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Hiring in Maldives
Maldives, officially known as the Republic of Maldives, is a country in South Asia. Male is the capital and the largest city of Maldives. Dhivehi and English are the official languages. Maldives has an upper middle income economy. Fishing and tourism are the major sectors of Maldives’ economy. Its main trading partners are Thailand, United States, France, United Kingdom, and Germany. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Maldives’ legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. Labor Code stipulates that employees are entitled to 30 days of annual leave. Residents are taxed on their worldwide income; non-residents are taxed on Maldives-source income only. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Maldives’ Labor Code and tax laws.
statutory labor requirements
Probation Period
- The maximum duration of probation period is three (3) months.
Annual Leave
- After working for one year for your company, employees should get 30 days of paid annual leave
Public Holidays
- New Year's Day (1st January)
- First day of Ramadan
- Labor Day (1st May)
- Eid al-Fitr
- Independence Day (of Maldives) (26th July)
- Hajj
- Eid al-Adha
- Islamic New Year
- Qaumee Dhuvas
- Prophet's Birthday
- Victory Day (3rd November)
- Republic Day (in Maldives) (11th November)
- The Day Maldives Embraced Islam
Maternity Leave
- Female employees are entitled to 6 months of paid maternity leave.
Paternity Leave
- Male employees are entitled to 1 month of paid paternity leave.
Sick Leave
- The employer is required to grant thirty days of paid sick leave to the employee during every year of employment
Work Hours
- The standard work week in Maldives is 48 hours per week or eight hours a day, Sundays to Thursdays.
Overtime
- An employee working overtime shall be paid 1 ¼ times his hourly working wage as over time, and if working overtime on a Friday or a public holiday shall be paid 1 ½ times his hourly working wage as over time.
Notice Period
- Employment agreements of indefinite term shall only be terminated after giving the minimum notice specified below: ‐
-
- two weeks’ notice for any person in employment for more than six months but less than one year;
- one month's notice for any person in employment for more than one year but less than five years;
- two months’ notice for any person in employment for more than five years.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or the 14th month salary.
- However there is some evidence that it is a statutory requirement to pay the 'Ramazan bonus'.
income tax
- A tax resident in Maldives is subject to income tax on worldwide income.
- A non-resident and a temporary resident is taxable in respect of income that is derived from Maldives.
- An individual (resident, non-resident, and temporary resident shall be taxed on one’s taxable income at the following rates:
|
Tax bracket (taxable income per tax year) (MVR) |
Tax rate (%) |
|
Not exceeding 720,000 |
0 |
|
More than 720,000 but not exceeding 1,200,000 |
5.5 |
|
More than 1,200,000 but not exceeding 1,800,000 |
8 |
|
More than 1,800,000 but not exceeding 2,400,000 |
12 |
|
More than 2,400,000 |
15 |
deductible expenses
Personal Deductions
- The following expenses are allowed from the personal income of an individual:
-
- Payment of zakat al-mal by a person to the relevant government institution,
- Payment made by a person to the Maldives Retirement Pension Scheme established under the Maldives Pension Act
Charitable Contributions
- Donations made by a taxpayer to a State institution or a charitable organization approved by the Commissioner General of Taxation are deductible.
- The maximum amount that may be deducted shall be 5% of the taxable income derived before the deduction of donation.
Life Insurance Premiums
- A premium payable to an issuer under a life insurance policy is not eligible for deduction unless the premium is payable:
-
- by a person who is carrying on a business
- under a key person insurance policy that covers the life of a key employee in that business, and
- the proceeds of such policy are payable to the person who carries on the business and constitute part or the whole of the total income of that person.
Mortgage Interest Expenses
- Interest paid on a loan obtained from any person, except a bank or a non-banking financial institution approved by the Commissioner General, by an individual for the purpose of deriving the person’s total income shall be deductible, up to a maximum amount of 6% per annum, in the computation of that person’s taxable income.
|
Deductible Expenses |
|
|
Personal deductions |
|
immigration
- Visitors of all nationalities are eligible for a free, 30-day tourist visa in the Maldives.
- There’s a possibility to extend the visa by 60 days as long as your employee is in a suitable financial situation to remain the full 90 days.
- Although a tourist visa allows foreigners to enter the country, it does not permit work.
