How to Set Up a Business in the Maldives as a Foreign Investor: A Step-by-Step Guide

Jul 22

The Foreign Investment Act 2024 (Act No. 11/2024), in force since 3 December 2024, sets out a structured route for foreign parties to establish and operate businesses in the Maldives. This article sets out the process in six practical steps.

1. Confirm That Your Sector Is Open to Foreign Investment

Before anything else, check how your intended business activity is classified. The Act categorises all business activities into open, restricted, and closed sectors.

Open sectors permit 100% foreign ownership, subject to minimum investment thresholds. For example, operation of tourist resorts, and banking and financial services (excluding insurance and pension funding).
Restricted sectors cap foreign ownership and typically require a Maldivian joint venture partner. For example, dive centres are limited to 65% foreign ownership while watersports centres are limited to 49% foreign ownership.
Closed sectors, such as wholesale and general retail trade and travel agency operations, are reserved for Maldivians.

The sector lists are published by the Ministry of Economic Development and Trade and are updated from time to time, so this should be confirmed against the current gazetted lists.

2. Obtain Foreign Investment Approval

Foreign investment approval follows four stages. First, the investor submits an application to the Ministry, which, if satisfied, issues a No Objection Letter constituting preliminary approval. Second, the investor fulfils the obligations set out in that letter, including registering a legal entity in the Maldives. Third, the Ministry issues the Foreign Investment Licence. Fourth, the investor and the Ministry execute a Foreign Investment Agreement.

Two timing points matter here. Approval must be in place before shares in an existing Maldivian company are transferred to a foreign party. Once the licence is issued and the agreement signed, operations must commence within six months.

3. Register a Legal Entity

Foreign investors can structure their presence in the Maldives in several ways. A new company may be incorporated under the Companies Act (Act No. 7/2023) under which a private company is offered a separate legal personality and limited liability, and the current Act permits incorporation with a single shareholder. A company incorporated abroad may instead be re-registered in the Maldives, allowing an existing corporate vehicle to operate locally without creating a new subsidiary. Partnership structures under the Partnership Act (Act No. 13/2011) are also available, and joint venture arrangements are common where the investment involves a Maldivian partner. The appropriate form depends on the investment structure, the sector’s ownership requirements, and tax considerations.

Incorporation is handled through the Ministry’s business portal. The company’s constitutional documents should be prepared with the foreign investment structure in mind, particularly where the sector is restricted and ownership percentages must be maintained.

4. Complete Tax Registrations

When a business is registered with the Ministry of Economic Development, it is automatically registered with the Maldives Inland Revenue Authority (MIRA) for income tax purposes. GST registration, however, is a separate application to MIRA, required once the registration threshold is met and businesses supplying goods and services in the tourism sector must register for GST regardless of turnover. GST is currently charged at 8% in the general sector and 17% in the tourism sector. Corporate income tax applies at 15% on taxable profits exceeding MVR 500,000 per year, and businesses should also be aware of withholding tax obligations on certain payments to non-residents.

Registering correctly at the outset matters beyond tax compliance itself: under the current expatriate employment framework, a business’s tax filing history with MIRA is taken into account when expatriate worker quotas are reviewed.

5. Understand Banking and Foreign Currency Exchange Obligations

The Foreign Currency Act (Act No. 32/2024), in force since 1 January 2025, requires monetary transactions in the Maldives to be conducted in Maldivian Rufiyaa, subject to specified exceptions that include much of the tourism sector. Businesses earning foreign currency, particularly in tourism, are subject to registration and mandatory exchange requirements administered by the Maldives Monetary Authority.

Foreign investors should factor these rules into their banking arrangements early: opening local accounts, structuring the flow of foreign currency revenue, and planning for the repatriation of profits all require attention to this framework.

6. Plan for Staffing

Hiring expatriate staff requires an approved quota and work permits, and the Regulation on Employment of Expatriates in the Maldives (Regulation No. 2025/R-120) has introduced phased localisation of certain job categories which means that some roles must be filled by Maldivians. Work visas are now fully digital. Staffing plans, especially for managerial and technical roles, should be checked against the localisation timelines before committing to an operating model.

Conclusion

Setting up in the Maldives as a foreign investor is a sequenced process: sector classification, investment approval, entity registration, tax and foreign currency exchange compliance, and staffing. Investors who address the requirements in the right order avoid the most common causes of delay. We assist foreign investors at every stage of this process, from initial sector assessments through to licensing and operational compliance.

This article provides a general overview and does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. The information is based on the Foreign Investment Act 2024 (Act No. 11/2024), the Ministry of Economic Development's Gazette Announcement No. (IUL)101-IM/PRIV/2025/2 (Annexes 1 and 2), the Foreign Investment Application Form, the Companies Act (Act No. 7/2023), the Foreign Currency Act (Act No. 32/2024), and the Regulation on Employment of Expatriates in the Maldives (Regulation No. 2025/R-120). Businesses should seek professional legal advice regarding their specific circumstances. For further information, kindly contact contact@nadhanazeer.com.