Foreign Currency Bill: Summary of Key Provisions
Section 3: General Rule
The general rule provided in the bill is that all monetary functions and obligations in the Maldives will have to be carried out in MVR subject to exceptions provided in the Act or any other law; and it is an offence to offer or make payment in any other currency.
Section 4: The Exceptions
The exception to the general rule is provided in the law, and it provides a list of transactions/functions that can be carried out in foreign currency despite the general rule.
1. Payments permitted to be made in a foreign currency to government or government agencies as is provide in the law or regulations;
2. Banks and financial institutions and their transactions with their customers;
3. Remittance agencies and their transactions with their customers;
4. Policies sold by insurance companies to tourism establishments, and transactions between insurance companies, their intermediaries and customers, and other services given by insurance companies as detailed in the regulations made under the Act;
5. Transactions carried out at the securities market;
6. International transactions [this is defined to mean all transfers to and from Maldives];
7. Accepting payment for goods and services supplied to tourists;
8. Accepting payment for goods and services exported from the country;
9. Making payment for goods and services in foreign currency, if it is a business receiving income in foreign currency, and if it elects to do so. [business receiving income in foreign currency is defined to mean any business which receives any amount of foreign currency as income]
10. Payment of dividends, conduct of transactions between a business and its shareholders, and other parties related to that business If it is a business receiving income in foreign currency,;
11. Buying and selling of shares of a business receiving income in foreign currency, issue of bonds and sukuk by that business, and transactions between the business and their bondholders and / or sukuk holders;
12. Paying salary and benefits of their employees in foreign currency, if it is a business receiving income in foreign currency;
13. Payments made by tourists to pay for goods supplied by duty free shops;
14. Payments made under judgments/orders by courts and tribunals and awards/orders by arbitral tribunals; and
15. Any other transaction or obligation listed in regulations made under the Act.
Section 5: No compulsion for Maldivians
Even if certain transactions are made permissible to be conducted in foreign currency under section 4, except in case of a payment made to a government agency or financial institution, a Maldivian buying goods or services in the Maldives cannot be compelled to make payment in a foreign currency.
Section 7: The Affected Persons
The bill targets the following two categories of persons, and require all their foreign currency income (realized sales proceeds) received for supply of goods or services to be deposited in a local bank account prior to the 28th day of the third following month.
1. Suppliers of goods and services in the tourism industry; and
2. All others (except financial institutions and tourism establishments) who earn foreign currency income equivalent to USD15m or more.
Section 8: MIRA Financials to MMA
MMA can ask MIRA to provide financials submitted to MIRA by businesses to the extent necessary to achieve the objects of this Act.
Section 9: The Conversion Requirement
1. Category A tourism establishments (like resorts, resort hotels, integrated tourist resorts, private islands);
2. Category B establishments (like tourist vessels, tourist hotels and guesthouses);
3. Businesses that received at least USD 15m last year in foreign currency.
Section 10: Amount of Conversion
Category A has two options: all tourist arrivals for the month at the rate of USD 500 per tourist, or 20% of income (gross sales proceeds) received in the month.
Category B has two options: all tourist arrivals for the month at the rate of USD 25 per tourist, or 20% of income (gross sales proceeds) received in the month.
Others – 20% of foreign currency income (gross sales proceeds) received in a month.
All conversions for a given month must be completed within the 28th day of the third following month.
Section 11: Exempt Persons
1. A tourist will not include one who stays for 24 hours or less in a tourist facility; children under 10 years, who stay there on FOC or complimentary basis; and
2. Dignitaries with privileges granted by Government.
Section 12: Revision of Conversion Amounts
if conversion is carried out according to section 10 by persons specified in section 9, and they cannot have adequate foreign currency funds to meet following obligations, and if MMA is also of the same view, then MMA may provide a lesser threshold for them, but only for a period to be determined by MMA, as provided in the regulations to be made under the Act.
1. Tax due to government;
2. Debt payable to a financial institution;
3. Payments due under a judgment of court tribunal or arbitration; or
4. Other activities permitted by MMA.
The regulations shall provide for details and documentation to be provided with an application made to MMA under this provision, and processes to be followed in the grant of permission.
Section 14: Prescribing Penalties
MMA has the power to investigate and act against persons who contravene this Act or regulations made under it, or alter the accounts and other details, or act in breach of any directives issued by MMA.
Powers available to MMA and procedures to be followed in an investigation shall be provided in regulations made under the Act.
Section 15 (a): Fine for Not Depositing
Actions against breaches – MMA has the discretion to impose a fine not exceeding 0.25% of the amount otherwise payable by a person for the month if they do not make the deposit foreign currency in a bank account, or do not deposit at the required threshold. If MMA considers appropriate, MMA can keep imposing a fine amount not exceeding 0.25% for each day of delay in remedying the breach.
Section 15 (b): Fine for Not Converting
MMA has the discretion to impose a fine not exceeding 0.5% of the amount otherwise convertible by a person for the month if they do not convert foreign currency to the requisite threshold. If MMA considers appropriate, MMA can keep imposing a fine amount not exceeding 0.5% for each day of delay in remedying the breach.
Except for those two instances, in respect of other breaches, MMA has the discretion to levy a fine between MVR 10,000 and MVR 1m depending on the gravity of the breach.
Section 16: Withholding License
if a person does not pay the fine within 90 days of imposition, MMA has the discretion to ask the government agency in accordance with regulations made under the law to temporarily withhold the business license issued to the person.
Section 17: Recovery of Fines
MMA has the discretion to recover the fine through court action in addition to taking steps to withhold / suspend the business license.
MMA may consider granting some relief in payment of fines.
Any recovery action must be completed within 180 days of filing the action.
Section 18: Registration at MMA
All businesses providing tourism goods and services are to register within 10 days of this Act. Those registered already under the MMA regulations will be deemed registered.
Businesses qualifying for USD15m per year income should register within 30 days of the Act.
New businesses to sell tourism goods and services must register within 30 days of commencement of the business.
Any business that earns income to the amount of USD15m after the commencement of the Act, shall register with MMA by the end of January, the following year.
Section 19: Record Maintenance
All documents, information and reports as required by MMA in pursuance of this Act or regulations must be submitted to MMA; and persons shall maintain such records for a period determined by MMA, and these can be stored in electronic form.
Section 20: Enforcement Agency for the Act
MMA is the nodal agency for the enforcement of this Act; and MMA has the power to issue directions, circulars, and directives to enforce the Act.
