Introduction

The Maldives Monetary Authority (“MMA”) has published the Foreign Currency (Monetary) Regulation (2024/R-91) on 1 October 2024. This regulation introduces major structural changes to handling, depositing, and converting foreign currency in the Maldives, targeting central bank measures to address depleting foreign reserves.

The core changes mandate:

1. MVR Default: All domestic transactions must be carried out in Maldivian Rufiyaa (MVR), subject to explicit statutory exemptions.
2. Proceeds Account: All realized sales proceeds from tourist resorts, hotels, tourist vessels, and guesthouses must be deposited into a licensed bank account in the Maldives.
3. Mandatory FX Exchange: Tourism operators must exchange a fixed minimum amount of US Dollars ($) to MVR per tourist guest through a licensed local bank.

Detailed Provisions

1. Currency of Transaction & Exemptions

While Maldivian Rufiyaa is mandated as the standard currency for domestic business transactions, the Regulation provides exemptions permitting the use of foreign currency for:

• Payments legally mandated to be settled in United States Dollars (USD).
• Payments to banks and finance companies for internal transactions and consumer banking services.
• International trade, remittances, and payment of international exports.
• Goods and services provided directly to tourists in foreign currency.
• Transactions between insurance companies, intermediaries, and clients for tourism-related insurance plans.
• Payments for goods/services received by a foreign-currency earning business, alongside dividend payouts, share sales, and related party dealings.
• Payment of salaries and employment benefits by businesses that generate their income in foreign currency.
• Sale of goods and services at airport duty-free shops.

2. Mandatory Registration Requirements

• Existing Providers: Tourism service providers registered with the Maldives Inland Revenue Authority (MIRA) before 1st October 2024 must register with the MMA on or before Thursday, 31 October 2024.
• New Providers: Tourism operators registering with MIRA after 1st October 2024 must register with the MMA within 30 days from their MIRA registration date.

3. Depositing Foreign Currency to Local Bank Accounts

All foreign currency earned (realized sales proceeds) from tourism activities during any given month must be transferred or deposited into a foreign currency account held at a bank licensed under the Maldives Banking Act (Law No. 24/2010). This must occur before the 28th day of the third month following the month of earnings.

Example: Realized sales proceeds earned during the month of October 2024 must be deposited into the licensed local foreign currency account before 28th January 2025.

4. Foreign Currency Conversion (Exchange Mandate)

Tourism facilities are required to systematically convert a specified amount of foreign currency per guest into MVR through a licensed bank before the 28th day of the third month following sales realization:

MMA Discretionary Relief: If a business cannot fulfill other primary foreign currency obligations (such as paying taxes in USD, debt servicing to financial institutions, or settling court-mandated judgments) due to compliance with this conversion rule, the MMA retains the sole discretion to reduce the required exchange amount.

Bank Obligation: Licensed commercial banks are mandated to sell 60% of all foreign currency proceeds received under this regulation to the MMA by Wednesday of the following week.

5. Reporting Obligations

• Monthly Activity Report: All tourism providers must submit details of goods sold and services rendered in a month to the MMA before the 28th day of the following month.
• FX Conversion Report: Category A and Category B providers must report foreign currency sold to licensed local banks within 10 working days from the end of each month.

Note: Prescribed standard reporting templates are expected to be published shortly by the MMA.

6. Penalties for Non-Compliance

Failure to adhere to the registration, depositing, exchange, or reporting rules of Regulation 2024/R-91 will subject the business to administrative fines ranging between MVR 5,000 and MVR 1,000,000.