Foreign Currency Rules in the Maldives

The Maldives Monetary Authority (MMA), overseeing the implementation, has introduced rules governing the foreign convert market in the Maldives. The Regulation on Foreign Currency (Regulation No : 2024/R-91) applicable to the period October 2024 to December 2024 and Foreign Currency Act (FCA) (Act No : 2024/32) applicable thereafter, establish guidelines for managing foreign currency transactions and regulate foreign exchange market in the Maldives. Here is in brief what you need to know about the foreign currency rules in the Maldives.

Foreign Currency Regulation

All transactions in the Maldives are required to be carried out in MVR including payments for goods and services, fees, charges, rent and remuneration. There are certain exemptions from this requirement.

• Obligations to be paid in foreign currency to government as per law or regulation enacted.
• Services provided by banks and financial institutions and transactions between their customers.
• Remittance service providers and transactions between customers.
• Transactions between Insurance Companies, insurance intermediaries and customers, in relation to insurance policies sold to Tourism Goods and Service providers
• International transactions
• Goods sold and services supplied to tourists
• Exports
• Payment for goods and services provided that the business receives income in foreign currency, and the provider of goods and services accepts such payment
• Dividends, other transactions between the business and its shareholders and business and its related parties, if the business receives income in foreign currency
• Sale of shares of a business, issuing of bonds or sukuk, transactions between the business and bond or sukuk holders provided that the business earns income in foreign currency
• Salaries and allowance to employees provided that the business receives income in foreign currency and employees accepting their salaries and allowances in foreign currency
• Sale of good and provision of services by duty free shops to tourist

Tourism service providers must submit details of sales of goods and services to the Maldives Monetary Authority (MMA) by the 28th of the month following the sale.

Deposit Requirement

The total sales proceeds received (realized sales proceeds) in a Foreign Currency, in a calendar month must be transferred or deposited into a bank account in the Maldives not later than 28th of the third month following the sale. For example, realized sales proceeds (regardless of the period of sales the proceeds correspond to) in October 2024 must be transferred or deposited before January 28, 2025.

Conversion of Foreign Currency

• Category A tourist establishments: USD 500 per tourist arrival during a calendar month, before 28th of the third month after the sale occurred
• Category B tourist establishments: USD 25 per tourist arrival during a calendar month, before 28th of the third month after the sale occurred

Category A tourist establishments

Tourist establishments in Category A consists of;

• Tourist Resorts
• Integrated Tourist Resorts
• Resort Hotels
• Hotels
• Tourist Vessels

These include guesthouses, hotels operated in inhabited islands with less than 50 rooms registered

Reconsideration of conversion requirement

Businesses may request the MMA to reconsider the mandated foreign currency conversion amount if they believe that complying with the standard computation would leave them with insufficient foreign currency to meet specific obligations. These obligations include:

• Taxes and other government obligations payable in foreign currency
• Debt owed to a financial institution in foreign currency
• Foreign Currency obligations payable under a court judgement, tribunal decision or a dispute resolution mechanism such as arbitration
• Other foreign currency obligations as determined by the MMA

If the MMA is satisfied with the business’s submission, it has the discretion to reduce the amount of foreign currency required to be converted into MVR for a specified period.

Record keeping

5 years from the date of sale of goods & services for tourism goods and services providers

Penalties for Non-Compliance

• Failure to Comply with Transactional Currency Requirements: A fine ranging between MVR 10,000 and MVR 1,000,000 
• Failure to Adhere to Registration, Information Submission, Deposit, Conversion, and Record Keeping Requirements: A penalty ranging from MVR 5,000 to MVR 1,000,000. MMA may impose a recurring fee of MVR 5,000 per day until full compliance is achieved.

