Banks begin charging Remittance Tax on cash withdrawals abroad

[vc_row][vc_column][vc_column_text]The Maldives Inland Revenue Authority has ordered banks operating in Maldives to impose Remittance Tax on cash withdrawals abroad, from accounts of expatriate workers in Maldives.

Pursuant to section 7 of the Remittance Tax Regulation, banks are required to charge Remittance Tax on cash withdrawn abroad from a bank account opened in the Maldives by a foreigner employed in the Maldives, from a date determined by the Commissioner General of Taxation.

Accordingly, the Tax Ruling TR-2016/R1 (Remittance Tax on cash withdrawals abroad) specifies that the last date on which cash can be withdrawn outside the Maldives by a foreigner employed in the Maldives without Remittance Tax being charged is 31 December 2016.

All banks began collection of Remittance Tax on withdrawals of cash abroad from a bank account opened in the Maldives by a foreigner employed in the Maldives, from 1 January 2017 onwards.

Such transactions made on or after 00:00 hrs of 1 January 2017 would be subject to Remittance Tax.

The Remittance Tax is a tax imposed on money transferred out of the Maldives by “foreigners employed in the Maldives”. Remittance Tax, which is collected at the rate of 3% of the remitted amount, came into effect on 1 October 2016.

It is imposed pursuant to the Fifth Amendment to the Employment Act (Law Number 22/2016), which was ratified by the President on 25 August 2016. “Foreigners employed in the Maldives” refers to “foreigners who have been issued a work visa pursuant to the Maldives Immigration Act (Law Number 1/2007) and foreigners who are not allowed to work in the Maldives without a work visa, even though such visa has not been issued or the visa has expired.”

Banks and money transfer agencies operating in the Maldives are responsible for collecting the tax from foreigners employed in the Maldives at the point of remittance.[/vc_column_text][/vc_column][/vc_row]