Do Business in Maldives

Legal Issues for Investors/Rules and Regulations

Key Business Legislations

The key rules and regulations relating to registering and operating a business in the Maldives provided below:

1.

Business Registration Act:

Requires every person running business in the Maldives to register his/her business entity in one of the following prescribed forms:

  • Company
  • Partnership
  • Cooperative Society
  • Sole Proprietor

2.

Companies Act: The Companies Act of Maldives provides the basis for formation, registration and running of companies in the Maldives.

3.

Partnership Act: Governs the formation and regulation of Partnership in the Maldives.

4.

Cooperative Societies Act: Governs the formation and regulatory matters on the establishment and operation of Cooperatives in the Maldives. This form of business is confined for the Maldivians.

5.

Sole Proprietorship Act: Governs the registration of sole proprietorship and the specific procedures relevant to operating a sole proprietorship in the Maldives. This form of business is confined for the Maldivians

6.

Import/Export Act Governs the regulatory regime relating to import, export and re- export of products, including the import duty regime and provisions relating to duty exemption.

7.

Foreign Investment Act: Governs all foreign investment that is established and operated in the Maldives.

8.

Special Economic Zones Act: Provides for the principles and processes for the designation of Special Economic Zones in the Maldives, and the incentives and regulatory flexibilities allowed for such investment.

9.

Business Profit Tax Act: Outlines the provisions for the establishment and implementation of an administrative framework for the purpose of implementing Business Profit Tax in Maldives. It outlines the applicable tax rates, the registration procedures and tax calculation principles.

10.

Goods and Sales Tax Act: Outlines the provisions for the imposition of “Goods and Service Tax” on the value of goods and services supplied in the Maldives. The law makes a clear distinction between suppliers of tourism goods and services and suppliers of other (general) goods and services, which are taxed at different rates.

11.

The Tourism Act The Maldives Tourism Act provides for the determination of zones and islands for the development of tourism in the Maldives; the leasing of islands for development as tourist resorts, the leasing of land for development as tourist hotels and tourist guesthouses, the leasing of places for development as marinas, the management of all such facilities; and the operation of tourist vessels, diving centers and travel agencies, and the regulation of persons providing such services.

12.

The Civil Aviation Act of Maldives Maldives Civil Aviation Act came into force in 2001. This Act makes the provision in respect of the registration and operation of civil aircraft in the Maldives; construction, registration, operation and use of civil aerodromes; other matters relating to civil aircraft and aerodromes; and safety of civil aviation in the Maldives.

13.

The Consumer Protection Act This Act provides for the establishment and protection of the rights of consumers.

14.

The Contract Act The Law of Contract 1991 provides definitions of contract and its element such as offer, acceptance and termination of offer, etc.

15.

The Maldives Monetary Authority Act This Act provides definitions, basis and foundation of monetary regulations in the Maldives.

16.

The Fisheries Act The Fisheries Act is called the “The Fisheries Law of Maldives”. This Act is the basis for formulation of fisheries regulations and fisheries management and development in the Maldives.

Establishing a business entity

Registering a new Business

Depending on your requirement, you may register your business as a Sole Proprietor, Partnership, Company or a Cooperative Society. You will need to approve a name for your business prior to completing registration. Additionally, if one or more of the owners are foreigners, you will first need to make a foreign investment registration.

Business Registration Act

The major instrument of incorporation of business in Maldives is Business Registration Act. The Business Registration Act (Law No:18/2014) requires every person carrying on business in the Maldives to register a business entity in one of the prescribed forms below:

(i) Company under the Maldives Companies Act

(ii) Partnership under the Partnership Act (Law No: 13/2011) or

(iii) Cooperative society under the Cooperative Societies Act (Law No: 3/2007) or

(iv) Sole Proprietor under the Sole Proprietorship Act (Law No: 19/2014)

(A) Company

A company is a business entity established pursuant to the Companies Act. In addition to locally incorporated companies, the Companies Act allows re-registration and establishment of branches of foreign companies in the Maldives. There are two main types of companies incorporated in the Maldives:

i) Private limited company: Any two or more persons may as prescribed in the Companies Act, having the liability of its members limited, form a private company. A company can be incorporated as a private company if its Memorandum or Articles declares it as such. Shares may only be transferred in accordance with its Articles of Association and the number of members of the company is limited to fifty (50). The sale of shares to the public is prohibited by the Articles of Association.

ii) Public limited company: Any ten or more persons may in accordance with the Companies Act, having the liability of its members limited, form a public company. A public company is a company whose Memorandum and Articles of Association declares it as a public company and can raise finance from the public in accordance with the Companies Act and laws governing the issuance of securities.

The basic incorporation requirements of companies are as follows:

(i) The registered office must be in the Maldives

(ii) Every private company must appoint at least two directors and every public company must appoint at least five directors to the Board.

(iii) A resident director must be appointed.

(iv) Every company must have a Memorandum and Articles of Association Annual filing and compliance requirements include the following:

(i) Annual report of the company

(ii) Annual financial statements of the company

B) Partnership

The Partnership Act (Law No.: 13/2011) governs the formation, registration and operation of all partnerships in the Maldives. The Partnership Act provides the establishment of general partnerships and limited liability partnerships.

Key features of Partnership are as follows:

(i) It enjoys separate legal entity status

(ii) It must have at least two partners, and up to a maximum of twenty partners.

(iii) At least one partner must ordinarily be resident in the Maldives.

(C) Cooperative Societies

The Cooperative Societies Act (Law No.:3/2007) governs the formation, registration and operation of Cooperative Societies in the Maldives. Cooperative societies are established for various community-based social and economic development activities, and the opportunity for membership in the society is open to all members in the community. This type of business entity is restricted to Maldivian citizens.

(D) Sole Trader

The Sole Proprietorship Act (Law No.: 18/2014) provides for the registration of sole proprietorship in the Maldives and specifies the procedures incidental to carrying business as a sole Proprietorship in the Maldives. The registration of a sole proprietorship does not create a separate legal entity for conducting such business.

Key features of a Sole Proprietor are as follows:

(i) Capital of the business is invested by the sole proprietor.
(ii) Ownership of all assets of the business shall be vested with the sole proprietor.
(iii) All profits of the business shall be entitled to the sole proprietor.
(iv) All losses of the business shall be borne by the sole proprietor.
(v) Liability for all debts of the business shall lie with the sole proprietor.
(vi) Liability for all business transactions and all matters of the business shall lie with the sole proprietor.


Intellectual Property (IP) – Patent, Trade Mark, Copyright

Copyright

The only form of intellectual property that is protected in the Maldives by law is copyright. The Copyright and Related Rights Act (Law No. 23/2010) grant protection to the owner of any original literary, artistic, music, or dramatic work. A registered copyright would be protected during the life of the author and full 50 years beyond the life of author.

