On 21 March 2019, MIRA published Tax Ruling TR-2019/B69 which amends Tax Ruling TR-2018/B65 (Employment Under a Contract of Service).
The ruling now classifies remuneration paid by a company to a director partnership to a partner, trust or body of persons to a member, as income from employment under a contract of service. This effectively means that such payments are not subject to the Business Profit Tax in the hands of the director, partner or member.
Additionally, the ruling also repeals Tax Ruling 2012/B8 which classified consideration received for services rendered by a director, partner, or member as part of the remuneration received by that director partner or member that requires to be ‘capped’ under Section 11 (d) of the BPT Act. Hence, with this Ruling, such consideration for ‘services rendered’ by such persons, will no longer be required to be capped under Section 11(d) of the BPT Act.
However, it is understood that, in addition to remuneration paid to directors, partners of members, if a salary is paid to them, that salary may still fall under the said remuneration cap.
The ruling takes effect from 21 March 2019.
Full details are available at the link below:
Source URL: Corporate Maldives