Yesterday, President Ibu Solih signed the Income Tax Bill into law, which was passed by the Parliament in 4th December 2019. Upon ratification, the law has been now published in the Government Gazette and will come into effect from 1st January 2020.
Income tax is imposed on personal income and profit earned from businesses. Thereby, the tax is charged from salary and wages, business profit, revenue from leasing assets, dividends, interest annuity, pension, retirement benefits, salary of beneficiaries, technical service fees, commissions, royalties, capital gains from disposal of assets, business investments, and any other income received from whichever source derived.
Personal annual income below MVR720, 000 is tax-free and employee withholding tax is null for amounts below MVR 60,000. The tax rates would remain unchanged for banks at 25% on profits, while taxes of 15% on profits that exceed MVR500, 000 would be levied on corporations, partnerships and other business entities.