The Foreign Currency Act which requires tourism businesses to exchange a percentage of their dollar income has come into force today.
The law mandates that all domestic transactions must be conducted in Rufiyaa except under specific circumstances. It also forbids charging Maldivian nationals for any services provided or acquired within the Maldives in any currency other than the Rufiyaa.
It introduces a framework for businesses operating under Maldivian law to exchange foreign currency obtained from realized sales proceeds.
These businesses are required to exchange their foreign currency with banks operating in the Maldives, which, in turn, must sell a specified percentage of these exchanges to the Maldives Monetary Authority (MMA).
Based on their operations and revenue, businesses are categorized into three distinct groups and must exchange foreign currency as follows:
- Category A: Establishments such as resorts, integrated tourist resorts, private island resorts, resort hotels, or any such business that falls under this category must exchange either USD 500 per tourist per month or 20 percent of their gross monthly sales with banks.
- Category B: Establishments such as tourist hotels, tourist guest houses, and tourist vessels are required to exchange USD 25 per tourist per month or 20 percent of their gross monthly sales with banks.
- Category C: This category includes businesses not falling under Categories A or B but with annual sales or purchase transactions exceeding USD 15 million in foreign currency; they must exchange 20 percent of their gross sales with banks.
The law further requires businesses operating in the tourism sector or those exceeding the USD 15 million thresholds in foreign currency transactions annually to register with the MMA and transfer their realized foreign currency sales proceeds to a local bank.
The central bank will oversee the implementation of this legislation, with regulations to be formulated within two months of its enforcement.
The Parliament's Public Accounts Committee met with the Maldives Association for Tourism Industry (MATI) and the Maldives Association of Travel Agents and Tour Operators (MATATO) while working on the bill. However, the committee report did not include their suggestions.
However, local media reports cited MATI as requesting a reduction in the foreign exchange rate from 20 percent to 10 to 15 percent. But the MMA told Adhadhu that resorts were content with the percentages in the ratified act.
