Beyond corporate and personal income taxes, the Maldives imposes a range of specific taxes that contribute to the country's fiscal landscape. These taxes encompass various aspects of economic activity and aim to achieve specific policy objectives.
Value-Added Tax (VAT)
VAT is a consumption tax levied on the sale of goods and services within the Maldives. It is a comprehensive tax that applies to most business transactions, with a standard rate of 6%. Certain essential goods and services, such as food and healthcare, are exempt from VAT.
Tourism Goods and Services Tax (TGST)
TGST is a specific tax imposed on tourism-related goods and services, such as hotel accommodation, restaurant meals, and tour operator services. The TGST rate is 12%, and it is intended to generate revenue from the tourism sector, which is a significant contributor to the Maldivian economy.
Business Profit Tax (BPT)
BPT is a tax levied on the net profits of businesses operating in the Maldives. The BPT rate is 15%, and it applies to both domestic and foreign companies. BPT is the primary source of corporate tax revenue for the government.
Withholding Tax
Withholding tax is levied on certain types of income, such as dividends, interest, and royalties, paid to non-resident individuals and companies. The withholding tax rate varies depending on the type of income and the recipient's country of residence.
Property Transfer Tax (PTT)
PTT is a tax imposed on the transfer of real estate property in the Maldives. The PTT rate is 10%, and it is payable by the buyer of the property. PTT is a significant source of revenue for the government, particularly in the tourism sector, where foreign investors often purchase property.
Stamp Duty
Stamp duty is a tax levied on various legal documents, such as contracts, deeds, and agreements. The stamp duty rate varies depending on the type of document and its value. Stamp duty is a minor source of revenue for the government.
Environmental Protection Tax (EPT)
EPT is a tax imposed on activities that have a negative impact on the environment, such as pollution and waste disposal. The EPT rate varies depending on the type of activity and the level of environmental impact. EPT is intended to discourage harmful environmental practices and promote sustainable development.
Taxpayers Subject to Specific Taxes
The taxpayers subject to specific taxes in the Maldives vary depending on the type of tax.
- VAT: Businesses engaged in the supply of goods and services within the Maldives are liable for VAT.
- TGST: Businesses providing tourism-related goods and services are liable for TGST.
- BPT: Domestic and foreign companies operating in the Maldives are liable for BPT.
- Withholding Tax: Non-resident individuals and companies receiving certain types of income from the Maldives are liable for withholding tax.
- PTT: Buyers of real estate property in the Maldives are liable for PTT.
- Stamp Duty: Parties involved in transactions subject to stamp duty, such as property buyers and parties to contracts, are liable for stamp duty.
- EPT: Businesses and individuals engaged in activities that have a negative impact on the environment are liable for EPT.
Purpose and Rationale
The specific taxes imposed in the Maldives serve various purposes and aim to achieve specific policy objectives.
- VAT: VAT is a major source of government revenue and contributes to funding public services and infrastructure development. It also promotes economic growth and fiscal stability.
- TGST: TGST generates revenue from the tourism sector, which is a vital part of the Maldivian economy. It also helps to ensure that tourists contribute to the country's development.
- BPT: BPT is the primary source of corporate tax revenue for the government. It contributes to funding public services and infrastructure development.
- Withholding Tax: Withholding tax ensures that non-resident individuals and companies pay their fair share of taxes on income earned in the Maldives.
- PTT: PTT generates revenue from the sale of real estate property, particularly in the tourism sector. It also helps to regulate the real estate market and discourage speculative investment.
- Stamp Duty: Stamp duty contributes to government revenue and helps to ensure the validity and enforceability of legal documents.
- EPT: EPT aims to discourage harmful environmental practices and promote sustainable development. It generates revenue that can be used to fund environmental protection measures and conservation efforts.
Legal Framework
The specific taxes in the Maldives are established and governed by various legal statutes and regulations. These include:
- Tax Administration Act (2010)
- Value-Added Tax Act (2011)
- Tourism Goods and Services Tax Act (2011)
- Business Profit Tax Act (2014)
- Withholding Tax Act (2015)
- Property Transfer Tax Act (2016)
- Stamp Duty Act (2017)
- Environmental Protection Tax Act (2018)
These legal frameworks outline the obligations, rates, and procedures for the collection and enforcement of specific taxes in the Maldives. They ensure compliance and facilitate revenue collection for the benefit of the Maldivian economy and society.
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