A withholding tax on employment income comes into force for the first time in the country’s history on Wednesday.
The withholding tax levied on an employee’s income, mandates employers to deduct applicable tax payments from the incomes of their employees who are subject to the tax, and file the tax payments with Maldives Inland Revenue Authority (MIRA).
According to MIRA, any income derived by “a resident in the Maldives is subject to tax in the Maldives irrespective of where the income is sourced”. Taxable income includes allowances and benefits received by an employee, whether received in cash or in-kind.
As per legislation, any income earned up to MVR 60,000 is exempt from income tax. Thereafter, a 5.5 per cent and 8 per cent withholding tax will be charged from individuals receiving an income between MVR 60,000-100,000 and MVR 100,000-150,000, respectively.
Additionally, individuals receiving an income between MVR150,000-200,000 and MVR200,000 and above will be imposed a withholding tax of 12 per cent and 15 per cent respectively.
The Maldives Inland Revenue Authority has publicized deadlines for filing tax returns and payments.
Income Tax Deadlines #AamdhaneenNegeyTax#IncomeTaxMv pic.twitter.com/krHfIXHfPJ
— MIRA (@MIRAmaldives) April 1, 2020
Although the collection of income tax on remuneration comes into effect from April 1 onwards, the government had commenced collecting income tax on business profits, revenue generated by leasing movable and immovable assets, dividend, interest, annuity, pension and retirement benefits, salary earned by beneficiaries, technical service fee, commissions and royalties, on January 1.
President Ibrahim Mohamed Solih ratified the Income Tax Bill on December 17, 2019. Collecting income tax was amongst key electoral pledges of President Solih’s presidential campaign in 2018.
Ministry of Finance estimates that the state will generate annual revenue of MVR 450 million through income tax alone.
A total of 3,200 individuals are eligible to pay the withholding tax.
Full details are available at the link below:
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