Parliament Accepts Bill to Ease Foreign Currency Conversion Rules for Businesses

The Maldivian Parliament has unanimously accepted a bill to amend the Foreign Currency Act, aiming to revise the criteria for converting foreign-currency income into Maldivian rufiyaa. All 57 members present voted in favor of the government-sponsored bill, which has now been referred to the Public Accounts Committee for detailed review. Submitted by Holhudhoo MP Abdulsattar Mohamed, the legislation seeks to redefine which entities must deposit foreign currency into bank accounts and specify who is required to convert those funds into the local currency. A primary objective of the amendment is to strengthen the regulations governing conversion for Category-A establishments while providing relief to fully Maldivian-owned businesses, excluding financial institutions and the tourism sector. The proposed changes significantly raise the threshold for mandatory currency deposits. Under current law, parties receiving USD 15 million in foreign currency income are required to deposit those funds into a bank account. The amendment proposes increasing this limit to USD 25 million for suppliers of goods and services, including those within the tourism industry, based on their earnings from the previous calendar year. Specific adjustments are also targeted at Category-A tourism establishments. Currently, these entities must convert either USD 500 per arriving tourist per month or 20 percent of their total income. The new proposal simplifies this requirement, mandating that Category-A establishments convert a flat 20 percent of their total foreign currency income received during a calendar month into rufiyaa. By adjusting these thresholds and simplifying the conversion process, the government aims to provide more flexibility for local businesses managing foreign exchange, potentially reducing the administrative burden on companies that operate with high foreign currency volumes but limited liquid rufiyaa needs.