Corporate Income Tax in the Maldives: A Comprehensive Guide
The Maldives, an archipelago nation renowned for its pristine beaches and vibrant marine life, also boasts a well-defined corporate income tax system. Understanding this system is crucial for businesses operating within the country's borders.
Methodology for Calculating Corporate Income Tax
The Maldives Revenue Authority (MRA) employs a straightforward approach to calculating corporate income tax. The process involves:
- Determining the company's taxable income by deducting allowable expenses from its gross income.
- Applying the applicable tax rate to the taxable income to arrive at the tax liability.
Applicable Corporate Tax Rates
The Maldives has a single corporate income tax rate of 15%. This rate applies to all companies, regardless of their size or industry.
Definition of Taxable Income
Taxable income for corporations in the Maldives encompasses various forms of revenue, including:
- Business profits
- Investment income
- Rental income
- Royalties
- Capital gains
Exemptions from Corporate Income Tax
Certain types of income are exempt from corporate income tax in the Maldives. These include:
- Dividends received from other Maldivian companies
- Interest earned on government securities
- Income derived from tourism activities in designated tourist zones
Legal Framework Governing Corporate Income Tax
The legal framework for corporate income tax in the Maldives is primarily governed by the Income Tax Act (Law No. 10/2011). Key provisions of this act include:
- Article 12: Defines the scope of taxable income for corporations.
- Article 13: Specifies the applicable corporate income tax rate.
- Article 14: Outlines the exemptions from corporate income tax.
Conclusion
The Maldives' corporate income tax system is designed to be transparent and straightforward, fostering a favorable environment for business growth and investment. By adhering to the provisions outlined in the Income Tax Act, companies can ensure compliance and contribute to the nation's economic development.
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