The Maldives operates a territorial tax system, meaning that income tax generally applies only to income sourced within the Maldives. Both employers and employees have specific tax-related obligations to fulfill. Understanding these obligations is crucial for businesses operating in the Maldives to ensure compliance and avoid penalties. The tax system in the Maldives is governed by the Maldives Inland Revenue Authority (MIRA).
This guide provides an overview of employer tax obligations and employee tax deductions in the Maldives for 2025, covering social security contributions, income tax withholding, available deductions, compliance deadlines, and special considerations for foreign workers and companies.
Employer Social Security and Payroll Tax Obligations
Employers in the Maldives are required to contribute to the Maldives Retirement Pension Scheme (MRPS) and pay other payroll taxes.
- Maldives Retirement Pension Scheme (MRPS): Both employers and employees contribute to the MRPS. As of 2025, the contribution rate is typically 7% of the employee's monthly wage for both the employer and the employee, totaling 14%.
- Other Payroll Taxes: There are currently no other mandated payroll taxes beyond the MRPS in the Maldives. However, employers must register with MIRA and comply with all relevant tax laws and regulations.
Income Tax Withholding Requirements
Employers are responsible for withholding income tax from their employees' salaries and remitting it to MIRA. Income tax, known as Income Tax, applies to taxable income exceeding a certain threshold.
- Taxable Income: Taxable income includes wages, salaries, allowances, and other benefits provided to employees.
- Income Tax Rates: As of 2025, the income tax rates are progressive. The tax brackets are as follows:
| Taxable Income (MVR) | Tax Rate |
|---|---|
| 0 - 60,000 | 0% |
| 60,001 - 120,000 | 6% |
| 120,001 - 180,000 | 8% |
| 180,001 - 240,000 | 10% |
| 240,001 - 300,000 | 12% |
| Above 300,000 | 15% |
- Withholding Calculation: Employers must calculate the income tax to be withheld from each employee's salary based on the applicable tax rates and thresholds. MIRA provides guidelines and tools to assist employers with this calculation.
Employee Tax Deductions and Allowances
Employees in the Maldives may be eligible for certain tax deductions and allowances that can reduce their taxable income.
- MRPS Contributions: Employee contributions to the MRPS are tax-deductible.
- Approved Donations: Donations to approved charitable organizations may be tax-deductible, subject to certain limits.
- Other Allowances: Specific allowances may be available as per the prevailing tax laws, such as allowances for medical expenses or education. It's important to consult the latest MIRA guidelines for a comprehensive list.
Tax Compliance and Reporting Deadlines
Employers must comply with specific tax reporting and payment deadlines to avoid penalties.
- Monthly Tax Payments: Withheld income tax and MRPS contributions must be remitted to MIRA on a monthly basis. The deadline for payment is typically the 15th of the following month.
- Annual Tax Returns: Employers are required to file an annual tax return with MIRA, reporting the total income tax withheld and MRPS contributions made during the year. The deadline for filing the annual return is usually within three months after the end of the tax year (calendar year).
- Record Keeping: Employers must maintain accurate records of all payroll transactions, including salaries, wages, allowances, deductions, and tax withholdings. These records should be kept for at least five years.
Special Tax Considerations for Foreign Workers and Companies
Foreign workers and companies operating in the Maldives are subject to specific tax rules and regulations.
- Tax Residency: Foreign workers who reside in the Maldives for more than 183 days in a calendar year are generally considered tax residents and are subject to income tax on their worldwide income. However, the Maldives operates a territorial tax system, so only Maldives-sourced income is typically taxed.
- Work Permits: Foreign workers must obtain a valid work permit from the relevant authorities before commencing employment in the Maldives.
- Double Taxation Agreements: The Maldives has double taxation agreements (DTAs) with certain countries. These agreements may provide relief from double taxation for foreign workers and companies. It's important to check the specific provisions of the applicable DTA.
- Corporate Tax: Foreign companies operating in the Maldives are subject to corporate tax on their profits sourced within the Maldives. The corporate tax rate is generally 15%.
- Goods and Services Tax (GST): Businesses with a turnover exceeding MVR 1 million per annum are required to register for GST. The GST rate is generally 6% for tourism sector and 8% for general sector.
