The Attorney General of the Maldives, Uz Ahmed Usham, has said that the government has no intention, for the present, of bringing any further amendment to the law with regards to the exchange of foreign currency.
Under the amendment already brought to the Foreign Exchange Act, the proportion of foreign currency which Category-A tourism establishments in the Maldives are required to exchange within the country’s banking system has been set at 40%. Businesses operating in the tourism sector are required to act in accordance with the said change from October 2026.
What Prompted This Question?
At a press conference held at the President’s Office, a journalist questioned whether the government held any thinking towards granting relief on the quantum of dollars which the said establishments are obliged to exchange through the domestic banking system, having regard to the effects which the tremors passing through the global economy may work upon the tourism industry of the island nation.
Responding to the said question, the AG said that the government had brought the amendment to the Foreign Exchange Act only after considering the studies carried out by the central bank (Maldives Monetary Authority). Those studies, he said, indicated that the quantum of foreign currency which tourism establishments are required to exchange ought to be increased, and it was for that reason that no further amendment is contemplated.
What Does The Amendment Actually Require?
Under the amendment which has now come into operation, the obligation to deposit foreign currency income into a bank account falls upon those who sell goods or provide services in the tourism sector, and upon any other party, who have received in foreign currency, over the course of a preceding calendar year, an amount equivalent to not less than USD 25 million.
The said monies must be deposited into an account opened at a bank licensed and operating under the MMA, and the details of the bank account into which the monies are deposited must be shared with the authority.
Besides this, the amendment provide that tourism establishments falling within Category-A must exchange 40% of the total foreign currency income received by them within a calendar month into Maldivian Rufiyaa.
What Else Does The Law Now Carry?
The amendment further provides that the business of exchanging currency is to be conducted only with a license issued by the MMA, and it incorporates provisions determining the measures to be taken against parties exchanging currency without a license or otherwise in breach of the regulation.
It is likewise an offence under the amended Act to sell dollars at a rate contrary to that determined by the MMA, or to advertise the same. Transactions in the buying and selling of foreign currency are to be conducted at rates not exceeding those determined and published by the authority, whether by reference to the published rate or to the bands, and the sale of foreign currency contrary to the said rate, or indeed the attempt to sell at such rate, constitutes an offence.
Why Does The October Date Matter For The Industry?
The commencement of the 40% requirement in October places the obligation upon resort operators at the opening of the winter season, which is the period during which the greater part of the year’s foreign currency earnings is generated.
The distinction drawn in the law is between the deposit obligation and the conversion obligation. The USD 25 million threshold governs which parties must route their foreign currency income through a licensed local bank and disclose the account to the authority. The 40% governs how much of the monthly foreign income of a Category-A establishment must actually be converted into Rufiyaa.
For an establishment earning USD 5 million in a given month, for instance, the requirement is the conversion of USD 2 million into local currency at the official rate, irrespective of the establishment’s own requirements for dollars to meet imported supplies, foreign loan servicing or management fees denominated in foreign currency.