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Parliament has approved a proposal to double withholding tax on payments to foreign contractors working on construction projects in the Maldives, raising the rate from five to 10 percent.
Mariyam Adheela
Committee of the Whole House 4th sitting of 2026 -- Photo: People's Majilis
MALÉ: The People’s Majlis today approved an amendment to the Income Tax Act to increase the withholding tax deducted from payments made to foreign contractors working on construction projects in the Maldives.
The amendment, proposed by Government-aligned MP Hassan Zareer, was passed with 54 of the 56 MPs who voted supporting it. Two MPs voted against the amendment.
Under the approved change, businesses making payments to foreign contractors will be required to withhold 10 percent as tax, compared with the current rate of five percent.
The government has said the amendment is aimed at creating a fairer and more competitive environment between Maldivian and foreign contractors bidding for construction projects in the country.
Withholding tax is deducted from a payment before it is made to the recipient and paid to the Maldives Inland Revenue Authority as tax.
The tax applies to income earned in the Maldives by foreign parties that are not resident in the country, helping ensure that tax due on income generated locally is collected by the government.
