Overview of the Foreign Currency Act 2024
In Brief
Law No. 32/2024, i.e. the Foreign Currency Act 2024 (the “Act”), was passed by the Maldives Parliament and subsequently ratified by the President of the Republic of Maldives on 14 December 2024. This Act expands on and establishes primary legislation on the Mandatory Deposit and Mandatory FX Regimes previously adopted under MMA subordinate legislation, the Foreign Currency Regulation.
The Act repeals Section 24 (d) and (e) of Law No. 6/81 (Maldives Monetary Authority Act 1981) and replaces and supersedes Regulation No. 2024/R-91 (Foreign Currency Regulation) (the “Repealed FX Regulation”) which has been in effect since 1 October 2024 until 13 December 2024.
The Maldives Monetary Authority (“MMA”) oversees implementation and enforcement as specified in the Act.
Effective Date: 1st January 2025.
Table of Contents
Quick Facts Summary Sheet (Page 3)
Mandatory Local Currency Transactions and Exemptions (Page 4)
Foreign Currency Act: What’s Different From The Repealed FX Regulation? (Page 5)
Transitional Arrangements (Page 10)
Quick Facts Summary Sheet
Mandatory FX Thresholds
TOURISM CATEGORY A (Registered Tourist Resorts, Integrated Tourist Resorts, Private Islands, Resort Hotels etc.):
USD 500 per tourist per month OR 20% of gross monthly sales in foreign currency.
TOURISM CATEGORY B (Registered Tourist Vessels, Tourist Hotels, Guesthouses):
USD 25 per tourist per month OR 20% of gross monthly sales in foreign currency.
NON-TOURISM / OTHER BUSINESS (with foreign currency annual earnings of at least USD 15,000,000):
20% of gross monthly sales in foreign currency.
Transactions in MVR
All local transactions are mandatory to be conducted in MVR, with the exception of 15 categories of exempted transactions, including:
Payments for goods and services in foreign currency by a business earning foreign currency, and acceptance of foreign currency payments by that vendor.
International transactions, remittance services, goods and services provided to tourists, etc.
Core Regulatory Framework
| Focus Area | Details |
| What is covered? | • Foreign currency transactions in Maldives.
• Mandatory deposits of foreign currency into local bank accounts.
• Mandatory exchange of foreign currency income. |
| Who does this apply to? | • Transaction Currency: Applicable to all.
• Mandatory Deposit & FX: Applicable to tourism establishments and ‘other businesses’ with annual foreign currency revenue $\ge$ USD 15,000,000. |
| On Foreign Currency | • Foreign Currency defined as non-Rufiyaa currency.
• No restrictions on expatriation/repatriation of foreign currency.
• No impact on foreign currency deposits in local bank accounts. |
| Key Concepts | • Mandatory Deposit: Requirement to deposit foreign currency income from all realised sales proceeds to a Maldives bank account.
• Mandatory FX: Requirement to exchange a minimum amount of foreign currency to Maldivian Rufiyaa. |
Definitions & Notes:
Realised sales proceeds: All foreign currency income received in a calendar month.
Tourist: Anyone arriving in the Maldives on a tourist visa. Exemptions apply to: (i) children below 12 years, (ii) tourists on complimentary stays, (iii) tourists staying for less than 24 hours, and (iv) guests under state privileges.
Business: Captures business conducted by both legal entities and natural persons.
Mandatory Local Currency Transactions and Exemptions
The Act requires that all local transactions be carried out in the local currency (MVR). Notwithstanding this general rule, foreign currency can be exchanged as part of exempted transactions. The Act expands the original 12 exempted categories from the Repealed FX Regulation to 15 (*new categories indicated with *):
Payments legally mandated (under law or regulation) to be settled to the state or governmental agencies in foreign currency.
Payments to banks and finance companies for services provided and other customer transactions.
Remittance services.
Transactions between insurance companies, intermediaries, and customers regarding tourism-related insurance plans.
