Govt submits bill to end $500-per-tourist forex option for resorts

The government on Wednesday submitted a bill to Parliament seeking to remove the option that allows resorts to meet their foreign exchange conversion requirement by exchanging USD 500 for each tourist arrival.

The proposed amendments to the Foreign Exchange Act were introduced during Wednesday's parliamentary sitting by Holhudhoo MP Abdulsattar Mohamed of the ruling People's National Congress (PNC) on behalf of the government.

The Maldives Monetary Authority (MMA) had shared details of the proposed changes with the media on Tuesday.

Under the Foreign Exchange Act, passed by Parliament in late 2024 and brought into force in January last year, resorts are required to convert part of their foreign currency earnings through banks.

Resorts currently have two options to meet the requirement. They can either convert USD 500 for each tourist arrival recorded during the month or convert 20 per cent of their total monthly foreign currency revenue.

The amendment seeks to remove the USD 500-per-tourist option.

If the bill is passed, resorts will be required to convert 20 per cent of their total monthly foreign currency revenue.

The change is expected to increase the amount of foreign currency that resorts with higher revenue per guest are required to convert through the banking system.

Under the Act, resorts are classified as Category A tourist establishments.

Other tourism businesses, including safari vessels, hotels and guesthouses, fall under Category B. These establishments can currently choose between converting USD 25 per tourist or 20 per cent of their monthly foreign currency revenue.

The bill does not propose changes to the conversion options available to Category B establishments.

The bill also proposes changes to foreign exchange requirements for businesses outside the tourism sector.

Under the amendments, the annual foreign currency revenue threshold at which non-tourism businesses become subject to mandatory conversion requirements would increase from USD 15 million to USD 25 million.

Non-tourism businesses that are wholly owned by Maldivians would be required to convert 7 per cent of their foreign currency revenue.

Businesses that are not wholly Maldivian-owned would continue to be required to convert 20 per cent of their foreign currency revenue.

The amendments also seek to require every resort to open a designated account with a licensed bank operating in the Maldives for the deposit of its dollar earnings. Resorts would be required to report details of the account to the MMA.

The existing law requires an account for such deposits but does not expressly require it to be maintained with a bank operating in the Maldives.

The proposed changes form part of measures being introduced by the government and MMA to increase the amount of foreign currency entering the domestic banking system.

Parliament is expected to consider the legislation before it enters recess next week. Under the bill, the amendments are scheduled to take effect on 1 September.