Major aspects of new forex bill
The Maldives Monetary Authority (MMA) has unveiled a new Foreign Exchange Bill, seeking public feedback before its enactment.
The Maldives Monetary Authority (MMA) unveiled a new Foreign Exchange Bill, seeking public feedback before its enactment. The bill aims to provide legal backing to the updated Foreign Exchange Rules and introduces significant changes to foreign exchange regulations for tourism businesses and other foreign currency-earning entities in the Maldives.
The bill revises how tourism businesses exchange foreign currency, with adjustments to the categorisation of some tourist services:
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Hotels in Residential Areas: Reclassified under "Category B," with a mandatory exchange rate of $25 per tourist.
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Safaris and Tourist Vessels: Now included in Category B, also with a $25 per tourist exchange rate.
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Resorts: Remain in "Category A," continuing the requirement to exchange $500 per tourist. However, exemptions are provided for specific cases, such as:
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Guests staying for less than an hour.
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Children under two years of age.
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Free accommodation arrangements.
Additionally, any non-tourism business generating $20 million in annual revenue must comply with the dollar exchange requirements.
The bill broadens the scope of businesses classified as foreign exchange earners:
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No Size Exceptions: Any business earning foreign currency, regardless of scale, must register with the MMA.
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Mandatory Local Bank Deposits: All foreign exchange earnings must be deposited into local banks.
The bill introduces a new category of businesses required to exchange a portion of their foreign currency earnings:
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Businesses not registered for TGST but earning over $20 million annually must exchange up to 25% of their monthly foreign exchange revenue.
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Specific businesses like seaplane operators and private oil companies will fall under this category.
The MMA is granted stronger legal authority to enforce compliance, including:
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Audit and Investigation Powers: The Maldives Inland Revenue Authority (MIRA) can audit businesses, seize documents, and conduct investigations.
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Fines for Non-Compliance:
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Failure to deposit foreign currency in banks: A penalty of 0.05% of monthly income, increasing by 0.05% daily until compliance.
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Failure to deposit the required amount: A penalty of 0.1% of monthly income, with daily increments of 0.1% until compliance.
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Other violations: Fines ranging from MVR 10,000 to MVR 1 million, depending on severity.
The Foreign Exchange Bill is set to take effect in January 2025. It is anticipated that the bill will pass parliamentary approval and receive presidential ratification before the parliament's recess on December 15. Until then, the current forex regulations remain in force.
Public comments on the proposed bill expired on Sunday.