International transactions.
Goods and services provided directly to tourists in foreign currency.
International trade and payment for international exports.
Payment for goods and services received by a foreign currency-earning business (at its discretion), and vendor acceptance.
Dividend payments to shareholders, shareholder transactions, and related-party dealings by a foreign currency-earning business.
Sale of shares of a business earning income in foreign currency.
Payment of salaries and benefits to employees by a foreign currency-earning business (at its discretion).
Payment for goods and services in foreign currency received by duty-free vendors.
Securities market transactions*.
Foreign currency payments under a court, tribunal, or arbitral order*.
Any other foreign currency payment obligations/transactions determined under subordinate legislation*.
Foreign Currency Act: What’s Different From The Repealed FX Regulation?
| Aspect | Repealed FX Regulation | New Act |
| Registration with MMA | Only tourism service providers registered with MIRA were required to register with MMA. | Expanded Registration Requirements:
• Tourism service providers not yet registered must register within 10 days from 1 Jan 2025.
• Businesses with annual FX earnings $\ge$ USD 15,000,000 must register within 30 days from 1 Jan 2025 (on or before 30 Jan 2025).
• New tourism businesses must register within 30 days of starting operations.
• Businesses reaching the USD 15M threshold in a calendar year must register before the end of January of the following year. |
| Mandatory Deposit Obligations | Only Category A & B tourist establishments were required to deposit realised FX sales proceeds into a local bank account before the 28th day of the third month. | • Rules remain unchanged for Category A & B tourist establishments.
• New Addition: Non-tourism businesses with annual FX earnings $\ge$ USD 15,000,000 are now also required to deposit realised sales proceeds into a local bank account before the 28th day of the third month. |
| Mandatory FX Obligations | Fixed USD conversion per tourist:
• Category A: USD 500 per tourist.
• Category B: USD 25 per tourist. | Flexible formula options introduced:
• Category A: USD 500 per tourist arrival OR 20% of gross monthly FX sales.
• Category B: USD 25 per tourist arrival OR 20% of gross monthly FX sales.
• Exemptions: Tourists $<24$ hours, under 12 years, complimentary stays, or state guests.
• Other Businesses ($\ge$ USD 15M): Mandatory FX at 20% of gross monthly FX sales (excludes financial institutions). |
| Review of Mandatory FX | MMA retains discretion to reduce conversion amounts if compliance impacts tax, debt, or court obligations. | Provisions are duplicated in the Act. Further circumstances for relief will be detailed in subordinate regulations. |
| Reporting & Record Keeping | Monthly reporting on sales and FX conversions within strict deadlines. | Monthly additional reporting requirements for tourism establishments are no longer applicable. Frequency and specifics will be set by subordinate MMA regulations. |
| Penalty for Non-compliance | Fines ranging from MVR 5,000 to MVR 1,000,000 based on severity. | Stricter Penalties:
• Deposit Default: Fine up to 0.25% of total deposit amount per month, calculated daily.
• Conversion Default: Fine up to 0.5% of total conversion amount per month, calculated daily.
• General Breaches: MVR 10,000 to MVR 1,000,000.
• Failure to pay within 90 days: May result in business license suspension. |
Transitional Arrangements
For realised sales proceeds earned during October, November, and December 2024 (under the Repealed FX Regulations):
| Requirement | Rule |
| Mandatory Deposits | Tourist establishments must continue to deposit realised sales proceeds into a domiciled local bank. |
| Mandatory FX (Category A) | Apply USD 500 per tourist $\times$ total tourist arrivals. (Under old definition: includes children, complimentary stays, short stays). |
| Mandatory FX (Category B) | Apply USD 25 per tourist $\times$ total tourist arrivals. (Under old definition: includes children, complimentary stays, short stays). |
| Reporting Requirements | Repealed FX Regulation reporting rules continue to apply for Oct–Dec 2024 proceeds. |
