The People’s Majlis has commenced debating an amendment to the Income Tax Act proposed by the government, which seeks to increase the non-resident withholding tax on foreign contractors from five percent to ten percent. Government officials from the ruling PNC estimate that this change will generate an additional MVR 251 million in annual state revenue. Proponents of the amendment state that its primary objectives are to ensure a level playing field for Maldivian contractors in project bidding and to prevent foreign entities from exploiting existing tax advantages. Conversely, members of the opposition MDP noted that while increasing the tax rate is a positive step, the benefit to local contractors remains questionable as small-scale projects continue to be awarded to foreign firms.