Trade Mark

A separate legal regime for the protection of trademarks does not exit at present. However, mechanism is facilitated through the Ministry of Economic Development to register trademarks with the Ministry. In addition to this, Trademark protection is made through the publication of cautionary notices in local newspapers. The legal validity of the “CAUTIONARY NOTICES” publications is 3 years renewable. Requirements:

  • Name, address and nationality of the applicant,
  • Legal status of the applicant,
  • Trademark,
  • International class,
  • Description of Goods or Services (if required).

Patent

The Maldives does not have any specific law, which protects patent right at this time.


Import-Export

All parties wishing to engage in international trade (import, export, re-export) in the Maldives have to register their business under the Business Registration Act under the Ministry of Economic Development.

Import, Export Licenses and Permits

All international trade (import and export, re-export) is subjected to the licensing regime. Subsequent to registration as a business entity at the Ministry of Economic Development, and prior to importation and exportation goods, the relevant licenses have to be obtained. Import, export and re- export licenses have a validity of 12 months since the date of issuance.

Import

As per Maldives Export/Import Law (No: 31/79) and Taxation Law (No: 3/2013), any party wishing to import goods into the Maldives must be registered at Maldives Inland Revenue Authority (MIRA) and should possess a license issued by Ministry of Economic Development/or any party allocated by this ministry to carry out the licensing procedures.

Issuing import license (Source: Ministry of Economic Development, Republic of Maldives.) click

Service:Issuing Import License
Why do I need to do this?Follow this user guide if you need an import license for importing goods into the Maldives.
Where can I apply for the service?You can apply in person at MED
How long will the process take?Same day as date of application
What are the fees and charges involved?Revenue stamp to be charged at the rate of 10 Laari per every MVR 100 worth of imports.
Which documents do I need to submit? Document Check for:
1. Import license Application form

§ All required fields filled correctly § All documents listed in the application form are submitted § Second page of form filled if applicant does not have a permit for trade of imported goods but wishes to import merchandise. § List of items attached – ensure that any items prohibited by the Maldivian law, or allowed only with special permit are not included in list § Total value of estimated imports in an year (CIF value) should be a minimum of MVR 100. § Signature (If applicant is an individual, his/her signature. If applicant is a business/government organisation, signature of an authorised person) § Seal (If applicant is a government entity or company registered for more than 15 days)

2. Revenue stamp § Revenue stamp equivalent to 10 Laari per every MVR 100 worth of imports (with the exception of government offices)
3. National Identification Card copy § Clear and complete NIC original and copy, if applicant is an individual § NIC original and copy of individual who receives the license (upon collection) – work visa original if foreigner
4. Copy of trade permit for import goods (if applicable) § Copy of valid permit for trade of imported goods, if applicant is a company, partnership, cooperative society, sole proprietor.
5. Copy of prior-attained permit from relevant government authority (if applicable) § Copy of permit for import of any products that requires prior permit from the relevant government agency.
6. Letter of justification (if applicable) § Letter justifying purpose of attaining license, if requesting under the name of more than one individual and for use in vessels registered under the name of up to two individuals, or for use vehicle or household use § Signature of individual
7. Copy of registration and receipt of last payment (if applicable) § Copy of registration and receipt of last payment of monthly fee for trade permit, if the business permit was registered in an island other than Malé.
How do I apply for the service?

1. Lodge application at counter.

2. If any information is missing, provide the required information. If application is in order, Ministry will calculate amount for payment and instruct to make payment. * If If license cannot be approved, Ministry will inform you of the issue and instruct for amendment as applicable.

3. If approved, receive invoice slip and make payment.

4. If approved, receive original of import license and sign form as proof of receipt.

What would I receive at the end of the process?§ Original import license § Copy of payment receipt
Did you know:

§ For licenses requested for individual use, you must be an individual over 18 years of age. License must be for your individual use only, with the exception of your children under 18 years of age. For the use of your spouse or children over 18 years of age, a separate application must be submitted. The license cannot be used for business use.

§ For licenses requested for business use, ensure that you have a valid trade permit for imported goods, and you must be registered at MIRA for GST.

§ For licenses requested for household, production or business administration use, you will be required to sign a declaration from applicant that you will not use the imported items for business purposes.

§ For Licenses requested for use in trade fairs/exhibitions arranged by Maldivian and foreign party collaboration, you will need a prior obtained permit for holding such a fair/exhibition, and the license will be issued only under the name of the Maldivian party involved.

§ List of items to be imported must not include any items that are prohibited by the Maldivian law.

§ License will not be issued to an import value larger than the equivalent of the maximum number of revenue stamps that can be occupied in the space allocated in the application form.

§ A minimum of MVR 100 is required as total value of estimated imports in an year (CIF value).

§ The total value of estimated imports will be rounded off to the nearest 100.

§ Payment by cheque is acceptable only with bank guarantees.

References:

§ Export and Import Act of the Maldives

§ Export and Import Regulation

§ List of prohibited items for import

§ User guide on permit for sale of import goods


License to import pork and liquor products

Service:License to import pork and liquor products
Why do I need to do this?

To import pork and liquor products you should obtain a License from MED. You can request for the License if you are/have a:-

  • Resort registered at the Ministry of Tourism
  • Individuals/companies who is given permit to operate duty free shops
  • Individual/companies with whom Ministry of Economic Development has made agreements to re-export pork and liquor products.
  • Bonded warehouses registered at Maldives Customs Services who are given permit for sale of pork and liquor products
  • Yatch marina and Picnic Islands registered at Ministry of Tourism
  • Bar located at the departure lounge of Ibrahim Nasir International Airport
  • Safari vessels and yatches registered at Ministry of Tourism
  • Tourist hotels registered at Ministry of Tourism which are located at uninhabited islands
  • Foreign Embassies in the Maldives
Where can I apply for the service? You may apply online or in person at MED.
How long will the process take? Within the same day of application
What are the fees and charges involved?
  • No fees
  • Revenue Stamp: MVR 500
Which documents do I need to submit? Document Check for:
1. Application form
  • All required fields filled correctly
  • Signature / Seal

– Signature (If applicant is an individual, his/her signature. If applicant is a business/government organisation, signature of an authorised person)

– Seal (If applicant is a government entity or company registered for more than 15 days

National Identification Card of the applicant (if the customer is an individual)
  • Clear and complete NIC original and copy
  • NIC original and copy of individual who receives the License (upon collection)
Copy of Registration Certificate / Copy of Permit / Copy of Agreement

A copy of the registration Certificate as a proof that the customer has been registered at the relevant authorities.

