Why Set Up Business in Maldives?
A small island located in the Indian Ocean, The Maldives consists of 1,192 islands surrounded by shallow, crystal clear lagoons enclosed within naturally protective coral reefs. The country is renowned worldwide for its natural geographical beauty and around 111 of Maldives’ islands have been developed into luxury resorts for tourists, from which the country generates most of its income. Additionally, the Maldives sits astride busy sea-lanes that connects Asia with the rest of the world. In addition to the local language, English is widely spoken and is the main medium of instruction in schools and the primary medium of communication in business. The Maldivian Rufiyaa (MVR) is the main unit of currency used in the country. The most common foreign currency used within the country is the US dollar.
According to a 2014 project titled “Doing Business,” when compared to 188 economies, Maldives ranked 50 as the easiest places to start a business. The overriding piece of legislation governing incorporation of businesses in the Maldives is the Business Registration Act. The Business Registration Act requires every person carrying on business in the Maldives to register a business entity in one of the prescribed forms for registration which are:
– Company under the Maldives Companies Act
– Partnership under the Partnership Act
– Cooperative Society under the Cooperative Societies Act
– Sole Proprietor under the Sole Proprietorship Act
How to set up a business in Maldives
To set up a business in Maldives, one needs to first of all, search for a unique company name and then pick up the standard application forms for incorporation of his company. This will take 1 day and no fee will be charged. The Registrar of Companies handles this step, while the rules about acceptable names of firms is given in the Companies Act 1996.
The Registrar of Companies gives a standard memorandum and articles of association in order to help make the process of incorporation easier and a standard form can be obtained from the Internet. Secondly, the applicant has to pay registration fees and this will take a day. Fees are determined based on a sliding scale of authorised share capital. This process is handled by the Ministry of Economic Development. Apart from this sliding scale fee, public firms are required to pay a yearly fee of MVR 10,000 (US$ 64.94) before the end of March each year. Private firms need to pay MVR 2,000 (US$ 129.87). Once this is done, the next step is to register at the Registrar of Companies and apply for a Tax Identification Number (TIN). According to the Companies Act 1996, all companies need to make a company seal and register it with the Registrar of Companies. This process takes 1 day and costs MVR 250 (US$ 16.23). The final step is to register the company seal with the Registrar of Companies. This takes 1 day and does not cost money.
There are numerous incentives offered to foreign investors, which include
– Right to 100% foreign ownership.
– Legally backed investment guarantee.
– Provision for overseas arbitration of disputes
– Long term contractual agreements and long term lease of land
– Freedom to use foreign managerial, technical and unskilled workers.
– No foreign exchange restrictions.
– No restrictions on the repatriations of earnings or profits.
All FDI proposals are screened by the Ministry of Economic Development and the process includes standard due diligence efforts such as a local police screening of all investors, determining the financial standing of the proposed shareholders through a bank reference, as well as performing a background check on the investors involved. The opinions of the related sector participants are also sought. Each case is reviewed based on its merits and other factors, including the number of existing investors in the area, and the employment and technology transfer potential demonstrated.
The Ministry of Economic Development makes the final decision. This has been a fairly transparent process to date. In conclusion, Maldives plans to develop special economic zones to provide employment diversification and opportunities in off-port shipping services, IT, and the financial services industry. The government is currently considering a foreign investment proposal to establish a commercial port and the country’s first free trade zone near the capital city Male. If you are looking to set up a business in Maldives, contact us.