Maldives mandates tourism businesses to deposit all foreign currency in banks

The Maldives Monetary Authority (MMA) on Tuesday introduced a new regulation requiring all foreign currency income generated by the tourism industry to be deposited in local banks.

As per the regulation, businesses active in the tourism industry and registered with the Maldives Inland Revenue Authority (MIRA) are required to re-register with MMA within 30 days. New registrants must also comply with this rule within the same timeframe.

Goods and service providers in the tourism sector are now required to submit details of their offerings to the MMA before the 28th of the following month.

The total foreign currency earnings must be deposited into a local bank’s foreign currency account, registered with MMA, within 87 days after the end of each month.

The regulation also specifies that transactions within the country must be conducted in Maldivian Rufiyaa, with certain exceptions. These include government-related transactions, remittances, foreign transactions, and sales to tourists, among others.

Any transaction made in foreign currency outside of the exempted categories will face fines ranging from MVR 10,000 to MVR one million.

Violations of other clauses in the regulation could also result in fines up to MVR one million.

In a second regulatory change, MMA has amended the Foreign Currency Regulation, requiring tourism facilities to exchange a portion of their foreign currency earnings through local banks.

For resorts, hotels, and tourist vessels (Category A), $500 per guest must be exchanged.

Guesthouses (Category B) are required to exchange $25 per tourist.

Lower exchange requirements are allowed in cases of tax payments in foreign currency, debt repayment, or court-ordered arrangements.

Last year, the Maldives saw 1.8 million tourist arrivals, with 1.5 million staying at resorts.

The MMA expects the new regulation to lead to an increase in foreign currency exchanges from the tourism sector, potentially boosting exchanges from 3 percent of total tourism revenue to 15%.

This is the first time the Maldives has made such an exchange mandatory. With this regulation, the Monetary Regulation of 1987 is now void.

MMA noted that these changes will increase the foreign exchange available to businesses and the public, while also facilitating the MMA’s ability to supply foreign currency to the market.