Hire Employees in the Maldives

Two routes exist. Registering a Maldivian entity gives you direct employment, a quota allocation and the ability to sponsor expatriates, followed by registration with MIRA and the Pension Office.

An Employer of Record removes that setup. The EOR is the legal employer, runs payroll, withholds income tax and remits pension, while day-to-day direction stays with you.

The quota is the real gate. Expatriate hiring is capped by an allocation on the Expat System, and local hiring quotas apply particularly in tourism and hospitality. That process, not payroll setup, is what sets the timeline.

Employer cost here is unusually simple: 7% of basic salary and nothing else. There is no separate social security charge, and the Aasandha health scheme is funded by the state rather than by contributions.

But two features narrow the base considerably. Pension applies only to local employees aged 16 to 65, so expatriates attract no contribution at all. And the pensionable wage is basic salary, which in resorts is often a modest share of what staff actually earn, because service charge distribution sits outside it.

The talent market is competitive in hospitality, healthcare, engineering and construction, and resort packages commonly include accommodation, food, health insurance and transport on top of pay.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a Maldivian entity somewhere between 15 and 25 employees, though quota access often matters more than cost. Model both, see EOR vs Entity for the framework.

The Maldives Retirement Pension Scheme takes 14% of pensionable wage in total. 7% from the employer and 7% from the employee. It is established under the Pension Act and administered by the Maldives Pension Administration Office.

Coverage is limited to local employees between 16 and 65. Contributions stop at 65, members may draw down from that age, and early withdrawal opens at 55.

The employer may pay the whole 14%. The Act does not bar an employer from covering the employee share rather than deducting it, which is sometimes used as a retention lever. Employees may also make voluntary additional contributions into the same Retirement Savings Account.

Records must be kept for at least six years, salary sheets, the Statement of Pension Contribution and employment contracts.

Pension payouts are calculated from the account balance: divided over 168 months from age 65, or 264 months where early withdrawal applies, subject to a minimum monthly payment of MVR 5,000.

Gross monthly salaries in rufiyaa. Employer pension applies to basic salary only.

Benchmarks below are gross monthly salaries in rufiyaa. Employer pension applies to basic salary only, which in resorts can be a modest share of total earnings once service charge is included.

The income tax threshold is MVR 60,000 a month, not a year, and this is the single most common error in published guidance. Two current guides describe the exemption as MVR 60,000 of annual income, which is a twelvefold understatement of the threshold and would over-withhold heavily. The annual equivalent is MVR 720,000.

Above the threshold, the employee withholding bands under Income Tax Act 25/2019 run at 5.5%, 8%, 12% and 15%. Most employees fall below the threshold entirely and pay no income tax.

The pension comes off before tax. The taxable base is gross remuneration after the employee’s 7% has been deducted, and the bands then apply to what remains.

Both income tax and pension contributions are due by the 15th of the following month, tax to the Maldives Inland Revenue Authority, pension to the Pension Office.

The old Business Profit Tax was repealed at the end of 2019; business and personal income now sit in a single regime.

Employee withholding bands under Income Tax Act 25/2019, applied to monthly remuneration after the employee pension deduction. Annual boundaries are twelve times these figures.

The Employment Act governs employment, with pension under the Pension Act and taxation under Income Tax Act 25/2019.

Employees receive a comprehensive set of statutory protections including paid leave, pension and family-related benefits.

Tourism shapes pay structure more than statute does. Service charge distribution can substantially exceed basic salary in resorts, and because only basic salary is pensionable, headline earnings and pensionable wage can diverge widely.

Written contracts under the Employment Act are the basis of the relationship.

Register local employees with the MRPS before the first payroll run. Registration matters beyond pension itself: the number of Maldivian employees for quota purposes is verified against how many the employer has duly registered for pension.

Register with MIRA for withholding, and retain salary sheets, contribution statements and contracts for at least six years.

Working hours and overtime are governed by the Employment Act.

Because the pensionable wage is basic salary, overtime and service charge increase earnings without increasing the employer pension contribution.

Resort staff are commonly provided with accommodation and food, and health insurance and transport are frequently included in packages.

The Maldives observes national and Islamic public holidays, with Islamic dates confirmed by official announcement.

The Maldives observes national and Islamic public holidays. Islamic dates follow the lunar calendar and are confirmed by official announcement, so they can shift by a day or two. Dates and any substitution rules are set out below.

The pension scheme is the principal statutory benefit. Each member holds a Retirement Savings Account, visible through the Pension App or the Koshaaru portal.

A state Basic Pension of MVR 5,000 a month operates alongside, with 50% of any MRPS payment offset against it. A person should not receive more than twice the basic pension amount from MRPS, nor more than MVR 5,000 from any state-funded scheme.

Applications may be made from six months before turning 65, through the member portal, by email or through island and atoll council offices.

Health cover is state-funded through Aasandha, so no employer or employee contribution arises for it.

Termination follows the Employment Act. There is no per-year severance: under section 21 a redundancy carries notice or pay in lieu of one month under a year's service, at least two months for one to four years and at least three months beyond that, and all dues are payable within seven days.

Final pay including accrued leave is due on separation and must be reflected in the month’s pension and tax filings.

For an expatriate, ending employment has quota and permit consequences that need handling alongside the employment steps.

Because pension registration evidences local headcount for quota purposes, deregistering a local employee can affect the employer’s expatriate allocation.

Expatriate hiring runs through a quota allocation on the Expat System, and a permit follows the quota rather than the other way round.

The quota is verified against pension registrations. The number of Maldivian employees is confirmed by how many the employer has duly registered for pension, which ties the two systems together and makes accurate pension registration a licensing matter as well as a payroll one.

Local hiring quotas apply particularly in tourism and hospitality, requiring a minimum share of Maldivian nationals before expatriates can be sponsored. A quota occupation change is permitted, with a fee, and after the first change a further one is allowed only six months after the last.

Expatriates fall outside the pension scheme, so their cost profile is permit and quota fees rather than contributions.

Treating the income tax threshold as annual is the dominant error. It is MVR 60,000 a month. Two current guides state MVR 60,000 a year, and following them would over-withhold by a factor of twelve on employees who in fact owe nothing.

Contributing pension for expatriates overstates cost. The scheme covers local employees aged 16 to 65 only.

Applying 7% to total earnings overstates it too. The pensionable wage is basic salary, so service charge and allowances sit outside the base.

Note also that pension registration evidences local headcount for expatriate quota purposes; that records must be kept six years; and that both tax and pension are due by the 15th.

Work backwards from the start date, and start with the quota if the hire is an expatriate, the allocation precedes the permit and sets the timeline.

Confirm nationality and basic salary before quoting, since one determines whether pension applies at all and the other sets the base.

Load the MVR 60,000 monthly threshold rather than an annual figure, register local employees with the MRPS before first payroll, and diarise the 15th for both MIRA and the Pension Office.