Withholding tax on foreign contractors to be increased from 10 percent
17 އޯގަސްޓު 2026 | ހޯމަ 12:26The government has submitted a proposal to Parliament to increase the withholding tax on non-resident contractors from five percent to 10 percent, a move projected to generate an additional MVR 251 million in state revenue. While the administration aims to create more opportunities for local companies through this amendment, opposition members have expressed concern, arguing that this measure alone will not provide sufficient growth for Maldivian businesses.
Hassan Zareer, Member of Parliament for the Mathiveri constituency | Majilis
A bill has been submitted to the People’s Majlis seeking to increase the withholding tax levied on non-resident contractors in the Maldives.
During Monday's parliamentary sitting, an amendment to the Income Tax Act was submitted on behalf of the government by MP Hassan Zareer of the Mathiveri constituency. The proposed amendment seeks to increase the current tax rate from five percent to 10 percent.
Among the government's additional objectives for proposing this bill is the establishment of a competitive environment between foreign and local contractors within the Maldivian construction industry. Furthermore, it has been stated that these amendments will increase opportunities for local businesses to secure projects.
However, members of the opposition MDP argue that simply increasing the withholding tax from five percent to 10 percent will not provide Maldivian businesses with any additional opportunities to undertake projects.
During the debate on the bill, Vaikaradhoo MP Hussain Ziyad noted that the stated objective of the legislation is to prioritize opportunities for Maldivians. However, he pointed out that while the Fushidhiggaru project is currently the largest undertaking in the country—and despite claims that the land reclamation is being managed by MACL—the actual work is being carried out by foreign entities. Furthermore, he highlighted that the government is now awarding contracts for the development of local youth centers to Chinese companies.
Expressing concern over the lack of subcontracting opportunities for local businesses, Dr. Ahmed Shamheed, Member of Parliament for the Hulhumalé South constituency, stated that mandating a 30 percent subcontracting requirement for local contractors in foreign-led projects would significantly increase the workload available to Maldivian companies.
MP Shamheed stated that the government exempts foreign companies from paying import duties on excavators and other machinery. However, he noted that local Maldivian companies are still required to pay duties on such equipment.
The government estimates that the tax hikes will generate an additional 251 million rufiyaa in state revenue. However, Ahmed Naseer, the government-aligned Member of Parliament for the Ihavandhoo constituency, noted that the positive impact of these legislative amendments will only be fully realized in three to four years.
