United States Department of State

Transparency of the Regulatory System

Maldives’ parliament (the People’s Majlis) formulates legislation, while ministries and agencies, primarily the Ministry of Economic Development and Trade, develop regulations pertaining to investment. The Ministry of Tourism develops regulations relevant to the tourism sector. Certain business sectors require sector-level operating licenses from other ministries/agencies, including fisheries and agriculture, banking and finance, health, tourism, transport, construction, and education. The Maldives Monetary Authority (MMA) regulates the financial sector and issues banking licenses.  The Capital Market Development Authority develops regulations for the capital market and pension industry and licenses securities market intermediaries.  Parliament regularly makes draft bills and regulations available for public comment.

The Solih Administration took steps to improve fiscal transparency during its tenure. For example, beginning in 2018, the MoF began issuing weekly updates on fiscal operations on its public website. A limited write-up on total annual debt obligations for 2024 and projected annual debt obligations for 2025 and 2026 were included in a “budget book” published on the MoF website, along with the 2024 proposed budget.  It includes the total amount of debt, disaggregated into the totals of domestic and foreign debt; however, it does not include details of contingent or state-owned enterprise (SOE) debt. Statistics on Central Government debt and on debt guaranteed by the government are published on the MoF website on a quarterly basis. Details of government-held debt are published bi-annually. Quarterly debt statistics include details on disbursed outstanding debt (both domestic and guaranteed), active external loans, external grants, and active sovereign guarantees. Quarterly debt can be found at https://www.finance.gov.mv/debt-management/debt-statistics . Since assuming office in November 2023, the Muizzu Administration has been continuing in the same manner as the former administration.

Details of SOE debt are published in the quarterly and annual reports on SOEs published by Public Enterprise Management (PEM) of the MoF at https://www.finance.gov.mv/public-finance/public-enterprises/audited-financial-statements-of-soes 

Details of active sovereign guarantees as of December 2021 can be accessed at: https://www.finance.gov.mv/public/attachments/mBb3dwgKLN1YZvSJOkAOdNDmzUSq8bn1uwXovIEK.pdf 

The MMA, which functions as Maldives’ Central Bank, includes information on domestic debt obligations on a monthly basis on their website: http://mma.gov.mv/#/research/statisticalPublications/mstat/Monthly percent20Statistics 

The MoF published a mid-year “Fiscal and Debt Strategy Report” on their website in October 2023. This report included details of the position of the debt portfolio at the end of 2022 and the estimated position by the end of 2023: https://www.finance.gov.mv/fiscal-and-debt-strategy-report 

The website of the Attorney General’s Office (AGO) ( www.mvlaw.gov.mv ) publishes the full text of all existing laws and regulations, but most of the documents are in the Dhivehi language.  The AGO is establishing an English language database of laws and regulations while the Judiciary is working on a database of court judgements.

Environmental, social, and governance (ESG) reporting is voluntary. Listed Public Limited Companies voluntarily report on sustainability aspects and Corporate Governance reporting is mandatory for all listed companies. Annual reports of listed companies: https://www.cmda.gov.mv/en/public/listed-companies .

International Regulatory Considerations

Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and is a signatory of the South Asian Free Trade Area (SAFTA).

Trade and investment related legislation and regulation are influenced by common law principles from the United Kingdom and other western jurisdictions.  The judiciary has cited foreign case law from jurisdictions from the United Kingdom, the United States, and Australia when interpreting local trade-related statues.

Maldives is a member of the World Trade Organization (WTO) and has submitted some of the notifications under Technical Barriers to Trade. However, the Ministry of Economic Development and Trade reports that technical assistance is required for Maldives to fully comply with WTO obligations.

Legal System and Judicial Independence

The sources of law in Maldives are its constitution, Islamic Sharia law, regulations, presidential decrees, international law, and English common law, with the latter being most influential in commercial matters.  The Maldives has a Contract Law (Law No. 4/91) that codifies English common law practices on contracts.  The Civil Court is specialized to hear commercial cases.  The Employment Tribunal is mandated to hear claims of unfair labor practices.  The Judicial Services Commission is responsible for nominating, dismissing, and examining the conduct of all judges.  The Attorney General acts as legal advisor to the government and represents the government in all courts except on criminal proceedings, which are represented by the Prosecutor General.

A Supreme Court was established as the highest judicial authority in Maldives in 2008 under the new Maldives Constitution.  In addition to the Supreme Court, there are six courts: the High Court; Civil Court; Criminal Court; Family Court; Juvenile Court; and a Drug Court.  There are approximately 200 magistrate courts, one in each inhabited island.  The Supreme Court and the High Court serve as courts of appeal. There are no jury trials. As of March 2024, the government was working on legislative amendments to the Judicature Act to establish a circuit court.

Historically, the judicial process has been slow and, often, arbitrary.  In 2010, the Judicial Services Commission (JSC), the judicial watchdog, reappointed—and confirmed for life—191 of the 200 existing judges.  Many of these judges held only a certificate in Sharia law, not a law degree.  The Maldivian judiciary is a semi-independent institution but has been subjected frequently to executive influence, particularly the Supreme Court.  An estimated 25 percent of judges have criminal records.  The media, human rights organizations, and civil society had repeatedly criticized the JSC for appointing judges deemed unqualified.

