The purpose of this guide is to help foreign investors that intend to set up business operations in the Maldives. In the tourism sector, foreign investors are given the opportunity to fully own tourist resorts, tourist hotels, and tourist vessels subject to a few government policy limitations.
This guide will outline who a foreign investor is as per the updated government policy, the Ministry to register with, the steps involved in the registration process with key registration requirements, and finally the administrative fee to be paid upon successful registration. In this way, this guide lays the foundation as a ‘Step 1’ for any foreign investor impassioned in investing in the Maldives. After a successful registration, further steps such as registering with the Maldives Inland Revenue Authority (MIRA) and obtaining other relevant licenses will follow. Some of these transactions require a minimum of USD 1,000,000 to be injected. Nevertheless, for tourist resort development, the government remains open to discuss and negotiate on the minimum investment required.
Who is a Foreign Investor?
Before understanding the laws and policy relevant to foreign investors, who exactly a foreign investor is must be outlined. As per the most recent foreign investment policy[1] a foreign investor is:
If the business or individual meets the criteria above, they are deemed to be a foreign investor and the laws and regulation below will apply. For such a foreign investor the following steps must be completed to register successfully.
The Relevant Ministry
The Ministry of Economic Development (MED) is the focal point for FDI registrations. MED exercises the sole discretion for FDI approvals. The Ministry consistently endeavours to improve the transparency, predictability, and certainty of the foreign investment process in order to nurture a business-friendly environment.
Registration Steps
Once they approve the application, an invitation will be sent to sign the Foreign Investment Agreement. Additionally, an administrative fee of USD 5000 will have to be paid to the MIRA for this process. The receipt of this payment will have to be presented at the next step.
Available Business Structures
Every foreign investor must register the business entity either as a company or partnership as per the Business Registration Act 18/2014. Alternatively, a company may re-register to conduct business activity in the Maldives as well (Maldives Companies Act 10/96). Re-registration does not involve incorporating a new company. Instead, a pre-existing foreign company is mirrored in the domestic jurisdiction by registering with the MED. The needs of each business are different. Some foreign entities will elect to choose a company structure while others may prefer a partnership structure. Moreover, the specific demands of contrasting projects will have to be studied and examined before choosing an appropriate structure as well. It is imperative that an apposite structure is set up at the outset to facilitate smooth and stable operations.
Registration Routes
MED has refined the registration mechanism to promote the ease of doing business in the Maldives. It is now a simple and straightforward procedure.
There are two key routes available for registration: the “Automatic” and “Government” route. The Automatic route guarantees the approval process if it conforms with the investment requirement or threshold criteria detailed by the government and the applicant meets the shareholding percentage outlined by the government FDI policy. The main advantage of this route is the processing speed. The Automatic route processes applications in 2 workings days. Investors choosing to develop a tourist resort have the benefit of completing the application via the Automatic route.
In contrast, the Government route is for applications that are case specific and sensitive in nature that may not directly meet the government criteria set out in the Automatic route. This route takes 5 to 14 days to process. Foreign investors that decide to open a guest house will have to follow this route. However, it is noteworthy that foreign investors can only own a maximum of 49% of a guest house. The rationale behind this policy is to protect both new and incumbent local investors.
In summary, any foreign investor investing in the Maldives must obtain approval in one of these forms before initiating business operations.
Our role
At AWG we understand the difficulties investors face when investing in a completely new jurisdiction. The relationship with the MED that we have nurtured over the year helps us to streamline the investment process. In this way, we can help facilitate any legal and administrative burdens that the investors face. Our services include:
