Non-resident Withholding Tax (NWT)

NWT is a collection mechanism through which any type of payment specified in Section 55 of the Income Tax Act made to a non-resident from a person carrying in business in the Maldives is taxed. The obligation to withhold and pay the tax to MIRA falls on the person conducting business in the Maldives (the payer) who makes the payment to the non-resident

The date at which the payment is actually made to the non-resident or the date at which the payment becomes payable, whichever is the earlier.

Non-resident withholding Tax Return (MIRA 602).

15^th of the month following the month in which the NWT was required to be withheld.

You are not required to file NWT return, unless you make a payment listed in the section 55 of the Income Tax Act to a non-resident in a particular month.

There could be circumstances where you wouldn’t have to withhold even if you are making a payment listed in section 55 of the Income Tax Act [For example: due to a relief available through a DTAA]. In such cases, you must file an NWT return.

No, NWT return must be submitted online via MIRAconnect

NWT must be paid to MIRA in Payee’s functional currency

Starting from the periods ending on or after 31 October 2024 to 19 August 2026:
• If your functional currency is MVR, you must prepare your withholding tax return in MVR and you have the option of paying withholding tax in either MVR or USD.
• If your functional currency is not MVR, you must prepare your withholding tax returns in USD and you must pay withholding tax in USD.

Starting from the periods starting on or after 20 August 2026:

1. Your functional currency is the currency in which more than 50% of your total income was derived in the tax year immediately preceding the tax year in which the accounting period, or period to which the return relates, ended;
2. If more than 50% of your total income for the tax year immediately preceding the tax year in which the accounting period, or the period to which the return relates, ended was derived in currencies other than MVR, your functional currency will be United States Dollar.
3. If you have not derived any income in the tax year immediately preceding the tax year in which the accounting period, or the period in which the return relates, ended, you may elect either the Maldivian Rufiyaa or the United States Dollar as your functional currency.
4. If this is your first tax year, your functional currency is the currency in which you’re estimated to derive more than 50% of your total income for the year.
5. If you estimate that you will not derive any income in the first year, you may elect either the Maldivian Rufiyaa or the United States Dollar as your functional currency.
6. If you estimate that more that 50% of your total income in the first tax year will be derived in currencies other than Maldivian Rufiyaa, your functional currency will be United States Dollar.
7. If you cannot determine your functional currency using any of the above-mentioned methods, you may elect either Maldivian Rufiyaa or United States Dollar as your functional currency.

• Payments made by State offices
• Payments mandated under the National Social Health Insurance Act to carry out the social protection schemes and programs
• Income made exempt under Section 12 of the ITA.

NWT must be deducted from the gross payment. If you make a payment without deducting NWT from an applicable payment, you must treat the amount of the payment as the net amount of the payment after deducting the NWT you were supposed to deduct. 

Use below formula to calculate NWT to be included in the return.
𝐴×𝑡 /100−𝑡 
Where 𝐴 = amount of payment, and 𝑡 = applicable NWT rate

On request, MIRA issues withholding tax certificates to the payer (the person who files) of the NWT return, and the obligation to make the certificate available to the non-resident is on the payer.

Payer (the person who files) can generate and download NWT certificate from MIRAconnect. 

If the exact amount from which NWT must be deducted is not known, or the period to which payments relates is not known, the amount subject to NWT must be computed based on a provision made, if a provision is required to be made in accordance under the accounting standards adopted by the person. NWT computed based on the provision in this manner must be accounted for in the NWT return for month to which the provision relates. 

If there is a shortfall in the amount of NWT, the amount must be deducted and accounted for in the month the exact amount becomes certain. Similarly, if it is found that NWT amount was additional, the additional amount can be claimed through the NWT return submitted for the month in which the amount becomes certain. 

Even if there is a separately identifiable component for reimbursement of costs included in the payment made to a non-resident, NWT must be deducted from the full amount.

NWT must also be deducted from payments made in respect of a recovery by a third party of such payment for which NWT would have been required to be deducted had the payment been made directly to the supplier of the service.

You may amend NWT returns within 12 months from the due date for filing that return