An amendment to the Income Tax Act has been submitted to the People’s Majlis to increase the withholding tax levied on foreign contractors.
The amendment, aimed at raising the tax rate for non-resident contractors, was introduced by Mathiveri MP Hassan Zareer.
The proposed bill seeks to double the current withholding tax rate from five percent to 10 percent on the total gross payments made to non-resident contractors.
Under the proposed legislation, a non-resident contractor is defined as any party not resident in the Maldives that provides goods or services—either directly or through an arrangement—other than as an employee. This also includes parties that facilitate or authorize the provision of goods and services by others within the Maldives.
According to the cost estimate submitted alongside the bill, citing the Maldives Inland Revenue Authority (MIRA), this change to the Income Tax Act is projected to increase state revenue by an average of MVR 251 million.
