Maldives, Republic of

Corporate - Group taxation

Last reviewed - 10 September 2023

Transfer pricing regime

The transfer pricing regime applies to the transactions entered between two associated persons and where the terms of arrangement or transaction are not based on arm’s-length terms. MIRA can reassess the taxable profit/loss based on the arm’s-length terms irrespective of actual terms of such arrangement or transaction.

All taxpayers (except micro, small, and medium enterprises) must prepare and maintain transfer pricing documentation for related-party transactions.

Thin capitalisation rules

The Income Tax Act provides for thin capitalisation rules, which are in line with Article 4 of the G20/OECD inclusive Framework on Base Erosion and Profit Shifting (BEPS) project.

In accordance with the thin capitalisation rule, the maximum amount of interest (except the interest payable to banks and financial institutions licensed by the Maldives Monetary Authority [MMA]) that a taxpayer can deduct from the taxable income is limited to 30% of Tax-EBITDA.

The interest in excess of the thin capitalisation rule limit, if any, can be carried forward for a period of ten years in order to set off against the taxable income of future years.

Controlled foreign companies (CFCs)

The income of a non-resident entity that is controlled by five or fewer resident of Maldives shall be calculated in accordance with the Income Tax Act of Maldives. The share of the resident person in the taxable income of the non-resident controlled entity shall be included in its taxable income in Maldives.