Registering SMEs in the Maldives

There are a myriad of laws, regulations and policies to wade through when setting up and running a business, whether it is a company aimed at exports abroad or set up as an online business tapping into the market through social media.

In order to register under the SME Act, the business has to submit an SME registration form and its business and taxpayer registration to the Ministry of Economic Development (MED). Meaning that prior to registering an SME, one has to first register as a business in the Maldives and also obtain a Tax Identification Number (TIN).

Business can be registered in the Maldives as; companies, partnerships, cooperatives and sole proprietorships. Though all applications need to be submitted to the MED, requirements for each are slightly different.

There are also a number of other registrations that are required for business operations. These include registration of logos, seals, shipping marks, trademarks and copyrights. Further, if a business is looking to import or export goods, import and export licenses, as well as re-export licenses are also needed.

Other specialist approvals will be needed if the business is to establish or operate any of the following: carnivals, fun fairs and night markets, pharmacies, shops, online trading, vehicles, vessels, workshops, factories, vehicle garages, carpentries, restaurants, cafés and canteens.

Restaurants, cafés and canteens also need a Certificate of Hygiene from the Maldives Food and Drug Authority.

Tourism or fishing related businesses also need to obtain permits from the Ministry of Tourism and the Ministry of Fisheries, Marine Resources and Agriculture respectively.

Registering to pay tax

Business Profit Tax

Under the Business Profit Tax (BPT), a 'business' is defined as any profession or vocation and every trade, commerce or manufacture of any other activity carried out with a view to making profits, excluding employment.

For all businesses registered with the MED, a separate tax registration does not need to be submitted to the Maldives Inland Revenue Authority (MIRA). Instead, registration for tax is done with the application to register the business.

After registration, MIRA issues the business a Tax Identification Number (TIN). If the business is adding new activities under its existing business structure, an application has to be made to register the new activity with MIRA, for which a new TIN will be issued. If the activity is registered with the MED, then this process is done automatically.

The penalty for not registering with MIRA is MVR50 per day for each day of delay, up to a maximum of MVR5,000.

Good and Services Tax

A separate application to register to pay Goods and Services Tax (GST) also has to be made if a tourism good or service is provided, if the business has an import license, or the total taxable sales of the business over the previous 12 months exceeds MVR1 million or estimated taxable sales for the next 12 months is over MVR1 million. 

The penalty for not registering with MIRA is MVR50 per day for each day of delay, up to a maximum of MVR5,000.

Income Tax

All businesses registered in the Maldives are required to file an Income Tax Return every year. This is not dependent on the level of income or profit generated. The documents that need to be submitted depend on the level of income derived.

For businesses with a total income above MVR10 million:

Profit or loss statement, notes to financial statements, statement of financial position, statement of cash flows, statement of changes in equity and auditors report. In the case of a company, a director's report also needs to be submitted.

For businesses with a total income below MVR10 million and opting for accrual basis accounting:

Profit or loss statement, notes to financial statements, statement of financial position, statement of cash flows and statement of changes in equity. In the case of a company, a director's report also needs to be submitted.

For businesses with total income below MVR10 million and opting for cash basis accounting:

Profit or loss statement and notes to the financial statements. In the case of a company, a director's report also needs to be submitted.

MFR Note: While this publication has made every effort to publish the most current information at the time of writing, please note that laws, and more often regulations, can change.