President Dr Mohamed Muizzu ratified the Foreign Currency Bill today. The bill was passed in the 60th sitting of the third session of the Parliament on December 12.
The bill aims to establish clear guidelines for managing foreign currency transactions in the Maldives and regulate currency exchange practices. The legislation mandates that all domestic transactions must be conducted in Maldivian Rufiyaa, prohibiting the use of foreign currencies except under specific circumstances defined by law. It also forbids charging Maldivian nationals for any services provided or acquired within the Maldives in any currency other than the Rufiyaa.
The bill introduces a framework for businesses operating under Maldivian law to exchange foreign currency obtained from realised sales proceeds. These businesses are required to exchange their foreign currency with banks operating in the Maldives, which, in turn, must sell a specified percentage of these exchanges to the Maldives Monetary Authority (MMA). Based on their operations and revenue, businesses are categorised into three distinct groups and must exchange foreign currency as follows:
- Category A: Establishments such as resorts, integrated tourist resorts, private island resorts, resort hotels, or any such business that falls under this category must exchange either USD500 per tourist per month or 20% of their gross monthly sales with banks.
- Category B: Establishments such as tourist hotels, tourist guest houses, and tourist vessels are required to exchange USD25 per tourist per month or 20% of their gross monthly sales with banks.
- Category C: This category includes businesses not falling under Categories A or B but with annual sales or purchase transactions exceeding USD15 million in foreign currency, they must exchange 20% of their gross sales with banks.
The Act further requires businesses operating in the tourism sector or those exceeding the USD15 million thresholds in foreign currency transactions annually to register with the MMA and transfer their realised foreign currency sales proceeds to a local bank.
The MMA will oversee the implementation of this legislation, with regulations under the Act to be formulated within two months of its enforcement.
Following its ratification, the Foreign Currency Act has been published in the Government Gazette and will come into effect on January 1, 2025.
With the Act coming into force, except for situations mentioned in sections 22 (a) and (b) of this Act, Foreign Currency Regulation, and subsections (d) and (e) of section 24 of the Maldives Monetary Act, will be repealed.