flag Maldives Maldives: Investing

FDI in Figures

According to UNCTAD's 2021 World Investment Report, FDI flows to the Maldives declined sharply to USD 348 million in 2020 from USD 956 million in 2019 (-63.6%), due to the global health and economic crisis triggered by the Covid-19 pandemic. Despite this, the Maldives is the third largest recipient of FDI among small island developing states. The FDI stock has grown to USD 5.6 billion in 2020. Tourism attracts most of the FDI, followed by the transport and telecom sectors. India is the largest investor in the country.

Traditionally, the country has had an open and liberal, economical environment. Foreign companies are now allowed to own land, but ambiguous foreign investment laws deter investors. Property rights are generally weak; most land is owned by the government and then leased to private owners or developers. Although legally independent, the judiciary is subject to influence amid numerous allegations of judicial impropriety and abuse of power. Government screens foreign investment, and state-owned enterprises distort the economy. Costly credit and limited access to financial services impede the development of a vibrant private sector. However, the business climate deteriorated significantly after the country experienced political instability in 2012: the government's reported violations of civil and political rights, the radicalisation of young Muslims and the risk of a decrease in tourism are significant obstacles to FDI. As a result, in recent years the Maldives lost several spots in the Doing Business ranking published by the World Bank.

According to the last 2020 Doing Business report, the country ranks 147th out of 190 countries in 2020, eight places down compared to the previous edition. The COVID-19 pandemic puts Small island developing economies in dire straits. A small and narrow economic base, high degree of openness and significant dependence on few large developed countries make small island economies extremely vulnerable to global economic shocks. These economies are often at the receiving end of global crises, as they are highly dependent on external flows—trade, remittances and external capital and borrowing—compared to other groups of developing countries (United Nations, 2021). The collapse in tourist arrivals not only directly affects income and employment in airlines, ground transport and hotels, but also adversely affects the rest of the economy, including agriculture and construction. Falling tourism, and subsequently, reducing tax revenues, will exacerbate fiscal balances of many small island economies and also reduce the flow of foreign direct investment (FDI), as the tourism sector is typically the largest recipient of FDI. Foreign investments in Maldives have primarily involved resort management, but also include telecommunications, accounting, banking, insurance, air transport, real estate, courier services, and some manufacturing. Tourism will likely continue to drive the economy, however, following the COVID-19 outbreak, the government plans to introduce measures to diversify the economy, with a focus on the fisheries and agricultural sectors.

Increasing FDI in strategic development areas is one of the key pledges of the government, but in the long-term, the Maldives Foreign Direct Investment is projected to trend around -300.00 USD Million in 2022, according to our econometric models (Trading Economics, 2022). For a gobal overview on the Maldives' FDI 2021 context, access this article of the Maldives Financial Review (2021) as well as the Invest Maldives website.

 

Country Comparison For the Protection of Investors

  Maldives South Asia United States Germany
Index of Manager’s Responsibility** 8.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 8.0 7.4 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 576956348
FDI Stock (million USD) 4,247.95,204.15,552.4
Number of Greenfield Investments* 6.05.03.0
Value of Greenfield Investments (million USD) 273179110

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

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Tax Rates

Goods and Services Tax (GST)
6% (standard rate)
12% (tourism sector)
Zero-rated goods and services include: rice, sugar, flour, salt, milk, cooking oil, eggs, tea leaves, deep sea fish, reef fish, all types of fish packed in the Maldives, and rihaakuru (fish paste), vegetables such as potatoes, onions, carrots, cabbage, beans and tomatoes, ingredients used in making curry paste (cumin, fennel, coriander, turmeric, garlic, ginger, chili, chili powder, cinnamon, cardamom, peppercorn, any other such ingredient), dhiyaahakuru, coconuts (kaashi, kurun’ba, kurolhi), carrots, cabbage, beans and tomatoes among vegetables, all kinds of fruits, bread, buns and faaroshi (rusk), baby and adult diapers, baby food, cooking gas, diesel, petrol.
Some items are exempt, including: electricity service, water facilities, postal service (not including courier services), sewerage facilities, education, health services, medical devices and drugs, financial services, rent earned from the lease of immovable property, international transportation services, payments collected as fines, daycare services.
Company Tax
Withholding Taxes
Dividends: 0 (resident)/10% (non-resident), Interests: 0 (resident)/10% (non-resident; except interest payable to a bank or financial institutions approved by the MIRA), Royalties: 0 (resident)/10% (non-resident).
Social Security Contributions Paid By Employers
Minimum 7%
Other Domestic Resources
Maldives Inland Revenue Authority (MIRA)
Overview of Maldives' tax measures in response to Covid-19
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

Personal income tax
MVR 0 - 720,000 0
MVR 720,000 - 1,200,000 5.5%
MVR 1,200,000 - MVR 1,800,000 8%
MVR 1,800,000 - MVR 2,400,000 12%
Above MVR 2,400,000 15%
 
 

Country Comparison For Corporate Taxation

  Maldives South Asia United States Germany
Number of Payments of Taxes per Year 17.0 26.7 10.6 9.0
Time Taken For Administrative Formalities (Hours) 390.5 273.5 175.0 218.0
Total Share of Taxes (% of Profit) 30.2 43.9 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Tenders Info, Tenders in Maldives
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Maldives.
Useful Resources
Foreign Investment Services Bureau (FISB)
SAARC Trade Portal
 

Business Setup Procedures

Setting Up a Company Maldives South Asia
Procedures (number) 6.00 7.12
Time (days) 12.00 14.56

Source: Doing Business.

 
 
 

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Latest Update: May 2022

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