The Parliament has officially passed an amendment to the Income Tax Act, doubling the withholding tax on payments made to non-resident contractors involved in construction projects in the Maldives from 5 percent to 10 percent.
The bill, submitted on behalf of the government by Mathiveri MP Hassan Zareer, was approved during the parliamentary sitting on 23 August with an overwhelming majority. A total of 54 MPs voted in favour of the amendment, while only two members voted against it.
Under the newly passed amendment, any party conducting business in the Maldives that makes a payment to a non-resident contractor must now deduct and remit 10 percent of that payment as withholding tax. This marks a significant increase from the previous law, which required a withholding tax rate of just 5 percent on such transactions.
According to the government, the primary objective of this legislative change is to foster a fair and highly competitive market environment. By adjusting the tax structure, the amendment aims to level the playing field for local Maldivian businesses competing against foreign entities for lucrative domestic construction contracts.
In addition to supporting local enterprises, the amendment is expected to provide a substantial boost to the national treasury. The government estimates that raising the withholding tax to 10 percent will generate an average of USD 16.3 million in additional state revenue annually.