Remittance tax on withdrawals out of Maldives, starting January 1

Maldives Inland Revenue Authority (MIRA) has made the decision to implement remittance tax on withdrawals made from bank accounts of expatriate workers registered in Maldives out of the country, starting from January 1, 2017.

As per amendments made to Employment Act, salaries and allowances of expatriate workers need to be transferred to bank accounts opened in their name in a registered bank operating in Maldives, starting from October 1. And a remittance tax of 3 percent will be taken by State on each transfer made by expatriate workers from the account.

As per Article 7 (a) of Remittance Tax Regulation, “transfer of money abroad” has two definitions; transferring money abroad via a bank or money transfer agency, and cash withdrawals made from the bank account from abroad.

The regulation states that remittance tax on cash withdrawals will be implemented staring from a date decided by Commissioner Genera; of Taxation.

MIRA has set the date at January 1, 2017, adding in its tax ruling that it can be implemented prior to that, on a day an automatic or manual mechanism for remittance tax is established.

The responsibility of paying remittance tax to the State falls on banks and other financial institution which provide money transfer services abroad.

Tax evasion will be met with penalties including fines and loss of business license.