Income Tax Bill of Maldives has been passed in the 74th sitting of the People’s Majilis (Parliament of Maldives) on 4th December 2019. Income Tax will commence from 1st January 2020, while the tax on employment income will be effective from 01st April 2020 onward.
Since Income Tax Bill is designed to charge tax from personal income and profit earned from businesses covering the broad spectrum of income earned from entities in Maldives by local and foreign individuals and businesses, the implementation of the Income Tax Act, is expected to repeal the Business Profit Tax Act, Bank Profit Tax Act along with the Petroleum Tax Act.
The Income Tax Bill, levies tax on residents earning income from within or outside Maldives or non-residents earning income from within the Maldives. Incomes that are subject to tax are salaries, business profit, rent from movable and immovable property, dividend, interest, annuity, pension and retirement benefit, income received to beneficiary, royalty, technical service fee, commission, directors fee, capital gains on disposal of assets, receipts on disposal of assets not eligible for capital allowance and any other income (irrespective of the legality of the earned income).
Income Tax Act proposes two types of taxes that is tax on income and withholding tax. The following tax rates remain the same from previous Acts to proposed bill:
The income tax bill will bring about the following major changes to the current tax system:
Income Tax - An Overview