- Foreigners going to the Maldives for employment are required to obtain a work permit from the employer.
- Work permits are issued by Maldives Immigration, which requires that employers deposit a sum of money as a work permit deposit for each employee.
- A monthly visa fee of MVR250 applies for foreign workers.
- Business visas also can be obtained from a Maldivian sponsor for a maximum of 90 days.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Tourist Visa |
|
90 days |
|
|
Business Visa |
|
90 days |
|
|
Work Permit |
|
1 year |
|
value added tax
- The supply of goods and services in Maldives is subject to a tax (GST) at the rate of 6% on the value of goods and services.
- The supply of tourism goods and services is subject to 12% tax on the value of goods and services.
|
GST |
|
|
Higher Rate |
12% |
|
Standard Rate |
6% |
withholding tax
- In accordance with Section 55(a) of the Income Tax Act, the following payments made by a person carrying on business in Maldives to a non-resident are subject to WHT:
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- Rent in relation to immovable property situated in Maldives.
- Royalties.
- Interests (except interest payable to a bank or financial institutions approved by the MIRA).
- Dividends.
- Fees for technical services.
- Commissions paid in respect of services performed in Maldives.
- Payments in respect of performance by public entertainers in Maldives.
- Payments made for carrying out research and development in Maldives.
- Payments made to a non-resident contractor.
- Insurance premiums.
- Reinsurance premiums.
|
Type of income received by the non-resident |
WHT rate (%) |
|
Income specified in Section 55(a) of the Income Tax Act |
10 |
|
Reinsurance premium |
3 |
termination
Employment agreements of indefinite term shall only be terminated after giving the minimum notice specified below:
-
- two weeks’ notice for any person in employment for more than six months but less than one year;
- one month's notice for any person in employment for more than one year but less than five years;
- two months’ notice for any person in employment for more than five years.
- Employment can be terminated without notice provided that the employee's wages and other benefits for the required notice period (from the date of commencement of the notice period to the date of termination of the notice period) has been paid in lieu of notice.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
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Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The taxable period is from 1 January to 31 December of the Gregorian calendar year.
- All persons are required to file their income tax returns and make payments in the following manner:
-
- First interim payment: 31 July of the tax year.
- Second interim payment: 31 January of the immediately following tax year.
- Final payment: 30 June of the immediately following tax year.
- The first and second interim payments are 50% of the previous year’s tax liability.
- However, the Income Tax Act allows taxpayers to make an estimate of current year tax liability and make interim payments based on that estimate.
- However, the final tax liability should not be more than 20% of total estimate of interim payments.
- Employees can make an annual declaration of their income and claim any additional deductions, other than pension contribution.
- If an employee derives income solely from one employer, he/she is not required to file an annual tax return or interim payment.
- A person is not required to file a tax return in the following cases:
-
- Total income is less than the amount specified in the regulation.
- Total income is derived solely from one employer.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Maldives ranked 147th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
0% |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Employees are entitled to severance pay that equals to 3 months of salary (25% of annual salary) |
| Vacations % | Employees are entitled to an annual holiday of 30 days (8.24% of annual salary) |
| Notice % |
Employees are entitled to 30 days of notice period for one year of service or more (8.24%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | Based on 1/3 of monthly salary (Ramadan Bonus) 2.77% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 44.34% |
employer accruals
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | After working for one year for your company, employees should get 30 days of paid annual leave | This equals 8.22% (30/365 days) of annual income |
| Maternity Leave | Female employees are entitled to 6 months of paid maternity leave. | This equals 50% (6/12 months) of annual income |
| Paternity Leave | Male employees are entitled to 1 month of paid paternity leave. | This equals 8.33% (1/12 months) of annual income |
| Sick Leave | The employer is required to grant thirty days of paid sick leave to the employee during every year of employment | This equals 8.22% (30/365 days) of annual income |
| Overtime | An employee working overtime shall be paid 1 ¼ times his hourly working wage as over time, and if working overtime on a Friday or a public holiday shall be paid 1 ½ times his hourly working wage as over time. | Depends on the number of overtime hours worked |
| Social Security | Every person who is considered a participant of the Retirement Pension Scheme of the Maldives shall pay a minimum of 7% of the employee’s pensionable wage, and the employer shall also pay a minimum of 7% of the pensionable wage to the scheme. | This equals 7% of annual income |
