President Muizzu Doubles Withholding Tax for Non-Resident Construction Contractors

President Dr. Mohamed Muizzu has ratified an amendment to the Income Tax Act, doubling the withholding tax for non-resident contractors engaged in construction projects across the Maldives. The tax rate has increased from 5 percent to 10 percent. Under the new regulations, this 10 percent withholding tax is established as the full and final tax liability for non-resident contractors. This move aims to streamline the fiscal obligations of foreign firms operating within the country. The legislation was passed by the Maldivian Parliament (the Majlis) during its 27th sitting of the second session on August 23, 2026. The President officially signed the bill into law during a ceremony held at the President’s Office. According to the government, the primary objective of the hike is to ensure a more equitable and competitive landscape. By adjusting the tax burden, authorities intend to level the playing field between local Maldivian businesses and foreign contractors competing for infrastructure and construction contracts. Beyond the rate increase, the amendment provides a more precise definition of what constitutes a "non-resident contractor" under the Income Tax Act. Government officials state that this clarified terminology will reduce bureaucratic friction and simplify the administrative process for foreign entities when filing their mandatory tax returns. The amendment has been officially published in the Government Gazette and is now in full effect, signaling an immediate shift in the taxation framework for the construction sector.