The People’s Majlis today passed an amendment to the Income Tax Act to increase the withholding tax rate on payments made to non-resident contractors.
The amendment, submitted by Mathiveri MP Hassan Zareer, was passed exactly as proposed without any further changes. The bill received 54 votes in favor, while two members voted against it.
The amendment to the Income Tax Act stipulates that the withholding tax rate on gross payments made to non-resident contractors will be increased from five percent to 10 percent.
The legislation further specifies that this amount shall be treated as the final tax levied on such contractors.
Under the amendment, a non-resident contractor is defined as any party not resident in the Maldives that provides goods or services—either directly or by authorizing others—under a contract, agreement, or arrangement other than an employment contract.
According to the cost estimate submitted with the bill, citing the Maldives Inland Revenue Authority (MIRA), this change is projected to increase state revenue by an average of MVR 251 million.
