The Maldives, a popular tourist destination with a growing economy, is not currently a member of the Organisation for Economic Co-operation and Development (OECD) and has not formally adopted the OECD’s Base Erosion and Profit Shifting (BEPS) framework, including Action 13, which mandates Country-by-Country Reporting (CbCR) for multinational enterprises (MNEs). However, as global tax transparency standards evolve, it is crucial for MNEs with operations in the Maldives to understand both the local tax landscape and potential future obligations. This guide provides Chief Financial Officers (CFOs) and financial executives in the Maldives with an overview of the current situation regarding CbCR, as well as considerations for ensuring compliance with international tax regulations.

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Applicability of CbCR in the Maldives

Criteria for Reporting:

• As of now, the Maldives does not have any specific domestic legislation requiring MNEs to file a CbC report. There is no local requirement for CbCR under the Maldivian tax regime.
• Multinational enterprises headquartered in jurisdictions that do mandate CbCR (such as OECD member states or EU countries) may still be required to comply with reporting obligations in those jurisdictions, even if no local filing is required in the Maldives.

Relevant Legislation:

• There is no formal CbCR framework in place in the Maldives. The country operates a relatively simple tax system primarily focused on goods and services tax (GST), tourism-related levies, and corporate income tax.
• However, as global standards on tax transparency continue to rise, the Maldives may adopt CbCR or similar reporting obligations in the future, particularly under pressure from international bodies such as the OECD or the Global Forum on Transparency and Exchange of Information for Tax Purposes.

Reporting Requirements

Information to be Reported:

• Since the Maldives has not adopted CbCR, there is no requirement for MNEs to submit financial information under the OECD’s CbCR framework.
• However, multinational enterprises with reporting obligations in other jurisdictions must prepare and file CbCR reports where required. This typically includes detailed information on:
  • Total revenues (from related-party and unrelated-party transactions)
  • Profit or loss before tax
  • Income tax paid and accrued
  • Stated capital and accumulated earnings
  • Number of employees
  • Tangible assets (excluding cash and equivalents)
• If a Maldivian entity is part of an international group, the group may still be required to file a CbCR in the jurisdiction of the ultimate parent entity or a surrogate parent entity.

Form and Submission:

• No CbCR submission is currently required in the Maldives.
• For MNEs with parent entities in other countries, CbC reports must be filed with the relevant tax authority in that jurisdiction according to the reporting format (usually XML) required under the OECD’s framework.

Filing Deadlines

• Since there is no CbCR requirement in the Maldives, there are no specific filing deadlines associated with this reporting in the country.
• MNEs subject to CbCR in other jurisdictions should adhere to the filing deadlines in those locations, typically within 12 months after the end of the fiscal year.

Penalties for Non-Compliance

Penalties:

• As the Maldives does not have CbCR legislation, there are no penalties associated with failure to comply with CbCR in the country.
• However, multinational enterprises must ensure compliance with CbCR requirements in jurisdictions where such regulations are in force, as non-compliance could result in significant penalties, including monetary fines and increased scrutiny from tax authorities.

Defences:

• In jurisdictions where CbCR is mandated, multinational enterprises may present reasonable cause for late filings or errors, such as technical issues or administrative misunderstandings. The Maldives does not have a framework for CbCR-related defences, as the reporting obligation does not exist locally.

Confidentiality and Use of Information

Data Protection:

• Given that the Maldives does not mandate CbCR, there are no specific regulations in place for handling or exchanging CbC reports.
• In jurisdictions where CbCR is implemented, the data is typically shared with other tax authorities under competent authority agreements (CAAs), ensuring confidentiality and adherence to OECD standards on data protection. MNEs operating in these jurisdictions must ensure compliance with the respective data protection laws.

Additional Resources

• For more information on the Maldives’ tax system, visit the Maldives Inland Revenue Authority (MIRA) website.
• Multinational enterprises with global operations should consult the OECD’s guidance on CbCR via the OECD CbCR page to ensure they meet international compliance requirements.

Conclusion

While the Maldives has not yet adopted Country-by-Country Reporting regulations, multinational enterprises operating in or through the region must remain aware of their global CbCR obligations. Non-compliance in other jurisdictions can lead to substantial penalties, even if no local filing is required in the Maldives. As international tax regulations continue to evolve, it is essential for MNEs to closely monitor developments in the Maldives’ tax landscape and maintain compliance with global tax transparency requirements. Engaging with local tax professionals and remaining informed through the Maldives Inland Revenue Authority will help MNEs navigate the complexities of tax reporting effectively.