Proposed forex bill caps foreign exchange at 25% of revenue, replacing $500 per guest rule

Maldives Monetary Authority (MMA) has shared a draft of a proposed foreign exchange bill with stakeholders, inviting comments before a December 1 deadline.

The bill introduces major changes to the existing October 1 foreign exchange regulations, aiming to address foreign currency management and compliance in the country.

Key changes in the bill

• Payments in Maldivian Rufiyaa: Under the proposed law, residents of the Maldives will not be required to pay for goods and services in foreign currency. Exceptions will be made only for transactions explicitly permitted by the law.
• Deposit of foreign exchange earnings: Businesses earning more than USD 20 million annually in foreign exchange will be required to deposit their earnings in a bank account in Maldives.
• Tourist sector reclassification: Tourist hotels located in inhabited islands with less or more than 50 rooms and tourist vessels like liveaboards will be moved to Category B.
• Changing $500 per tourist to percentage exchange: The draft law introduces a cap on foreign exchange allocation. No more than 25% of foreign exchange earnings shall be exchanged at a local bank under MMA regulations unlike the current rule of $500 per tourist.
• Exemptions from exchanging foreign exchange: Certain categories are exempted from the requirement to exchange foreign exchange earnings, including tourists staying less than 24 hours in the Maldives, children under two years of age, and guests receiving free or complimentary accommodation.
• Exemption for foreign-registered tourist vessels: Tourist vessels registered outside the Maldives are excluded from the scope of the law, aligning with international maritime practices.

On October 1, MMA had amended the Foreign Currency Regulation, requiring tourism facilities to exchange a portion of their foreign currency earnings through local banks.

For resorts, hotels, and tourist vessels (Category A), $500 per guest must be exchanged.

More than 50 resorts in the Maldives have formally expressed opposition to the new MMA rule that requires tourism businesses like resorts to exchange $500 per tourist.