Maldives National Association of Construction Industry (MNACI) has welcomed the government’s efforts to revert the withholding tax on foreign contractors from 5 percent back to 10 percent.
The tax was originally at 10 percent for foreign contractors, but was reduced to 5 percent in July 2021 under the government of President Ibrahim Mohamed Solih. The change gave foreign contractors a tax advantage, which resulted in them paying less tax than local contractors.
The government has now proposed restoring the 10 percent rate to create a more level playing field through an amendment to the relevant laws. The amendment to the Income Tax Act was proposed by Member of Parliament Hassan Zareer.
The proposal has received support from stakeholders, including MNACI. In a post on X, MNACI said the change will be a positive change for contractors, and expressed gratitude to the government for pursuing the change.
Minister of Infrastructure, Housing and Urban Development Dr Abdulla Muththalib also said the change will help restore equality and provide Maldivian contractors with fairer income opportunities.
The Maldives Inland Revenue Authority (MIRA) estimates the change could increase government revenue by an average of USD 16.2 million per year.