1 - What is BPT?
BPT is a tax payable under the Business Profit Tax Act (Law no. 5/2011) on the taxable profits of all the businesses carried on in the Maldives.
2 - When does BPT commence?
BPT commences on 18 July 2011.
3 - What is a business?
For the purpose of BPT Act "Business" includes; any profession, vocation and every trade, manufacturing or any other activity carried on with a view to making profit. This also includes rental income but does not include employment income.
For example: profits from Fishing, Agriculture, and Aqua-culture are subject to BPT.
4 - Who is subject to BPT?
All persons carrying on business in the Maldives whose annual taxable profit exceeds MVR 500,000 are subject to BPT. This includes resident and non-resident companies, partnerships, cooperatives and individuals. Certain payments made to non-residents of the Maldives are also subject to withholding tax.
5 - Who needs to register for BPT?
Any Person carrying on business in Maldives (a resident and non-resident company, partnership, corporative and individuals, and any profession or vocation and very trade commerce or manufacture or every adventure in the nature of trade, agriculture, horticulture, forestry and timber growing, aqua-culture, fishing, fish farming, poultry or cattle raising, apartment rental or any other activity carried on with a view to making profits) needs to register for BPT.
6 - How do I register for BPT?
You can register using the Business Registration Form (MIRA101), which can be downloaded from /forms/MIRA%20101_latest.pdf
It is also available at the MIRA Taxpayer Service Center.
7 - How is my taxable profit determined?
Taxable profit is the full amount of all your profits for a tax year. In the first year of BPT, taxable profits are calculated only from 18 July 2011 to 31 December 2011 (or to the end of your accounting period if that is before 31 December). For a company that is not resident in the Maldives, taxable profits are the full amount of profits derived by a permanent establishment in the Maldives and any rent, royalties and management fees received from the Maldives.
8 - What is a tax year?
A tax year is the period from 1 January to 31 December of every year. However the first tax year will be from 18 July 2011 to 31 December 2011.
9 - What are the rates of BPT?
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Companies, Partnerships, individuals, other legal bodies: 15% on taxable profits of a year exceeding MVR 500,000
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Company profits exclusively from sources outside the maldives. The company should be a company:
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Incorporated in maldives and not resident abroad, and
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not making any profits in maldives
5% on taxable profits of a year exceeding MVR 500,000
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Withholding Tax: 10% of the payments made or payable to non-residents of the Maldives.
10 - What is withholding tax?
Withholding tax is a tax charged on certain payments made to non-residents of the Maldives. It is deducted by the taxpayer from the gross amount to be paid to the non-resident. The taxpayer pays the withholding tax to the MIRA by the 15 of the month following the payment. For example: payments made to a non-resident as rent, royalties, fees for management or technical service or usage of computer software.
11 - Is a business run by a Maldivian outside the Maldives taxable?
No, the business is subject to tax only if the Maldivian is a resident in the Maldives.
12 - How do I determine if I am a resident in the Maldives?
You are a resident in the Maldives if you:
- are actually in the Maldives for 183 days or more in a tax year, or
- arrive in the Maldives in a tax year with the intention of establishing your residence in the Maldives, or
- are ordinarily resident in the Maldives, but leave before the end of a tax year.
13 - How to determine whether a company, partnership, trust or other body of Persons is resident in the Maldives?
A company which is incorporated in the Maldives is considered as resident in Maldives. In a case where a company is not incorporated in Maldives, the company's place of resident will be determined by reference to the place where the central management and control of the company's business will be considered as resident in Maldives.
A partnership, trust or other body of Persons that carry on any business in Maldives will be considered as resident in Maldives
14 - What deductions am I allowed in calculating my taxable profit?
In computing your taxable profits for a tax year, you are allowed deductions from your gross income for expenditure that you incur in deriving that income. There are limits and special rules for some of these deductions.
- Capital allowances, i.e. depreciation for tax purpose
- Head office expenses
- Expenditure on welfare of employees
- Pension contributions
- Audit fees
- Bad debts
- Any receipts which have suffered withholding
- Donations
You are not allowed a deduction for:
- Domestic or private expenditure
- Capital expenditure on fixed assets
- Some interest payments
- Fines and penalties imposed under any law or any regulation
15 - What happens if I have a loss in a tax year?
If you incur a loss in a tax year, you can carry forward the loss to next year and deduct it in full from next year's taxable profit. If there are not enough taxable profit next year to fully use up the loss, you can keep carrying the balance of the loss forward and offset it against taxable profit of subsequent years for up to 5 years. You cannot deduct losses incurred before 18 July 2011.
16 - What is a tax return?
A tax return is a statement that you must submit to the MIRA every year, which shows how you calculated your taxable profits and your amount of tax payable for the year.
17 - When do I have to file my tax return?
You must file your tax return each year on later of the following dates:
- before the end of 6 months from the end of your accounting period, or
- on or before 30 April of the following tax year.
18 - What is my accounting period?
If you prepare accounts each year, your accounting period is the 12-month period covered by the accounts. If your accounting period ends on 31 December, it is the same as the tax year. If it ends on a different date, your taxable profits for a tax year are your profits of the accounting period whose balance date falls in that tax year. The accounting period for an individual must be same as the Tax Year.
19 - What records do I have to keep?
You must keep clear and accurate records of all your business transactions to enable us to verify the accuracy of your calculation of your taxable profits. Records must be kept either in Dhivehi or English for 6 years from the year to which they relate.
20 - When and how much should I pay for BPT?
BPT must be paid for a tax year as follows:
1. First interim payment: on or before 31 July.
2. Second interim payment: on or before the following 31 January.
The amount of the first and the second interim payments for a tax year are each equal to one-half of your assessed tax for the last tax year. For your first tax year, you must make a realistic estimate of your first and second interim payments. The first interim payment for the tax year ending on 31 December 2011 is due on 31 January 2012.
3. Final payment: on or before the due date for filing your tax return. The amount of your final payment is the assessed tax for a tax year less the total of your interim tax payments.
21 - What are the offences and penalties relating to BPT?
|
Offence |
Penalty |
|
Evasion of tax, including assisting another person to evade tax |
- A fine not exceeding MVR 100,000 and/or
- 6 months to 2 years house arrest or imprisonment or banishment, and/or
- A penalty equal to twice the amount of tax payable.
|
|
Failure to file a tax return, keep proper records, submit accounts, or filing an incorrect return or giving incorrect information without a reasonable excuse |
- A fine of up to MVR 250,000, and/or
- 3 months house arrest, and/or
- A penalty of twice the amount of tax payable, and//or
- MVR 500 per day for each day that failure to file or submit continues.
|
|
Failure to pay BPT or withholding Tax |
- A fine of up to MVR 250,000, and/or
- Up to 3 months house arrest or imprisonment, and/or
- A penalty equal to the greater of:
- MVR 250,000 or
- Twice the amount of tax payable
|
|
Refusing to allow a deduction of withholding tax |
- A fine of up to MVR 250,000, and/or
- Up to 3 months house arrest or imprisonment, and/or
- A penalty of MVR 50,000
|
|
Failure to comply with other requirements |
- A fine of up to MVR 250,000, and/or
- Up to 3 months house arrest or imprisonment, and/or
- A penalty of MVR 125,000
|
|
Assisting or inducing submission of incorrect information |
- A penalty of MVR 50,000 |
22 - Will my personal information as a taxpayer be revealed to anyone?
No. Any document or other personal particulars about you will not be revealed to a third party without your consent.