The government has decided to abolish the ‘ Remittance Tax ‘ which applies to money transferred abroad by foreign employees.
Sharuvash Adam, the Chief Financial and Budgeting Executive of the Finance Ministry, stated that the decision was made due to a reduction in financial transactions in money sent out of the country through the banks.
The Tax Policy Consultant of the Ministry, Arushad Jameel, noted that it was highly discriminatory to levy remittance tax on foreigners.
“The system is still not functioning well despite introducing the remittance tax. This tax is very discriminatory, it is imposed on certain people only. It is being implemented in low-income earners”, Arushad said.
Arushad said that with the implementation of the tax, the amount of money sent abroad by banks significantly decreased.
“As a result of imposing remittance tax, the salary was being given to expatriates in Maldives from foreign bank accounts, among other undesirable actions. When expatriates depart from Maldives, the tax is charged on the dollars they carry with them. We are not receiving a good revenue from this tax, which is why we have decided to scrap it all together”, he informed.
In 2016, the government introduced a remittance tax of three percent on expatriate employees. Under the law, remuneration must be deposited in the accounts of banks working locally for all expatriate employees in the Maldives. Employers who violate this law have been fined MVR 50,000.
Though expatriates send over $500 million in wages out of the country each year, the government received 101 million MVR as remittance tax last year. This is a drop compared to 2017 when MVR 114 million were received.