  • Resort – registration from Ministry of Tourism
  • Duty Free shops – permit to operate Duty free shops
  • Individual/firms – agreements to re-export pork and liquor products.
  • Bonded warehouses – registration from Maldives Customs Services permitting sale of pork and liquor products
  • Yatch marina and Picnic Islands – registration by Ministry of Tourism
  • Bar located at the departure lounge of Ibrahim Nasir International Airport – Agreement with Ibrahim Nasir International Airport
  • Safari vessels and Yatches – registration by Ministry of Tourism
  • Tourist Hotels – registration by Ministry of Tourism
Revenue Stamp A Revenue stamp of MVR 500.
How do I apply for the service?
  1. Lodge application and documents at counter.
  2. Receive the invoice 3. Make the payment
What would I receive at the end of the process?License to import pork and liquor products
Did you know:

You should have the below 2 documents before you apply for this License:

  1. Trade permit for sale of import of goods
  2. Trade permit for sale of pork and liquor products
References:
  • Import and Export Act of Maldives
  • Pork and Liquor Regulation
  • Companies Act of the Maldives
  • Companies Regulation
  • Revenue Stamp Law

Import Restrictions

Non – tariff measures are imposed on certain categories of products, to protect the health of the population, plant or animal life and environment, while similar measures are imposed on some products on religious and security grounds. To import controlled goods that are subjected to additional non-tariff measures, special permits have to be obtained from the relevant government agencies, prior to import and export.

Goods that require special approval prior to import:

Items Special approval granting authority
Dogs, dangerous animals, dangerous chemicals and acids created from such chemicals and poisons, excluding explosive, fog signals and fireworks, distress signals used in marine vessels, fishing guns. Ministry of Defense and National Security
Alcohol, pork, pork products Ministry of Economic Development
Weapons and explosive Only for government purpose
Tuna fishery export originating from the Maldives
Live plants and animalsRequired special catch certificate from Ministry of Fisheries and Agriculture
Medicine
Tobacco and tobacco products A valid medical prescription issued by a registered medical practitioner is required for importation of controlled drugs (for personal use only)
Valid phytosanitary/sanitary certificateMaldives Food and Drug Authority
Communication equipmentTelecommunication equipment with radio frequency transmitting capacity exceeding 100 milliwatts should be inspected and approved by Communication Authority of Maldives.
Hydro chlorofluorocarbonEnvironment Protection Agency
Live fish and frozen meatPort Health
Bird Import LicenseMinistry of Fisheries and Agriculture
Pesticide and fertilizersMinistry of Fisheries and Agriculture and Ministry of Defense and National Security
VehiclesMinistry of Transport

Export

Any party wishing to export or re-export from the Maldives must be registered at Maldives Inland Revenue Authority (MIRA) and should possess a license issued by Ministry of Economic Development/or any party allocated by this ministry to carry out the licensing procedures.

Issuing export license

Service:Issuing export license
Why do I need to do this?Follow this user guide if you need an export license for export of goods from the Maldives.
Where can I apply for the service?You can apply in person at MED
How long will the process take?Same day as date of application
What are the fees and charges involved?§ Revenue stamp to be charged at the rate of 10 Laari per every MVR 100 worth of exports.
Which documents do I need to submit? Document Check for:
1. Export license application form

§ All required fields filled correctly

§ All documents listed in the application form are submitted

§ List of items attached – ensure that any items prohibited by the Maldivian law, or allowed only with special permit are not included in list

§ Total value of estimated imports in an year (Cargo In Freight value) should be a minimum of MVR 100.

§ Signature (If applicant is an individual, his/her signature. If applicant is a business/government organisation, signature of an authorised person)

§ Seal (If applicant is a government entity or company registered for more than 15 days)

2. Revenue stamp § Revenue stamp equivalent to 10 Laari per every MVR 100 worth of exports (with the exception of government offices)
3. National Identification Card copy

§ Clear and complete NIC original and copy, if applicant is an individual

§ NIC original and copy of individual who receives the license (upon collection)

4. Copy of prior-attained permit from relevant government authority (if applicable) § Copy of permit for export of any products that require prior permit from the relevant government agency.
How do you apply for the service?
  1. Lodge application for export license at counter.
  2. If any information is missing, provide the required information. If application is in order, Ministry will calculate amount for payment and instruct to make payment. * If license cannot be approved, Ministry will inform you of the issue and instruct for amendment as applicable.
  3. If approved, receive invoice slip and make payment.
  4. If approved, receive original of export license and sign form as proof of receipt.
What would you receive at the end of the process?

§ Original export license

§ Copy of payment receipt

Did you know:

§ You must have a registered business at the Ministry of Economic Development.

§ For all application types, ensure that any items prohibited by the Maldivian law, or allowed only with special permit are not included in list of items for export.

§ If you have to obtain clearances/permits from other relevant Ministries, ensure that any additional documents that should accompany the permit are also submitted along with the application.

§ If you wish to export items that have been imported to the Maldives for which they have paid import duty, the export license issued should state this.

§ License will not be issued to an export value larger than the equivalent of the maximum number of revenue stamps that can be put in the space allocated in the form.

§ The total value of estimated export will be rounded off to the nearest 100.

§ A minimum of MVR 100 is required as total value of estimated imports in an year (CIF value) per export license.

§ Payment by cheque is acceptable only with bank guarantees.

References:

§ Export and Import Act of the Maldives

§ Export and Import Regulation

§ List of prohibited items for export


The following items can be exported and re-exported without an export license:

  • Consignment with a net weight of under 5 kg (except ambergris)
  • Temporary export
  • Items exported by individual for their personal use
  • Items such as container used to import goods
  • Corpse
  • Temporary import

Export Prohibited Items

  • All types of bait fish (used for pole & line fishing)
  • Big eye scad (under 6 inches)
  • All types of corals (except organ pipe coral)
  • Eels
  • Pearl oysters
  • Puffer fish
  • Skates and rays
  • Trochus
  • Dolphins
  • Whales
  • Lobsters and lobster meat
  • Conch (Triton) shells
  • Giant Clam
  • Black corals
  • Whale shark
  • Napoleon wrasse
  • Sharks
  • Turtles

Re- Export

n addition to the general licensing requirements, all registered re-export business have to separately enter into a re-export agreement prior to re-export of goods, with the Ministry of Economic Development.

