which the Maldives is a party.

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, the 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; and
• 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 works, 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 made, first made available to the public or first published, whichever is the latest.

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

Registration of Copyright

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

Copyrights may be registered after an application is submitted via oneGov and the prescribed fee is paid. A non-refundable fee of MVR1,000 is currently payable. The registration process is usually completed within seven business days.

Changes to the registration process are expected with the introduction of new laws. Please see 9.1 Upcoming Legal Reforms.

Remedies

Right to file an action in 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 to be 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 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. Upon receiving such a report or becoming aware of such 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 into account the loss incurred or that may be suffered by the owner of the protected right. 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. Except for the Trademark 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 that everyone must respect these rights. The Maldives has not 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 replace the existing Civil Aviation Act (Law 2/2001). The bill is currently being reviewed at the the committee stage and, if approved, it will introduce a comprehensive and modern legal framework to ensure effective regulation and oversight of all aspects of civil aviation in the Maldives.

As part of 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 Parliament.

The Maldives Intellectual Property Office Act (Law 12/2025) (the “MIPO Act”) came into force on 1 January 2026, pursuant to which registration of intellectual property rights is to be transferred to the Maldives Intellectual Property Office. Regulations with new procedures are expected to be issued under the new MIPO Act and the Trademark Act.