Forex bill removing $500 per tourist option set for 1-day committee review

Parliament's Public Accounts Committee on Wednesday decided to complete its review within one day of a government-proposed amendment to the Foreign Exchange Act that would remove the option allowing resorts to convert $500 per tourist arrival.

The bill, introduced by Holhudhoo MP Abdulsattar Mohamed of the ruling People's National Congress (PNC), was accepted by Parliament and referred to the Public Accounts Committee during Wednesday's sitting.

At a committee meeting later in the day, members decided to accept public comments on the bill until 11.30am on Thursday and complete the committee's review by the end of the day.

The proposal was submitted by Funadhoo MP Mohamed Mamdhooh of the PNC and seconded by Guraidhoo MP Hannan Mohamed Rasheed, an independent member. It was approved unanimously by members present at the meeting.

Under the Foreign Exchange Act, which was passed in late 2024 and came into effect in January 2025, resorts are required to convert part of their foreign currency revenue through banks.

Resorts, which are classified as Category A tourist establishments under the law, currently have two options. They can either convert $500 for each tourist arrival recorded during the month or convert 20 per cent of their monthly foreign currency revenue.

The proposed amendment would remove the $500-per-tourist option, requiring all resorts to convert 20 per cent of their 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 domestic banking system.

Category B tourist establishments, which include hotels, guesthouses and tourist vessels, currently have the option of converting either $25 per tourist or 20 per cent of monthly foreign currency revenue. The bill does not propose changes to these requirements.

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

Under the bill, the annual foreign currency revenue threshold at which non-tourism businesses become subject to mandatory conversion requirements would be raised from $15 million to $25 million.

Non-tourism businesses that are 100 per cent Maldivian-owned 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.

The amendment would also require every resort to open a designated account at a licensed bank operating in the Maldives for depositing its foreign currency earnings and to report the account details to the Maldives Monetary Authority (MMA).

The committee's decision to complete its review within a day comes as Parliament moves to conclude several bills before its recess.

Parliament on Wednesday voted to extend its current session until Thursday next week. The second session of the year had previously been scheduled to end this Saturday.

The foreign exchange amendment is expected to be put to a vote before Parliament enters recess. Under the bill, the changes are proposed to take effect on September 1.