What is Non-resident Withholding Tax
A 10% tax on dividends paid to non-residents, per the Income Tax Act (Law Number 25/2019.*
*Non-resident Withholding Tax is imposed under the Income Tax Act (Law Number 25/2019) effective from 1 January 2020. It is applicable on certain payments, including dividend payments, made to persons who are not resident in the Maldives (nonresidents).
Why is Dhiraagu collecting information about my tax residency status?
To determine if dividends paid to you are subject to the 10% non-resident withholding tax.*
*Dividends paid to non-residents are subject to Non-resident Withholding Tax at 10% under Section 55(a)(4) of the Income Tax Act. Furthermore, Section 55(c)(1) of the Act requires Dhiraagu to deduct the tax if, at the time of payment of the dividend, it cannot be determined that the shareholder is a tax resident of the Maldives. As such, Dhiraagu will or will not withhold tax on the dividends paid to you, based on the declaration you make on your tax residency status.
How is tax residency determined?
You are a tax resident if you:
• Have a permanent abode in the Maldives.
• Are present or intend to be present in the Maldives for 183 days or more in a 12-month period.
• Are an employee or official of the Maldives government posted overseas.*
*Rules for determining tax residency are stated in Section 79(kk) of the Income Tax Act. You will be considered a tax resident based on the following:
An individual:
• whose permanent place of abode is in the Maldives; or
• who is present in the Maldives or intends to be present in the Maldives for an aggregate of 183 days or more in any 12-month period commencing or ending during a tax year; or
• who is an employee or official of the Government of the Maldives and is posted overseas during a tax year;
A company:
• that is incorporated in the Maldives; or
• that has its head office in the Maldives; or
• that has its control and management in the Maldives.
A partnership:
• that is formed in the Maldives; or
• that has its control and management in the Maldives.
A trust:
• that is formed or settled in the Maldives; or
• A heritage trust of a deceased person who was resident in the Maldives; or
• A trust that was operated in the Maldives at a point in time during a tax year.
What should I do if my tax residency status changes?
Please update us immediately by submitting an updated Shareholder Information Form. It is your responsibility to ensure the information that we have on you is correct and up to date.
What happens if I do not update my information?
We will withhold 10% of your dividend as non-resident withholding tax and pay it to MIRA if you do not update your residency status.
How can I claim benefits under Double Tax Avoidance Agreements (DTAAs)?
Submit a declaration and a valid residency certificate if you are eligible for benefits under a DTAA with the Maldives.
