The Maldives Inland Revenue Authority (MIRA) has introduced amendments to its regulations, mandating that individuals and businesses earning in foreign currency must now pay their Income Tax in U.S. dollars.
In a statement released last night, MIRA announced the changes, which stipulate that those who receive earnings in foreign currency are required to file their Income Tax statements and make payments in U.S. dollars, in accordance with the Income Tax Act. The amendments specify that taxpayers whose functional currency is in foreign currency must submit their income tax and interim statements in USD and settle their tax obligations, including interim payments, in the same currency.
The regulation also applies to withholding taxes for non-resident entities, employee withholding taxes, and capital gains withholding taxes, all of which must now be paid in dollars if the taxpayer's functional currency is foreign. This new requirement for withholding taxes will take effect starting in November.
These adjustments come following a Cabinet decision last month aimed at addressing the country's ongoing dollar shortage. In line with that decision, businesses earning in foreign currency will also be required to pay pensions and customs duties in USD.
The government, alongside the Maldives Monetary Authority (MMA), is exploring further measures to retain U.S. dollars in the domestic economy as part of broader efforts to stabilize the nation's currency reserves.
