Income Tax return in Maldives
Income Tax return in Maldives
Self – Assessment tax system is existed in Maldives. In this system, the taxpayers are responsible to pay the required amount of tax in a certain date and the taxpayers don’t need to wait for the Maldives Inland Revenue Authority (MIRA) on submission of income tax return in Maldives or payment of tax. Under section 30 of the Tax Administration Act, MIRA has the power and ability to conduct audits on the taxpayers to make sure that the declared amount of tax is paid by the taxpayer correctly and timely and assesses the correct tax liability if it has been computed incorrectly. Voluntary compliance makes MIRA easy to focus on the resources and at the same time on the taxpayers who don’t comply with the rules and regulations. If it is found a taxpayer don’t pay the certain amount of tax during the audit, MIRA will issue a notice to the taxpayers to pay additional amount of tax. Maldives Inland Revenue Authority (MIRA) will conduct criminal investigations on such taxpayers if they have lack of solid ground to believe or find tax fraud. In Maldives, there is a kind of charged tax called BPT on profits which is derived by business and levied in case of exceed MVR 500,000 (approx. USD 32,425) in a tax year. The taxation of business profits is governed by the Business Profit Tax Act and its subordinate regulation, the Business Profit Tax Regulation where all activities carried on making a profit including any profession or vocation is considered as a business in BPT purposes except for employment. In general, BPT is imposed at the rate of 15% on such non-resident companies, partnerships along with other persons who are currently carrying out business in the Republic of Maldives. The rate of BPT is applied considering the following areas such as:
- Net rent received from the lease of land and building in the Maldives
- Taxable profits which are attributable to any business carried on permanent establishment
- The resident and non-residential person of Maldives should pay the royalties and management fees which will not be considered under the previous point.
BPT is applied at a concessionary 5% rate to taxable profits according to the provision which is passed to in an intention to encourage the establishment of offshore financial centers in Maldives. This profit is derived by such companies which source outside from Maldives though their origin in Maldives. Besides, such companies what are registered under the Companies Act of the Maldives and not resident another country along with their income deriving from bonds, shares, debentures, loans or other financial instruments will be under the BPT. If the person is not a resident of Maldives or even a resident of Maldives but carried his/her business outside of Maldives will also be under this tax legislation. It is recommended that all the taxpayers will prepare their accounts from 1 January to 31 December.
Returns and payments
First interim payment, second interim payment and the final payment are the three criteria of payment which should be paid. When the investors or applicants will make the interim payment, they must be submitted a Statement of Interim Payment according to Maldives Inland Revenue Authority (MIRA) – 303 as policy of income tax return in Maldives. Investors or applicants should bear in mind that when they will make the final payment, BPT return must be submitted according to MIRA – 304 and this return should be accompanied by financial statements.
- As income tax return in Maldives process the deadlines are described in the below for filing up the Statement of Interim Payment, BPT Return and paid amount of tax.
- Paying the first interim payment which should be accompanied the Statement of Interim Payment, investors or applicants must pay half of the tax payable for the previous tax year and by 31 July of the same tax year.
- Paying the second interim payment which should be accompanied by the Statement of Interim Payment, investors or applicants must pay half of the tax payable for the previous tax year and by 31 January of the upcoming tax year.
- Paying the final payment which should be accompanied by a BPT return, investors or applicants must pay the balance after getting deduced the interim payments from the tax liability for the current tax year and by 30 June of the upcoming tax year.
If the investors present their financial statements in Maldivian Rufiyaa, they must pay BPT to MIRA in Rufiyaa, on the other hand, there is an opportunity for the investors who can make their payment in either United States Dollars or Rufiyaa if they present with the United States Dollars. Foreign investors choose the second option and they convert the amount of USD to Rufiyaa where the exchange rate of USD 1 = MVR 15.42.
Income tax submission process
If the annual turnover exceeds of MVR 10,000,000 (approx. USD 648,508), audited financial statements have to submit the signed by a MIRA-registered auditor with BPT Return of the investors.
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