Issuing Re-export License

Service:Issuing re-export license
Why do I need to do this?Follow this user guide if you need a permanent or temporary re-export license for re-export of goods from the Maldives.
Where can I apply for the service?You can apply in person at MED
How long will the process take?Follow this user guide if you need a permanent or temporary re-export license for re-export of goods from the Maldives.
What are the fees and charges involved?None
Which documents do I need to submit? Document Check for:
1. Re-Export license application form
  • All required fields filled correctly
  • All documents listed in the application form are submitted
  • Signature (If applicant is an individual, his/her signature. If applicant is a business/government organisation, signature of an authorised person)
  • Seal (If applicant is a government entity or company)
2. Invoice stamped by Maldives Customs Service A copy of the invoice for items to be re-exported, with price officially endorsed and stamped by Maldives Customs Service
3. Copy of bonded warehouse registration

A copy of the bonded warehouse registration certificate issued by Maldives Customs Service

4. Copy of registration certificate Copy of registration certificate of business.
5. Re-export agreement (if applicable) Copy of the re-export agreement, if applicant is applying for permanent re-export license. • A re-export agreement is not required for temporary re-export licenses.
How do you apply for the service?
  1. Lodge application for re-export license at counter.
  2. If any information is missing, provide the required information. * If license cannot be approved, Ministry will inform you of the issue and instruct for amendment as applicable.
  3. If approved, receive original of re-export license and sign form as proof of receipt.
What would you receive at the end of the process? Original re-export license
Did you know:
  • You must have a registered business at the Ministry of Economic Development.
  • You must have a valid re-export agreement registered with the Ministry (in case of permanent re-export licenses).
  • You must have a copy of the invoice for items to be re-exported, officially endorsed and stamped by Maldives Customs Service.
  • You must have a copy of the bonded warehouse registration certificate issued by Maldives Customs Service
  • For all application types, ensure that any items prohibited by the Maldivian law, or allowed only with special permit are not included in list of items for export.
  • If you have to obtain clearances/permits from other relevant Ministries, ensure that any additional documents that should accompany the permit are also submitted along with the application.
  • If you wish to export items that have been imported to the Maldives for which they have paid import duty, the export license issued should state this.
  • License will not be issued to an export value larger than the equivalent of the maximum number of revenue stamps that can be put in the space allocated in the form.
  • The total value of estimated exports will be rounded off to the nearest 100.
  • A minimum of MVR 100 is required as total value of estimated exports in an year (CIF value) per export license.
  • Payment by cheque is acceptable only with bank guarantees.
References:
  • Export and Import Act of the Maldives
  •  Export and Import Regulation
  •  List of prohibited items for export


Customs Duties

Maldives Customs Service issues licenses to clients to carry out a number of functions in the Import/Export Industry. These licenses are for Customs Brokers, Importers, Exporters, Shipping Agents, Local Courier Agents, Bond Keepers, Bonded Warehouses, Entry/Exit Permits and Duty Free Shops. The Tariff rates for the products imported to and exported from the Maldives is governed by the Export Import act of Maldives (Law No:31/79) and its subsequent amendments.


Tax information

Tax rates on corporate income

TaxDescription Statutory tax rate Remarks
Business Profit Tax Companies, Partnerships and other Persons 15% On taxable profit in excess of MVR 500,000
Profit from sources outside the Maldives 5%
Withholding tax

(For more information: https://www.mira.gov.mv/bpt.aspx)

10%
Green Tax This tax payable by tourists who stay in tourist resorts, tourist hotels and tourist vessels in the Maldives. USD 6 per day Maldivians and resident permit holders who stay in resorts, hotels and vessels are not required to pay Green Tax.
GST (GOOD and Service Tax) General goods and services 6% Business exceeds MVR 1 million (approx. USD 64,850)
Tourism sector goods and services 12%
Tourism Land Rent Land area less than 200,000 square meters Rent is fixed at USD 1,000,000 (Lesser than USD1,000,000-USD 8 square meter) This rent is applicable for the purpose of land rent for tourist resort, tourist hotels and tourist guest houses
Land area 200,001-400,000 USD 1,500,000
Land lesser than 400,001 USD 2,000,000
Duty Free Royalty Cosmetic and perfume, liquor, tobacco and lighter, Sportswear, toys 12.5% All duty free shops in the Maldives are liable to pay a monthly royalty calculated as percentage of sales.
Electronic games, florist, 10%
Confectionary, leather products and clothing 7.5%
Jewelry, stationary, books and magazines 3.5%
Cameras and watches, electronic items 1.5%
Others 0.5%
Re-Export Royalty* Royalty is based on the FOB** value of exported goods. All the parties carrying out re-exported business
Company annual fees Public Company Rufiyaa 10,000/  
Private Companies Rufiyaa 2,000/

*Re-Export Royalty is levied under the Export Import Act (Law No.: 31/79) and is payable on all goods that are exported in its existing form or after further processing and manufacture, subsequent to being imported into the Maldives. Royalty is based on the FOB value of exported goods.

**Free on Board or Freight on Board


Other Tax

Goods and Services Tax (GST): 6% on general goods. Tourism service subject to 8% GSP.

Value Added Tax (VAT): None

Branch Income

15% income tax on income exceeding MVR 500,000

Income Determination

Inventory valuation as per IFRS, realized capital gains taxable, intercompany dividends are not taxable, foreign earned income taxable at 5%. Stock dividend is taxable.

Deductions

• Capital allowance given up to 100% of the asset value. Net operating losses can be carried forward up to five (5) years. • Payments to foreign affiliates allowed. • Interest allowed if paid to local banks. If not 6% is maximum allowed.

Group taxation policies

Companies taxable on the income of individual companies.

Withholding Tax

DividendsNil
Interest Nil
Royalties10% tax
Technical Fee 10% tax
Branch Profit 10% tax

Tax administration

All companies are required to file a final return within six months after the end of the business year and must pay the calculated taxes to Maldives Inland Revenue Authority (MIRA) within the period. All companies should submit an interim return before 31st January and 31st July every year.

Taxable incomes for non-residential companies and individuals

Non-resident companies are taxable at 5%. Individual income is not taxable.

Liberal trade regime:

According to the Maldives Import-Export Act (Law No: 31/ 79), the tariff rates for the products imported and exported are lower than many other countries. For example, tariff rates of over 50% are placed only on alcoholic products, tobacco and environmentally sensitive products. Other products have tariff rates lower than 50%. The table below will show you the tariff rates regarding the percentage of total products. The full tariff list is available on the website of Maldives Customs Service, http://www.customs.gov.mv/

0% tariff 41% of tariff lines
0-5% tariff 26% of tariff lines
20-35% tariff31% of tariff lines
>50% tariff2% of tariff lines

Personal Income Tax

There is no personal income tax in the Maldives. However, those persons engaging in business (either as a sole proprietor or otherwise) are subject to the provisions of the Business Profit Tax Act.


Rental Fee

Office

As at June 2016, rental fee for Office premises in Malé is approximately 1200- 3000 MVR per square foot per month, plus the electricity cost. However these fees are subject to infrastructure and other facilities that are provided in the office. Therefore the prices may vary.

