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Maldives
Why maldives?
Maldives Limited Liability Company (LLC)
This type of companies offer total ownership to foreigners with limited liability and a business profit tax rate of 5% on their earnings from outside of the country. That is the reason, most of the foreigners choose the LLC as the type of company to form their entity in Maldives. Moreover, in LLC the shareholders’ liabilities are limited to their contributions to the share capital.Sole Proprietorship
In Maldives, the sole proprietorship is the simplest form of business to operate. However, the sole proprietorship is not a legal entity and the business owner is personally responsible for its debts. Moreover, the sole proprietorship can operate under the name of its owner or a business name registered for the purpose.Partnership
There are two types of partnerships firm can be created under Maldives Partnership Act: General Partnership – General partnership is comprises of two or more partners who have unlimited liability and are jointly and severally liable for all the debts and obligations of the partnership. Limited Liability Partnership – This type of partnership exists as a separate legal entity distinct from its owners whereas the partner is not personally liable for any debts other than for the amount already invested in the partnership. This can be converted to a general partnership.Being an independent island country in the north central of Indian Ocean, Maldives consists of a chain of about 1,200 small coral islands and sandbanks, grouped in clusters, or atolls. Since 18th century its economy has developed rapidly, whereas the annual growth of gross domestic product (GDP) has been high. The country’s economy is mainly based on tourism, fishing, boat building, and boat repairing with the tourism sector driving a rapid growth. Maldives has entered the South Asian Free Trade Area (SAFTA) and signed a free trade agreement with China recently. Maldives is a major importer of goods including consumer goods such as food textiles, medicines, and petroleum products etc.
Advantages
Easy property and construction strategy
In Maldives, Labor cost and raw material expense are limited, which makes it economically beneficial for Business owners to establish an estate for their company. Moreover the paperwork is also online which saves both time and energy.Stable economy and transparent legal system
As it is well known that, especially since the Maldives government has opened plenty of opportunities for foreigners to benefit since the late 1980s, the country has become one of the best place for foreign investment.Investment incentives
Maldives continues its aim of attracting as much possible foreign investment into the country, especially investments which are capital intensive, enhance the transfer of technology and introduce new skills, all the while remaining environmentally friendly in the process. Actually, Maldives government encourages foreign investors from all sectors, big or small, to enter and operate their business in the Maldives.Entry visa made easy
With a free thirty days tourist visa to visit the country, a person can conduct research related to investing in the country. Moreover, all the foreign employee interested to proceed should go through the regular procedure of obtaining a work permit with the approval of the Government.Tax benefit
Maldives have signed number of tax treaties with other countries to avoid double taxation and eliminate the tax barriers.Simple Tax Regime
Corporate tax
In Maldives, tax residents are liable to be taxed on his worldwide income whereas, a non resident is liable to income tax in respect of income derived from Maldives. Following tax rates are applicable for different types of corporate taxpayers:
- Income not exceeding MVR 500,000 is liable to tax at a rate of 0%;
- Income more than MVR 500,000 is liable to tax at a rate of 15%.
Banks
The banking institutions are liable to tax at a rate of 25% of its taxable income. There is no threshold limit available for a bank.
Non resident international transport operators
In Maldives, the income derived by a non resident shipping or aircraft operator from transportation of passengers, livestock, mail, parcel, merchandise, or goods on a ship or an aircraft, which departs from a place located in Maldives, shall be subject to income tax at the rate of 2%.
Individual income taxes
A tax resident in Maldives is subject to income tax on worldwide income. A non resident and a temporary resident is taxable in to respect of income that is derived from Maldives.
Tax rate
An individual (resident, non resident, and temporary resident) shall be taxed on one’s taxable income at the following rates:
- Income not exceeding MVR 720,000 is liable to tax at the rate of 0%;
- Income more than MVR 720,000 but not exceeding MVR 1,200,000 is liable to tax at the rate of 5.5%;
- Income more than 1,200,000 but not exceeding 1,800,000 is liable to tax at a rate of 8.0%;
- Income more than MVR 1,800,000 but not exceeding MVR 2,400,000 is liable to tax at rate of 12.0%; and
- Income more than MVR 2,400,000 is liable to tax at a rate of 15%.
Maldives Companies
Maldives Limited Liability Company (LLC)
This type of companies offer total ownership to foreigners with limited liability and a business profit tax rate of 5% on their earnings from outside of the country. That is the reason, most of the foreigners choose the LLC as the type of company to form their entity in Maldives. Moreover, in LLC the shareholders’ liabilities are limited to their contributions to the share capital.Sole Proprietorship
In Maldives, the sole proprietorship is the simplest form of business to operate. However, the sole proprietorship is not a legal entity and the business owner is personally responsible for its debts. Moreover, the sole proprietorship can operate under the name of its owner or a business name registered for the purpose.Partnership
There are two types of partnerships firm can be created under Maldives Partnership Act: Genral Partnership – General partnership is comprises of two or more partners who have unlimited liability and are jointly and severally liable for all the debts and obligations of the partnership. Limited Liability Partnership – This type of partnership exists as a separate legal entity distinct from its owners whereas the partner is not personally liable for any debts other than for the amount already invested in the partnership. This can be converted to a general partnership.
The country’s economy is mainly based on tourism. Tourism is the largest industry in the Maldives, accounting for 28% of GDP and more than 60% of the Maldives’ foreign exchange receipts. Other industries such as fishing, boat building, and boat repairing with the tourism sector have been driving a rapid growth. Maldives has entered the South Asian Free Trade Area (SAFTA) and signed a free trade agreement with China recently. Maldives is a major importer of goods including consumer goods such as food textiles, medicines, and petroleum products etc.
Author: Chandrawat & Partners
Topic: About Maldives
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