Maldives
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WHY MALDIVES?
There are three main types of legal entities that could be considered to start a new business in Maldives; sole proprietorship, partnership and limited liability company.
Value Added Tax (VAT):
This type of companies offer total ownership to foreigners with limited liability and a business profit tax rate of 5% on their earnings from outside of the country. That is the reason, most of the foreigners choose the LLC as the type of company to form their entity in Maldives. Moreover, in LLC the shareholders’ liabilities are limited to their contributions to the share capital.
Sole Proprietorship
In Maldives, the sole proprietorship is the simplest form of business to operate. However, the sole proprietorship is not a legal entity and the business owner is personally responsible for its debts. Moreover, the sole proprietorship can operate under the name of its owner or a business name registered for the purpose.
Partnership
There are two types of partnerships firm can be created under Maldives Partnership Act: General Partnership – General partnership is comprises of two or more partners who have unlimited liability and are jointly and severally liable for all the debts and obligations of the partnership. Limited Liability Partnership – This type of partnership exists as a separate legal entity distinct from its owners whereas the partner is not personally liable for any debts other than for the amount already invested in the partnership. This can be converted to a general partnership.
Being an independent island country in the north central of Indian Ocean, Maldives consists of a chain of about 1,200 small coral islands and sandbanks, grouped in clusters, or atolls. Since 18th century its economy has developed rapidly, whereas the annual growth of gross domestic product (GDP) has been high. The country’s economy is mainly based on tourism, fishing, boat building, and boat repairing with the tourism sector driving a rapid growth. Maldives has entered the South Asian Free Trade Area (SAFTA) and signed a free trade agreement with China recently. Maldives is a major importer of goods including consumer goods such as food textiles, medicines, and petroleum products etc.
<span data-metadata=""><span data-buffer="">ADVANTAGES
Although Maldives is world wide known for its natural beauty and tourism, doing business in Maldives also have a number of benefits . Followings are some of the reasons of doing business in Maldives:
Easy property and construction strategy
In Maldives, Labor cost and raw material expense are limited, which makes it economically beneficial for Business owners to establish an estate for their company. Moreover the paperwork is also online which saves both time and energy.
Stable economy and transparent legal system
As it is well known that, especially since the Maldives government has opened plenty of opportunities for foreigners to benefit since the late 1980s, the country has become one of the best place for foreign investment.
Favourable business environment:
The Armenian government has implemented several measures to create a favourable business environment, including streamlined regulations, simplified tax procedures, and a low corporate tax rate.
Cost-effective operations:
The cost of doing business in Armenia is relatively low compared to other countries in the region. This makes it an attractive location for businesses looking to reduce their operational costs.
Growing economy:
Armenia has a growing economy that offers numerous opportunities for businesses, particularly in the areas of technology, tourism, and agriculture.
Access to funding:
Armenia has a well-developed banking system and access to international funding sources. This makes it easier for businesses to secure financing for their operations.
Overall, the combination of a strategic location, skilled workforce, favorable business environment, cost-effective operations, growing economy, and access to funding makes Armenia an attractive destination for businesses looking to expand their operations.
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<span data-metadata=""><span data-buffer="">SIMPLE TAX REGIME<span data-metadata="">
Corporate tax
In Maldives, tax residents are liable to be taxed on his worldwide income whereas, a non resident is liable to income tax in respect of income derived from Maldives. Following tax rates are applicable for different types of corporate taxpayers:
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Banks
The banking institutions are liable to tax at a rate of 25% of its taxable income. There is no threshold limit available for a bank.
Non resident international transport operators
In Maldives, the income derived by a non resident shipping or aircraft operator from transportation of passengers, livestock, mail, parcel, merchandise, or goods on a ship or an aircraft, which departs from a place located in Maldives, shall be subject to income tax at the rate of 2%.
Individual income taxes
A tax resident in Maldives is subject to income tax on worldwide income. A non resident and a temporary resident is taxable in to respect of income that is derived from Maldives.
Tax rate
An individual (resident, non resident, and temporary resident) shall be taxed on one’s taxable income at the following rates:
MALDIVES COMPANIES
There are three main types of legal entities that could be considered to start a new business in Maldives; sole proprietorship, partnership and limited liability company.
Maldives Limited Liability Company (LLC)
This type of companies offer total ownership to foreigners with limited liability and a business profit tax rate of 5% on their earnings from outside of the country. That is the reason, most of the foreigners choose the LLC as the type of company to form their entity in Maldives. Moreover, in LLC the shareholders’ liabilities are limited to their contributions to the share capital.
Sole proprietorship:
In Maldives, the sole proprietorship is the simplest form of business to operate. However, the sole proprietorship is not a legal entity and the business owner is personally responsible for its debts. Moreover, the sole proprietorship can operate under the name of its owner or a business name registered for the purpose.
Partnership:
There are two types of partnerships firm can be created under Maldives Partnership Act: Genral Partnership – General partnership is comprises of two or more partners who have unlimited liability and are jointly and severally liable for all the debts and obligations of the partnership. Limited Liability Partnership – This type of partnership exists as a separate legal entity distinct from its owners whereas the partner is not personally liable for any debts other than for the amount already invested in the partnership. This can be converted to a general partnership.
The country’s economy is mainly based on tourism. Tourism is the largest industry in the Maldives, accounting for 28% of GDP and more than 60% of the Maldives’ foreign exchange receipts. Other industries such as fishing, boat building, and boat repairing with the tourism sector have been driving a rapid growth. Maldives has entered the South Asian Free Trade Area (SAFTA) and signed a free trade agreement with China recently. Maldives is a major importer of goods including consumer goods such as food textiles, medicines, and petroleum products etc.
Author: Chandrawat & Partners
Topic: Doing Business in Maldives
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