Service Charges

Water

Description

Male tariff (MVR per month)

Maafushi Tariff (MVR per month)

Male/ Maafushi(USD per month)

Water for domestic consumption
0- 100 liters 22.00 65.00 1.43/$4.23
101-500 liters 70.00 75.00 4.56/$4.89
501 liters and above 95.00 95.00 6.19/$6.19
Fixed monthly charge 30.00 30.00 1.95/$1.95
Water for institutional consumption
All consumption 75.95 75 4.95/$4.89
Fixed monthly charge 30.00 30.00 1.95/$1.95
Water for commercial consumption
All consumption 101.26 100.00 6.60/$6.51
Fixed monthly charge 30.00 30.00 1.95/$1.95
Water from Kiosk
All Consumption 100 NA 6.51/NA

Telephone

Given below are the telecommunication charges for different telephone and broadband packages offered by Dhiraagu, Maldives.

Monthly charges for mobile and fixed service in the Maldives.

 

Mobile

Fixed

Remarks

Monthly Charge 100 (US$ 7.78) 30 (US$ 2.33) 30 days validity for pre- paid: monthly rental for fixed telephone
Call Charge (Per Minute) 2.7 MVR 0.25 MVR Peak. For fixed. Reefers to local call.
Usage Charge Included in voucher 9.26 (US$0.72) Mobiles allows 37minutes of peak time conversation with Rf 100 Voucher)
Total Charge 100 (US$ 7.78) 39.26 (US$ 0.72)  

Internet

Given below are the charges for different telephone and broadband packages offered by Dhiraagu, Maldives.

Fiber Broad Band

Package

Fiber 100M (350 GB)

Fiber 50 M (250 GB)

Fiber 15 M (135 GB)

Fiber 8 M (110 GB)

Download/Upload Speed 100M/ 20M 50M/ 10M 15M/ 3M 8M/ 2M
Allowance Unlimited Unlimited Unlimited Unlimited
Monthly Fee MVR 2,300 MVR 1,790 MVR 1,490 MVR 1,290

* Rates are subject to 6% GST.


Wireless Zone Service

 

1/2 hour access

2 hours access

10 hours access

30 hours access

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Fuel Cost

Fuel Supplies Maldives (FSM), incorporated on 18th December 2000 is now a joint venture between State Trading Organisation (STO) and the Maldives National Oil Company (MNOC) formed with the main objective of streamlining fuel distribution in the country and to offer easy and convenient access to fuel throughout the country. Until the formation of FSM, fuel distribution was managed by STO, which is also the principal importer of fuel in the Maldives. At its inception, the purpose of FSM was to create a company that would specialise in the distribution of fuel in the Maldives.

Diesel Price as at 13th June, 2016:
1 Liter- 0.67 USD Petrol
Price in Maldives as at 13th June, 2016
1 Liter- 0.64 USD

The Employment Regulations of the Maldives

The Employment Act 2008 governs the employment relationship in the Maldives. Employment Agreement signed between the employer and the employee supplements further regulation of the relationship. The genesis of the Act is the core eight conventions of the International Labour Organization. Certain employment practices of the Civil Service are also codified in the Act. According to this Act:

Fundamental Principle

  • No person shall be compelled or forced into employment
  • Non Discrimination: It is prohibited to discriminate amongst persons carrying out equal work either in the granting of employment, determination of remuneration, increase in remuneration, provision of training, determination of conditions and manner of employment, dismissal from employment or resolution of other employment related matters, based on race, colour, social standing.

Employment of Minors

  • Minimum age: Minor under the age of sixteen years shall not be employed except in connection with training associated with their education or deportment. Minor under the age of sixteen years who participate in the family's line of work of their own will shall be exempted from this principle.
  • No minor shall be employed in any work or employment or in conditions of work or employment that may have a detrimental effect on his health, education, safety or conduct.

Employment Agreement

There shall be a written employment agreement (consisting of one or several documents) between the employer and the employee. Such employment agreement shall include:

I. the name of the employee, permanent address, current address, identity card number or passport number, date of birth, nationality, emergency contact person’s name, address and phone number;

II. whether employment is permanent or temporary;

III. date of commencement of employment agreement;

IV. salary and other benefits;

V. method and guidelines for calculation of salary; obtaining guardian’s approval hours of work register of minors in employment health check penalty forms of employment agreement .

VI. pay day;

VII. days on which leave may be granted;

VIII. principles pursuant to which disciplinary measures may be taken against the employee due to his conduct;

IX. staff appraisal; and

X. manner of dismissal from employment.

Working Hours

  • No employee shall be required to work more than forty‐eight hours a week. This principle does not include overtime carried out in accordance with this Act.
  • No employee shall be required to work more than six consecutive days a week (on a day that is normally a day off or has been agreed as a day off), without being provided with twenty‐four consecutive hours of leave.
  • This Section does not prevent a person or persons employed at tourist resorts, tourist vessels or uninhabited islands designated for industrial projects from working an additional two hours a day.

Meal time

No employer shall require or authorise an employee to carry out the following:

i. work consecutively for more than five hours without allowing at least a thirty minute break for meal time; or

ii. require an employee to work during meal time.

Time for prayer and break time

Every employee shall be allowed fifteen minutes to pray during each prayer period in such a manner that it does not disrupt work.

Overtime

Employees shall not be required to work overtime except this has been agreed in the employment agreement.

An employee working overtime shall be paid 1 ¼ times his hourly working wage as overtime, and if working overtime on a Friday or a public holiday shall be paid 1 ½ times his hourly working wage as over time.

Leave Entitlement

- Legal annual leave and public holidays

- All employees should be given following leaves:

  • 30 days paid annual leave
  • 30 days paid medical leave
  • 10 days family responsibility leave
  • 05 days paternity leave
  • 60 days maternity leave

Payment Wages

Except for wages to be paid to a temporary employee, all other employees shall be paid at least on a monthly basis.

Temporary employees shall be paid on a daily basis in general. However the employer and the temporary employee can agree that such payments shall be made on a weekly, bi‐weekly or monthly basis.

Ramadan bonus

Each employee is entitled to a sum of money no less than one third of his monthly salary as a Ramadan bonus, payable before the beginning of Ramadan.

Denial of minimum wage

Any employer who pays an employee less than the minimum wage commits an offence. The employer shall be fined MVR 1,000 the first time when such offence is committed and shall be fined a sum that is not less than MVR 1,000 and is not more than MVR 3,000 when the second time such offence is committed.

Special labour standards to take heed of

At least 50% of employees must be locals in any investment. Maximum working hours per week are 48 hours.

Social welfare: insurance, pension, etc

All employers should contribute 7% of employee salary to retirement pension scheme of government

Brief information on labour union

Until 2008, trade union was not allowed in the Maldives. But due to the implementation of the employment act in 2008 and the ratification of the new constitution, trade union and right to work have been recognized. This environment encourages the labour movements.


Land Law

According to the Maldives land law, foreign people acquire right to land in two ways.

