The Maldives government will be discontinuing the levy of remittance tax from foreigners who send money abroad.
Speaking about this decision, the Chief Financial and Budget Executive of Maldives Ministry of Finance, Mr Saruvash Adam said that the discontinuation of remittance tax came as a move to reduce the “out-of-bank” money transactions that are commonplace since the said taxation became effective.
Backing on the decision, the ministry’s Tax Policy Consultant Mr Arushad Jameel also noted that the remittance tax was a discriminatory practice.
“The remittance tax still hasn’t become an effective tax method and it is also a highly discriminating system. The tax is levied on a significant portion of people, and following implementation the tax is collected from the lowest earning working group,” Mr Jameel explained.
Furthermore, he also highlighted that following implementation of the remittance tax the amount of money transfers abroad via banks reduced significantly.
Remittance tax became effective on 2016 following amendments to the Maldives Employment Act. Following the amendment, it was made mandatory for all expatriates employed in Maldives to deposit their salaries to locally opened bank accounts.
Any breach or violation of this was met with fines on the employer with an amount of MVR50,000. While expatriates employed in Maldives, transfer a total of USD500 million on annual terms, the revenue collected to state from the remittance tax in 2018 alone reached only MVR101 million.
The revenue in remittance tax in 2018 was a drop from the MVR114 million collected in 2017.