The Section 12(k) Exemption

Section 12(k) of the Income Tax Act provides for non-resident airline and shipping operators [including charterers and lessors of aircrafts or ships] in international transportation to apply for an exemption from taxation of income specified in Section 11(r) of the Income Tax Act. It also allows non-resident lessors to apply for exemption from taxation of income derived as lessors of aircrafts or ships or equipment which are integral to the airworthiness of aircrafts used in the Maldives or seaworthiness of ships used in the Maldives. This exemption is contingent upon availability of a reciprocal exemption to Maldives resident airlines, shipping operators, charterers, or lessors, in the country of residence of the non-resident airline or shipping operator seeking the exemption. For the purpose of this exemption, the applicant’s country of residence is the jurisdiction where the central management and control of the applicant is.

Application for Exemption

Procedure to apply for Section 12(k) Exemption

To apply for this exemption MIRA 607 form must be submitted to MIRA, together with the following documents.

  • A document from the external auditor verifying the location of the central management and control of the applicant;
  • If the applicant is a lessor of an aircraft, ship, or equipment, seeking to get exemption from Non-resident Withholding Tax (NWT), agreements, and other documentation related to the lease.

When an application for section 12(k) exemption is received and if there is no reciprocal arrangement already in place with the jurisdiction of residence of the applicant, MIRA will make inquiries with the tax administration of the jurisdiction of the residence of the applicant to confirm the tax reciprocity status of the jurisdiction. If MIRA cannot establish the required tax reciprocity status within three months from the initial communication with the other tax authority, the application file will be closed and the applicant will be informed accordingly. If a reciprocity arrangement has already been established or when the tax reciprocity status is confirmed, the outcome of the application will be notified to the applicant in writing. If granted, the exemption start date would be the date stated in the written notification issued to the applicant.

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