(I) Foreign ownership of land

(II) Long leases

Foreign ownership of land

Until July 2015, constitution prohibited foreign ownership of any part of Maldivian territory. But now foreigners will be allowed to buy land provided they invest more than $1bn. Because the parliament removed the constitutional restriction of foreign ownership of land, foreign investors will be able to buy 10% of the 298 square km (115 square miles) of naturally occurring land that make up the Maldives. And most importantly, the business project should be approved under an act of parliament enacted for the purpose.

Long leases

Foreign investor can have a long lease on real estate as provided in the relevant legal regime subject to the constitutional restriction that long leases to foreign investor can only be granted for a maximum term of 99 years. The term of long lease must also comply with different legal regimes, including Land Act (Law No.: 1/2002), Chapter 15 of the Constitution, Uninhabited Islands Act (Law No.: 20/98), Tourism Act (Law No.: 20/99), and nationalization.


Investment

Foreign investment in the Maldives are regulated by:

  • Law on Foreigners Doing Business in the Maldives (4/79);
  • Foreign Investment Act (25/79); and
  • Companies Act (10/96).

Procedure for Registration and Licensing by Foreign Investors

Foreigners or foreign entities wishing to engage in business in the Maldives require permission to do the same. The Foreign Investment Act has a two-track mechanism for foreign investment, one for those wishing to engage in tourism-related business activities and another for all other business activities.

Those who wish to engage in tourism-related business activities must apply to the Ministry of Tourism for a relatively straightforward permit, which is generally granted. There is, however, a certain level of protectionism practice regarding safari/live aboard vessels, thus, a foreign investment will only be allowed to engage in the business of operating or managing a live aboard or safari vessel if the vessel has more than 20 rooms (40 beds).

Once the permit from the Ministry of Tourism is granted, the investor can proceed directly to the incorporation of the entity in the Maldives.

For non tourism-related business activities, the investor must submit a proposal prepared according to given guidelines to the Ministry of Economic Development together with the requisite information. The Ministry of Economic Development will review the proposal before granting the permit.

A foreign investment agreement is entered into with all investors going through the Ministry of Economic Development route which, before the Business Profit Tax Act, levied a royalty on profits. The royalty regime has been abolished since the establishment of a tax regime under the Business Profit Tax Act.

Once approval for the activity is granted, a foreign investor can choose either to establish a new entity in the Maldives or to reregister a foreign entity as an entity permitted to do business in the Maldives.

Who is a ‘Foreign Person?’

A ‘foreign person’ means every person who is not a Maldivian citizen as explained in Article 9 of the Maldives constitution, and includes companies, partnerships, clubs, societies, and business entities registered overseas. A foreign person may choose, either to set up a company, partnership, re- register a company incorporated in a foreign jurisdiction or establish a branch of a foreign legal entity by incorporating or re- registering a business in the Maldives.

Currently, there are 2 regimes available for foreign investors to set up the business in the Maldives. (i) Normal regime governed under the Foreign Investment law (ii) Special Economic Zone (SEZ) regime governed under the Special Economic Zones Law

Normal Regime governing Foreign Investments

All foreign investment allowed under the normal regime is governed under the Business Registration Act and the Foreign Investment Act, which require both the investor and government, to enter into a foreign investment agreement. Tourism-related investment is subject to the Tourism Act (Law No. 2/99). Businesses in the Maldives can be undertaken through any of the following four legal vehicles, Companies; Partnerships; Sole Traders and Cooperative Societies, with each vehicle governed by a separate law. Foreign investment made in accordance with the normal regime follows a nondiscriminatory tax regime applied to all businesses operating in the Maldives. However, the government reserves the right to exempt selected foreign investment from the Business Profit Tax, provided such exemptions are covered in the foreign investment agreement.

Restricted Areas for Foreign Investments

  1. Retail sector
  2. Photography and related activities
  3. Passenger transfer service identified as retail sector, but can seek approval within the following conditions: - Only in instances, where 51% of the company is owned by a Maldivian (individual or a legal entity). - And where the company engages in provision of maritime transfer services on a wholesale basis by seeking contracts from resorts.
  4. Specific areas where local small businesses engage in
  5. Operation of bonded warehouse in the Customs area
  6. Water sports and related activities, (but can seek approval if foreign investors can engage in this sub-sector with at least 51% local shareholding).
  7. Souvenir trading and related business (wholesale and retail trade)
  8. Retail of mobile phone and related accessories
  9. Fishing within the Exclusive Economic Zone (EEZ) of the Maldives.
  10. Purchasing, processing and export of Skipjack tuna.

Foreign Investment Registration Procedure

There are the five major steps which is required to establish a business entity under the normal regime governed under the foreign investment law. Those are as follows:

Step 01 Lodge Foreign Investment Application at the Ministry of Economic Development

  • Application for foreign investment is available from the Ministry’s website; www.trade.gov.mv.
  • Walk-in meetings are available for all foreign investors, who may wish to discuss their proposal, prior to submitting an application.

Step 02 Getting the Foreign investment approval

  • An approval will be granted for the requested proposal in consultation with relevant government stakeholders and in accordance with the criteria specified in the Business Registration Act. (Law No.: 18/2014)
  • The standard processing time is 3 working days. However, in case of relevant line Ministries need to review the applications further, it may take 10-14 days for a decision on the application.

Step 03 Registration of a business vehicle

  • At the stage of lodging the foreign investment application, a decision will need to be made on the type of business vehicle to register the business subject to getting approval for the proposed business. The options available include Company, Partnership, or re-registering a company, which has been duly incorporated in another jurisdiction.
  • Application forms for registering as a legal vehicle are available from the Ministry’s website www.trade.gov.mv.

Step 04 Sign the Foreign Investment Agreement

  • Upon registering as a business vehicle, a foreign investment agreement (FIA) has to be signed with the Ministry of Economic Development. This agreement outlines the terms and conditions related to carrying out the specific business in the Maldives. For tourism sector investment, the said FIA needs not be signed with the Ministry of Economic Development. In such instances, where land is acquired through the government, a land lease agreement is signed with the Ministry of Tourism.

Step 05 Obtain licenses and permits

  • Depending on the type of business activity undertaken, an operating license or permit may need to be obtained.
  • Please refer to the section on Business Licenses for more details.

Special Economic Zones Regime:

In line with Government's agenda to deliver key pieces of infrastructure through or in partnership with local and foreign private investors, a Special Economic Zones (SEZ) Law was introduced in September 2014. 5.23. The SEZ Law grants special tax and non-tax incentives for large-scale investment projects of above US$150 Million, complying with strategic objectives of the Government as outlined in the Law. The strategic priorities as outlined in the SEZ Law include:

  1. Manufacturing and processing activities with a focus on export
  2. Transshipment port, international logistics, port, airport, bulk breaking, bunkering, docking services
  3. University, tertiary hospital, super specialty hospital, and research and development facilities
  4. Information Communication Technology (ICT) parks and related facilities
  5. International financial services
  6. Renewable energy, oil &gas exploration
  7. Initiatives that introduce new technologies to the Maldives.