Foreign Currency Act

Similar to the repealed regulation, the new FCA that came into effect on 01 January 2025, mandates that all monetary transactions carried out in the Maldives must be in local currency Maldivian Rufiyya (MVR). This includes payments for goods and services, fees and charges, rent, remuneration. However, there are certain exemptions to this rule including three additional transactions in the exemption list. These are

• Transactions carried out by the Maldives Securities Market
• Foreign currency obligations payable under a court judgement, tribunal decision or a dispute resolution mechanism such as arbitration
• Other transactions and obligations as determined by the regulation made pursuant to the act

All providers of goods and services in the tourism industry must register within 10 days of the Foreign Currency Act (FCA) coming into effect. However, entities already registered under Regulation Number 2024/R-91 will be considered automatically registered. Entities entering the tourism sector after the commencement of the Act must register within 30 days.
Additionally, entities outside the tourism industry and financial sector are required to register before the end of January of the following year, if their foreign currency sales exceeded MVR 15 million in the preceding year. For in-depth insights into the registration rules, check our article here.

Deposit Requirements

The Act requires, total sales proceeds realized in Foreign Currency to be transferred or deposited to a bank account opened in Maldives before the 28th of the third month after the sale occurred i.e. realized sales proceeds of January 2025 is required to be deposited before 28th of the April 2025

Conversion requirement

The Act classifies persons required to convert foreign currency income into three categories:

• Category A tourism establishments: This category includes resorts, integrated tourist resorts, private islands, resort hotels and other similar establishments
• Category B tourist establishments: This category includes tourist vessels, tourist hotels, and guesthouses.
• Other businesses: Businesses that are not classified as Category A or Category B tourism establishments but earned a minimum equivalent to USD of 15 million in Foreign Currency

• Category A: USD 500 per tourist arrival in a calendar month, OR, 20% of gross sales received in Foreign Currency
• Category B: USD 25 per tourist arrival in a calendar month, OR, 20% of gross sales received in Foreign Currency
• Other businesses: 20% of gross sales received in Foreign Currency

Banks are required to present the details of the foreign currency received to MMA and sell a predetermined percentage of the foreign currency that the bank receives.
When determining the number of tourists for the purpose of calculating the required foreign currency convert, the following are excluded.  

• Tourists that spend less than 24 hours in a tourist establishment
• Children that are below 12 hours of age
• Guests staying at resorts free of charge or on complimentary basis
• Guests who have been granted special privileges by the government

Businesses may request the MMA to reconsider the mandated foreign currency conversion amount if they believe that complying with the standard computation would leave them with insufficient foreign currency to meet specific obligations. These obligations include:

• Taxes and other government obligations payable in foreign currency
• Debt owed to a financial institution in foreign currency
• Foreign Currency obligations payable under a court judgement, tribunal decision or a dispute resolution mechanism such as arbitration
• Other foreign currency obligations as determined by the MMA

If the MMA is satisfied with the business’s submission, it has the discretion to reduce the amount of foreign currency required to be converted into MVR for a specified period. This provision ensures that businesses can maintain adequate liquidity to meet their critical financial commitments.

Reporting and document maintenance

Details, information, documents and reports as required by the MMA are to be submitted by those that fall within the ambit of the Act. Further guidance is likely to be provided by MMA in the regulation made pursuant to the Act. 

Penalty

MMA has the Authority and power to investigate and take action against persons who are alleged to have violated this Act and the rules made under this Act, to have falsified accounts and information in carrying out the duties required by this Act.
The following penalties are applicable if any person fails to comply with the Act

• Failure to transfer or deposit foreign currency in bank account and failure to transfer or deposit the amount determined by the Act : At least 0.25% of the amount required to be transferred or deposited in that month
• Failure to convert the foreign currency and failure to convert the correct determined amount of foreign currency as per the act : At least 0.25% of the amount required to be converted 
• Failure to comply with other requirements of the Act or Regulation made pursuant to the Act : MVR 10,000 to MVR 1,000,000 depending on the severity of the action

If penalties imposed by MMA are not paid within 90 days, MMA can request to hold the approvals and licenses granted by government institutions.