This history led the Solih Administration to make judicial reform a top priority.  In 2019, the JSC was overhauled; it removed the former Supreme Court bench and initiated investigations into ethics standards complaints against several judges from the High Court, Criminal Court, Civil Court, Family Court, and several island magistrate courts.  In 2019, Parliament amended the Judicial Service Commission Act to return control of the Department of Judicial Administration (DJA), which is responsible for the management of courts, to the JSC. This amendment was intended to overcome longstanding issues of the former Supreme Court using its direct supervision of the DJA to punish judges exhibiting judicial independence by transferring them to a lower court or another island as retribution.

Laws and Regulations on Foreign Direct Investment

Foreign parties can invest in Maldives through the Foreign Investment Law or the Special Economic Zones (SEZ) Act.  Details are available on the Ministry of Economic Development and Trade’s Doing Business in the Maldives Guide and in the tax guide:

https://maldivesembassy.ae/wp-content/uploads/2019/11/DBM-19_.pdf

https://www.mira.gov.mv/Files/GetFile/1e8dc364-60ec-4a11-a636-6b6c4c264248 

Invest Maldives ( https://investmaldives.gov.mv ) is the primary website for investments and provides information on areas that are open for investment in Maldives. Sector-wise, broad investment opportunities are presented on the website with links to conceptual project briefs for which Invest Maldives is seeking investment from potential investors.

A Foreign Direct Investment (FDI) policy was published in 2020 to consolidate existing practices and introduce new guidelines, including two new routes to get government approval for foreign direct investments and new caps on equity ownership for investments in certain sectors. The first and second amendments to the FDI policy were announced in 2021. The policy is available at https://trade.gov.mv/laws-regulations  under Foreign Investment Act.

Foreign investment in Maldives is governed by Law No. 25/79, covering agreements between the government and investors.  The Business Registration Act (18/2014) requires foreign businesses to register as a company or partnership.  The Companies Act (10/96) governs the registration and regulatory and operational requirements for public and private companies.  The Partnership Act of 2011 governs the formation and regulation of partnerships.  Foreign investments are currently approved for an initial period of five years, with the option to renew.

Maldives introduced income taxes through an Income Tax Act in 2019, with taxation commencing in 2020.   The Business Profit Tax regime imposed under the Business Profit Tax Act and the Remittance Tax regime imposed under the Remittance Tax Act were repealed with the commencement of the Income Tax Act.  Under the Act, tax rates remain unchanged for banks at 25 percent on profits, while taxes of 15 percent on profits that exceed $32,425 (MVR 500,000) would be levied on corporations, partnerships, and other business entities.

In 2020, President Solih ratified the sixth amendment to the Employment Act, which provides a standalone regulatory framework for overseas employees. It includes guidance on registering with the online Xpat system (work permit processing portal), grant of quotas, collection of quota fees, grant of entry passes and work permits to enter and remain in the country for work, deposits and refunds, accommodation arrangements and standards, regularization, and penalties for breaches. In 2022, President Solih ratified the seventh amendment to the Maldives Employment Act which removed the obligation on employers to pay minimum wage to expatriate employees in accordance with the Minimum Wage Order until a compliance date is announced by the Minister of Economic Development and Trade.

In 2020, President Solih ratified the second amendment to the Maldives Immigration Act. Under the amendment, there are two additional visa options for foreigners travelling to Maldives: a corporate resident visa and a meeting visa. The corporate resident visa is a permit issued to foreigners who have invested over $250,000 in Maldives or by maintaining $250,000 in a fixed deposit account in a Maldivian bank for five years. According to the amendment, shareholders and partners of companies registered and operating in Maldives may acquire a corporate resident visa for themselves and their families under the established rules and regulations. The meeting visa is a short-term permit under which foreigners may visit Maldives for professional reasons. This may include attending a business conference, professional convention or a meeting approved by a government agency. A meeting visa is issued according to the guidelines defined by the Registrar of Businesses.

Competition and Antitrust Laws

In 2021, Maldives implemented the Competition and Fair Business Practices Act to ensure a fair market and equitable opportunities for all small and medium enterprises. The Ministry of Economic Development and Trade is the principal agency responsible for implementing the Act, including hearing, reviewing, and acting on competition-related complaints. No competition-related cases have been submitted to Ministry of Economic Development as of March 2024.

Expropriation and Compensation

According to the Law on Foreign Investment (No. 25/79), the government may, with or without notice, suspend an investment when an investor indulges in an act detrimental to the security of the country or where temporary closure is necessary for national security.  If, after due investigation, it cannot be concluded within 60 days of the temporary closure that the foreign investor had indulged in an activity detrimental to the security of Maldives, the government will pay compensation.  Capital belonging to an investment that is closed for these reasons may be taken out of the country in a mutually agreed upon manner.

Dispute Settlement

ICSID Convention and New York Convention

Maldives is not a Party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.  In 2019, Maldives acceded to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, which was instituted in Maldives later that year.

Investor-State Dispute Settlement

Maldives does not have a Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with the United States.  An Arbitration Act modeled on the United Nations Commission on International Trade Law (UNCITRAL) model law was passed in 2013 and provides for implementation of international arbitral awards.  However, the judgments of foreign courts cannot be directly enforced.  Judgments of foreign courts must be submitted to domestic courts, which then make a separate judgment.  In 2019, President Solih established the Maldives International Arbitration Centre, a requirement under the 2013 Act.