In addition, the SEZ Law also outlines the process of submitting an investment proposal to the Board of Investment established under the Law. The Board of Investment is the principal authority making decisions with respect to all SEZ proposals submitted.

Investment Promotion and Incentives

Ministry of Economic Development is the central facilitation entity for foreign investment. The Ministry is tasked with the development of economic and investment policies, in consultation with other Government stakeholders; develop commerce and industrial activities in the country; attract and promote investments into the country; regulate imports, exports and re-exports; develop and promote exports and re-exports; register and regulate businesses, companies, partnerships and cooperative societies; develop and promote small and medium enterprises; set and regulate standards in metrology; develop and enforce intellectual property rights; act as the focal point related to all bilateral, regional and multilateral issues related to trade and commerce; set the policies, guidelines and create the necessary legislations and regulations to promote and regulate trade and economic development activities, maritime and land transportation sector, employment, labour and labour related issues and work related to international conventions and covenants already signed or has to be signed, related to the areas where the Ministry has the mandate. The ministry has specific agency call “Invest Maldives” especially for investment promotion.

Invest Maldives

Invest Maldives is the government agency entrusted with promoting, regulating and licensing foreign investments in the country. It is the first port of call for all foreigners keen on investing in the Maldives.

The process of registering foreign investment, as required by Law, is simple and straight forward. Prospective investor can expect to get its operations under way within 10 days from the date that all required documentation is submitted to Invest Maldives.

Invest Maldives will pave the way for speedy commercial operations by providing assistance for every stage of the investment process. The objective is to provide a one-stop-service for all investors wishing to invest in the Maldives

With regard to services, Invest Maldives plays an active role in supporting investors in their establishment and operations. The following are the main functions and services that are provided by Invest Maldives:

  • Marketing and promotion of the Maldives as an investment destination.
  • Providing information on the Maldives and potential areas of investment to prospective investors.
  • Providing information and guidance on investment approvals and business registration.
  • Disseminate in Co-ordination with line ministries in facilitating business operating licenses for investors.
  • Maintaining the co-ordination and dialogue process of strategic investment projects of the Government.
  • Registering foreign investment as required by law

Maldives Association of Tourism Industry (MATI):

Non-governmental, nonprofit organization was formed for the purpose of promoting tourism in the Maldives.

Maldives National Chamber of Commerce (MNCCI):

Members of MNCCI are persons engaged in commercial activities and those involved in developing trade and all other associated with trade or service.

Key sectors for Investment Promotion

Investing in the Maldives has numerous advantages and it is one of the places where businesses can achieve excellence on a global scale. The government of the Maldives has published a list of positive investments for foreign investors. However, the main reason for this list is to give a direction for foreign investors about areas where they can invest in the Maldives. The area within the tourism sector is always favorite for foreign investors. Fisheries, construction, agriculture, transportation and some other service sectors are the potential sectors where foreign investors are welcomed.

Why invest in the Maldives?

Maldives is a country with a natural beauty and growing economy. As mentioned earlier, the Maldives is performing well compare to some other small states. According to World Bank (2015), it has the highest GDP per capita in the South Asia region with USD 8,438. The community of the Maldives is well educated with 99.9% literacy rate. English is the main medium of instruction in the education system of the country. The Maldives is located in a strategic geographical location at the heart of the Indian Ocean, at the historical crossroads between the East and the West. The country has an extensive air transport network with international airports and domestic airports. It has ready accessibility to all islands via the world’s largest sea-plane operation and a developing marine transport system.

As mentioned earlier, tourism is the main contributor for 30% of Maldives’ GDP or almost 70% of foreign currency receipts. The most popular tourism establishment is seaside resorts. Resorts are built on “one island – one resort” concept. Building a tourist resort is an investment which has a great probability of high return. City hotels can be built in the Malé, the capital city, or other big islands. Guest houses are becoming more popular in the Maldives as they are cheap and require lower scale of investment, compared to City hotels or resorts. Safari vessels are also a good option to invest. Thanks to the natural beauty of the Maldives, it is worth visiting the beautiful islands once in a lifetime, where “Sea, Sun and Sand” is the biggest unbeatable advantage. In the Maldives, you will find natural white sandy beaches, underwater beauty, crystal clear water, blue sky and tropical weather that will make you wish to revisit.

Invest in the “Special Economic Zone”

As the main economic pledge of the current government, special area of the country has been finalized as “Special Economic Zone”. It is an area to build mega investment projects with strategic alliance of international investors. As mentioned in the SEZ Act (2014), some of the possible investment in the “Special Economic Zone” include; Industrial Estate Export Processing Zone (export of local goods or goods manufactured using local or imported items) Free Trade Zone (exports; offering transshipment, storage, warehousing, repacking, value addition or re-export operations) Enterprise Zone (distressed area designated for economic revitalization) Free Port (an island or geographical area aimed at tourism, retail trade etc…) Single Factory Export Processing Zone, Offshore Financial Services and High Technology Park (earmarked for developing or enhancing modern technology and technological innovations) Some of the special incentives for foreign investors of “Special Economic Zone” are; import duty is exempted for importation of capital goods for development management and operation of the Zone; exemption from business profit tax; exemption of goods and services tax for first 10 years; exemption of business profit tax from shareholder dividends; tax relief available period under specific guidelines; Tax credit available under specific guidelines; exemption from payment of withholding tax for first 10 years period; and relaxed rules to bring and recruit expats for employment.

Incentives for foreign investors

Below are some of the highly remarkable incentives for foreign investment within the territory of the Maldives, Invest Maldives (2014).

  • Foreigners are allowed to have 100% ownership
  • Legally supported investment guaranteed
  • Provision for overseas arbitration of disputes
  • Long term lease of land for large scale projects
  • Foreigners are allowed to use their own managerial, technical and unskilled workers.
  • No restrictions on foreign exchange.
  • Freedom to repatriate profits and capital proceeds
  • Exemption of import duty on raw materials.
  • Land ownership for the investment above USD 1 billion.

