The Parliament has passed a significant amendment to the Foreign Exchange Act, introducing revised regulations for the deposit and conversion of foreign currency earnings.
The bill, introduced on behalf of the government by Holhudhoo MP Abdulla Sattar Mohamed, was passed with 58 votes in favour following a review by the Public Accounts Committee, which recommended the bill without further changes.
The primary objective of the amendment is to modernise the oversight of foreign currency entering the Maldivian economy. A key change includes raising the threshold for mandatory foreign currency deposits. Under the revised law, entities in the tourism sector, as well as any party earning at least USD 25 million annually from goods or services, must deposit their earnings into accounts at banks licensed by the Maldives Monetary Authority (MMA). This marks an increase from the previous threshold of USD 15 million.
The legislation also tightens rules for "Category-A" tourism establishments, which are now required to convert 20 percent of their total monthly foreign currency revenue into MVR. This replaces the prior regulation that allowed these entities to choose between a flat rate of USD 500 per tourist or 20 percent of their total foreign currency income.
In a move to support the local economy, the amendment provides substantial relief for 100 percent Maldivian-owned businesses operating outside the tourism and financial sectors. These enterprises will now only be required to convert 7 percent of their monthly foreign currency revenue into local currency.
To ensure a smooth transition, the bill mandates that the MMA establish a specific transitional period for compliance. Additionally, all relevant guidelines and regulations must be updated within 30 days of the law coming into effect.