On 12th December 2024, the Parliament of the Maldives passed the Foreign Currency Bill, which introduces the Foreign Currency Act (32/2024). The Act was published in the official gazette on 14th December 2024 and will come into effect on 1st January 2025.
Key Highlights of the Foreign Currency Act (32/2024):
Mandatory Deposit/Transfer of Foreign Currency to a Bank Account held with a Licensed Bank in Maldives
Tourism goods and services providers, and non-tourism businesses earning an equivalent of USD 15 million or more annually in prior financial year (excluding businesses in tourism sector and financial) are required to deposit or transfer monthly realized foreign currency sales proceed into a designated bank account by the 28th day of the third month following the income receipt.
Foreign Currency Exchange Requirements
Monthly foreign currency exchange requirements apply as follows:
Category A Tourist Establishments (tourist resorts, integrated resorts, private islands, resort hotels, and such similar places):
- USD 500 per tourist arrival during the month OR
- 20% of the monthly foreign currency gross sales
Category B Tourist Establishments (tourist vessels, tourist guesthouses and tourist hotels):
- USD 25 per tourist arrival during the month OR
- 20% of the monthly foreign currency gross sales
Goods and service providers, excluding businesses in tourism sector and financial institutions, that received an equivalent of USD 15 million or more in annual revenue during the previous financial period:
- 20% of the monthly gross sales from foreign currency obtained through sales of goods and services.
The foreign currency required to be exchanged into MVR must be exchanged by the 28th day of the third month following the month in which it was received.
Exemptions
- Tourists staying less than 24 hours
- Children under 12 years who are tourists
- Tourists staying on a complimentary basis or free of charge
- Guests who are specially hosted by the government of Maldives
- Tourist vessels registered and operated outside of Maldives
Mandatory Registration Requirements with the Maldives Monetary Authority (MMA)
Existing tourism goods and services providers: Must register within 10 days from the enactment date (1st January 2025)
New tourism goods and services providers: Must register within 30 days from the business registration date.
Existing goods and service providers, excluding businesses in tourism sector and financial institutions, that received an equivalent of USD 15 million or more in annual revenue during the previous financial period: Must register within 30 days from the enactment date
New goods and service providers, excluding businesses in tourism sector and financial institutions, that received an equivalent of USD 15 million or more in annual revenue during the previous financial period: Must register by the end of January of the following year.
Tourism goods and services providers already registered under the Foreign Currency Regulation are not required to undergo re-registration.
Penalties for Non-Compliance
Deposit/Transfer Requirements of foreign currency to a bank account
- A fine up to 0.25% of the monthly foreign currency amount required to be deposited/transferred to the bank account.
- Additionally, MMA can impose a daily fine up to 0.25% of the monthly foreign currency amount required to be deposited/transferred to the bank account per day for continued non-compliance.
Exchange requirements
- A fine up to 0.5% of the monthly foreign currency amount required to be exchanged to MVR.
- Additionally, MMA can impose a daily fine up to 0.5% of the monthly foreign currency amount required to be deposited/transferred to the bank account per day for continued non-compliance.
Except for the penalties outlined in (a) and (b) above, based on the severity and circumstances of the violation, the authority may impose fines ranging from MVR 10,000 to MVR 1,000,000 on parties who fail to comply with the law.
Unsettled penalties within 90 days may lead to additional measures including requesting the relevant authority to suspend the operating licenses for a specified period or court actions.
Repeal of Existing Provisions
The enactment of the Foreign Currency Act repeals Section 24 (d) and (e) of the Maldives Monetary Act (Law Number 6/81) and the Foreign Currency Regulation (2024/R-91) introduced on 1st October 2024.
However, the requirements referenced to Foreign Currency Regulation outlined in section 22 of the Foreign Currency Act, will be effective under the Foreign Currency Act. These are the existing foreign currency requirements which apply to the period from October to December 2024.
Staying Ahead in Compliance
The Foreign Currency Act (32/2024) marks a significant shift in foreign currency regulations in the Maldives, particularly for businesses in the tourism sector and large-scale enterprises. With the Act taking effect from 1st January 2025, it is crucial for businesses to assess their compliance processes, review cashflow strategies, and ensure timely registration with the MMA.
At Crowe Maldives, we are here to help you navigate these changes seamlessly. Get in touch with our team today to ensure your business remains compliant and ahead of the curve as this new regulatory landscape unfolds.