Legislation governing foreign investment

The source of law in the Maldives is based on the constitution and on the Islamic Sharia. Bills passed by the Citizens Majlis (the Parliament) become law after ratification by the president. The President ratified the WTO Agreement in March 2004, whereby it became law. However, there have been delays in implementing the Agreement. Major legislation on trade and investment in Maldives are as follows:

Title of legislation

  • Law governing foreign investment in the republic of Maldives, Law No.25/79
  • Law governing formation of public companies, Law No.23/72
  • Law of Contract, Law No. 4/91
  • Law on Doing Business in Maldives by Foreign Nationals, 1979 (No. 4/79)
  • Mortgage Law, 1993 (No. 9/93)
  • Law on Leasing Uninhabited Islands for Developing Tourist Resorts, 1994 (No. 3/94)
  • Consumer Protection Law, 1996 (No. 1/96)
  • Law on Prohibited Imports, 1975 (No. 4/75)
  • Partnership Law, 1996 (No. 9/96)
  • Company Law, 1996 (No. 10/96)
  • Law on Tourism, Law No. 15/79
  • Law on export and import, Law No.31/79
  • Law on registration on companies, Law No. 25/82

Types of Investment

Foreign investor may choose, either to set up an investment wholly owned by foreigners or form joint venture with Maldivian nationals or companies registered in the Maldives.

Option I : Proposal for registering joint venture investment.

Option II: Proposal for registering investment wholly owned by foreigners or legal entities incorporated outside of the Maldives.

A decision on all foreign investment proposals received by Invest Maldives, which meet the conditions, stated in either Option I or option II will be made and communicated to the investor within 7 working days, upon submission of all the relevant documentation.

Areas of investment

Potential investment opportunities for the keen investors are:

(i) Tourism and hospitality

(ii) Fisheries

(iii) Air and sea transportation

(iv) Infrastructure development

(v) Property development

(vi) Marine based industries e.g. fish processing, aquaculture and marine culture

(vii) Buy out shares in existing businesses

(viii) Participate as an investor in a new company


Bilateral Agreements

The Government of Maldives has established bilateral trade relations with several countries for the promotion and development of trade and economic relations. The followings are the bilateral agreements which the Maldives has with other countries.

Trade agreement between the Government of India and the Government of Maldives

The Indo-Maldives trade Agreement, which was entered into force from 31st of March, 1981, promotes the development of trade and economic relations between their respective countries within the framework of their laws, rules and regulations. This Agreement provides duty free market access to both the countries on a preferential basis in a phased manner. And also, all payments between the two countries shall be made in freely convertible currency, subject to foreign exchange regulations and other pertinent laws, rules and regulations effective in either country. Moreover, trade between two countries, the Contracting Parties shall encourage and facilitate the visit of commercial and technical representatives, groups and delegations of either party to the country of the other and the participation by either country in trade fairs and in arranging exhibitions of either country in the territory of the other, on terms to be agreed between their competent authorities.

Agreement on Trade and Economic Cooperation between China and the Maldives

The Agreement on Trade and Economic Cooperation between China and the Maldives was signed on 28th March 2004 and the purpose of this agreement are to achieve and enhance coordination and cooperation in the fields of standardization and conformity assessment and develop harmonized standards for the region and to facilitate intra-regional trade and to facilitate better access to the global market.

Trade and Investment Framework Agreement (TIFA) between the U.S. and the Maldives

This agreement signed on 17th October 2009 and it leads to enhance the spirit of cooperation, expand trade and strengthen economic relations between the two countries.

USA Investment Incentive Agreement (OPIC)

USA Investment Incentive Agreement came into force on 15th March 2015. And the major objective of this agreement is to facilitate financial resources for investment by US companies in other countries.

Agreement on Economic, Commercial and Technical Cooperation between the Maldives and Qatar

Agreement on Economic, Commercial and Technical Cooperation between the Republic of Maldives and Qatar was signed on 15th April 2013. It has strengthened the relationship between the two countries in the areas of economic, commercial and technical cooperation for the mutual benefit of two countries and promotes and facilitates export and import of industrial and agricultural products, services, as well as raw materials.


Regional Agreements

Agreement on South Asia Free Trade Area (SAFTA):

The Agreement on South Asian Free Trade Area (SAFTA) came into force since 1st January, 2006. India, Pakistan and Sri Lanka are categorized as Non-Least Developed Contracting States (NLDCS) and Bangladesh, Bhutan, the Maldives and Nepal are categorized as Least Developed Contracting States (LDCS). Afghanistan which became the eighth member of SAARC during the 14th SAARC Summit held on 3-4 April 2007 in New Delhi is due to become a party to the SAFTA Agreement as an LDC member.

Objectives: The objectives of this Agreement are to promote and enhance mutual trade and economic cooperation among Contracting States by, inter-alia:

  1. Eliminating barriers to trade and facilitating the cross border movement of goods between the territories of the Contracting States;
  2. Promoting conditions of fair competition in the free trade area, and ensuring equitable benefits to all Contracting States, taking into account their respective levels and pattern of economic development;
  3. Creating effective mechanism for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes; and
  4. Establishing a framework for further regional cooperation to expand and enhance the mutual benefits of this Agreement.

SAARC Preferential Trading Arrangement (SAPTA)

The Agreement on SAARC Preferential Trading Arrangement (SAPTA) which envisages the creation of a Preferential Trading Area among the seven member states of the SAARC, namely Bangladesh, Butan, India, the Maldives, Nepal, Pakistan and Sri Lanka was signed in Dhaka in April 1993.The objective of the SAPTA is to promote and sustain mutual trade and the economic co-operation among the member states through exchange of trade concessions. SAPTA therefore is the first step towards higher levels of trade and economic co-operation in the region.

SAARC Agreement on Trade in Services (SATIS)

The objective of the Agreement is to promote and enhance trade in services by establishing a framework for liberalising and promoting trade in services within the region. Under this agreement member countries are required to progressively liberalize their services sectors in order to promote and enhance trade among them.

The Agreement was signed by all Member States during the 16 SAARC Summit held in 2010. The Government of Maldives has not yet opened up any services sectors under the Agreement.


Multilateral Agreements

The Maldives has been a contracting party to the General Agreement on Tariff and Trade (GATT) since 19 April 1983. In addition, the Maldives is also a founder member to the World Trade Organization (WTO) on 31 May 1995.

As a Member of the WTO, the Maldives accords MFN treatment to all WTO Members. During its Trade Policy Review in 2009, the Maldives has stated that it wanted a quick and positive outcome of the Doha Development Agenda (DDA), especially with regard to technical assistance and the "aid for trade initiative", both of which would contribute to its development and improve its compliance with WTO Agreements.

In 2008, the Maldives appointed an ambassador to the WTO and accredited its United Nations mission in Geneva to the WTO. These steps will ensure increased participation in WTO meetings, and thus greater understanding of WTO rules and proceedings.

In the WTO, at present, the Maldives is a member of the following groups in the negotiations: Asian Developing Members; G-90; Small, Vulnerable Economies (SVEs)-Agriculture, Small, Vulnerable Economies (SVEs)-NAMA; and Small, Vulnerable Economies (SVEs)-Rules.