Disclosure Requirements

There are no disclosure requirements in the Maldives.

Standard Documentation

The Maldives Inland Revenue Authority (MIRA) issued transfer pricing documentation regulations pursuant to the new Income Tax Act. The new documentation regulations are effective from 10 June 2020.

Under the new regulations, taxpayers are required to prepare and maintain the transfer pricing documentation in respect of transactions and arrangements entered into with related parties by the due date for the submission of the tax return. However, the taxpayers are required to submit the documentation within 30 days of request by the MIRA.

The new regulations also introduce the concept of qualifying past transfer pricing documentation, which provides that documentation prepared by a taxpayer is valid for a period of three years if:

The documentation has been prepared in accordance with the regulations;
The transactions with respect to which the transfer pricing documentation was prepared are of the same type, or arrangement as the subject transactions; and
The information provided in the documentation accurately describes the same matters as the subject transaction in respect of:

the commercial or financial relations between the parties;
the terms and conditions between the parties;
the transfer pricing method used for the transaction or arrangement; and
the arm’s length terms applied for the transaction or arrangement.

A copy of such documentation is required to be maintained including a declaration which states that such documentation is a qualifying past transfer pricing documentation.

The following exemptions are available from the standard documentation requirements, where:

The taxpayer has been categorized as a Small and Medium Enterprise during the previous two years and was required to prepare transfer pricing documentation for the two accounting periods;
The transaction is between domestic related parties (other than loan transaction) and the income is subject to tax in the Maldives or is exempt from tax for both of the parties;
The transaction is a domestic-related party loan and the party issuing the loan is not in the business of borrowing and lending money in the Maldives;
The transaction is a loan not exceeding MVR 15 million and the parties to the loan agree to apply the indicative margin published on MIRA’s website for the year in which the loan is obtained or provided;
The transaction is the provision of routine support services to group companies where a mark-up of at least 5% is applied to the cost of provision of the service (see Sec. 13.4.2.);
The value of all related party transactions undertaken during the tax year (excluding the transactions specified above) does not exceed MVR 5 million.

The transfer pricing documentation includes the following information:

Details of the commercial and financial relations between the two parties involved;
The terms and conditions made or imposed between the two parties involved in respect of the transaction or arrangement;
An explanation as to why the terms are concluded as at arm’s length; and
Any other information as may be prescribed through regulation.

The new regulations clarify the documentation required, which includes a Master file, a Local file, and Country-by-Country (CbC) reporting.

Master File

The contents of a Master file include an overview of the business of the taxpayer’s group, the nature of its global business operations, its overall transfer pricing policies, and global allocation of income and economic activities, including:

An overview of the organizational structure;
A description of the group's business operations, including:

information of the group’s businesses, products and services, geographic markets, and key competitors;
a description of the supply chains of those businesses, products, and services;
the group’s business models and strategies;
the “business drivers” of the group;
the industry, market, regulatory and economic conditions in which the group operates;
the business activities of each entity in the group and the functional analysis describing their value-adding contributions, including functions performed, assets used, and risks assumed; and
changes to the group’s structure through restructuring, acquisition, or divestiture;

A description of the group’s intangible assets that are used in or applied to the business in the Maldives, including a description of the group’s strategy for the development, ownership, and exploitation of intangible assets, the legal ownership of the assets, cost-sharing agreements between the associated parties, transfer pricing policies of the group, and any transfer of interests in intangible assets;
A description of the group’s intercompany financial activities; and
A description of the group’s financial and tax positions.

Local File

The contents of a Local file include information of the taxpayer’s business and its transactions with its associated parties in the accounting period to which the transaction relates, including:

The management structure showing the reporting lines between the associated parties and the management staff of the taxpayer;
The organizational structure of the taxpayer;
A description of the taxpayer’s business, including:

the business, products and services, geographic markets, intangible assets, and key competitors in that accounting period;
the industry, market, regulatory and economic conditions in which the applicable entity operates in; and
business models and strategies of the applicable entity, and any changes to its structure through restructuring, acquisition, or divestiture; and

A description of the controlled transactions between the taxpayer and its associated parties, including:

the details of each transaction, including the identity of the associated party, the country in which the associated party is incorporated, registered, or established, the relationship between the applicable entity and the associated party, and information of each transaction, including the value of the transaction;
the contract or agreement showing the terms of each transaction;
intra-group payments and receipts for each category of transactions identified by the tax jurisdiction of the foreign payer or recipient;
a functional analysis describing the functions performed, the assets (including intangible assets) used or contributed, and the risks assumed by each party to each transaction;
a copy of the group’s advance pricing arrangements, including unilateral, bilateral, or multilateral advance pricing arrangements and other tax rulings; and
a transfer pricing analysis to ascertain whether the conditions made or imposed between the taxpayer and its associated party, with respect to the transaction, are in line with the definition of arm’s length terms.

Country-by-Country (CbC) Reporting

The Tax Administration Act of the Maldives was amended effective 12 September 2019 enabling the introduction of a Country-by-Country (CbC) reporting requirement for parent entities of a multinational group, which are resident in the Maldives.

In January 2021, the Maldives introduced detailed regulations governing the submission of CbC reports to the Maldives Inland Revenue Authority (MIRA). The CbC reporting requirements apply for fiscal years beginning on or after 1 January 2021 for MNE groups with consolidated group revenue exceeding EUR 750 million in the previous year.

The requirement to submit a CbC report primarily applies to the ultimate parent entity resident in the Maldives. A secondary local filing obligation applies to resident non-parent constituent entities if:

The ultimate parent entity is not required to file a CbC report in its jurisdiction of tax residence;
The ultimate parent entity’s jurisdiction of tax residence does not have a qualifying competent authority agreement in force for the exchange of CbC reports with the Maldives by the date the report is due; or
There is a systemic failure of the jurisdiction of tax residence of the ultimate parent entity for exchange of CbC report and such failure has been notified by the MIRA to the resident constituent entity.

The secondary local filing requirement does not apply to non-parent constituent entities if a CbC report is filed by a surrogate parent entity in another jurisdiction and certain requirements are met, including that such report will be exchanged with the Maldives.

Effective 28 January 2024, the secondary local filing requirement is reinstated (suspended from 5 June 2022 until 27 January 2024) and applies to the filing of CbC reports for fiscal years ending in the year 2024 and thereafter.

Any constituent entity resident in the Maldives must notify the MIRA by the last day of the reporting fiscal year whether it is the ultimate parent entity or the surrogate parent entity, and if neither, on the identity and residence of the entity submitting a CbC report on behalf of the group. Where there is more than one constituent entity of the same MNE group which is required to file a CbC report, the designated reporting entity must be notified to the MIRA.

The CbC report must be filed within 12 months of the end of the reporting fiscal year of the MNE group in the manner and format prescribed guidance.

The Maldives has not yet signed the OECD’s Multilateral Competent Authority Agreement for the exchange of CbC reports (CbC MCAA), but the law enables the exchange of CbC reports received by the MIRA with other jurisdictions in accordance with the applicable tax information exchange agreements.

Language of Documentation

The transfer pricing documentation must be prepared in English or Dhivehi.

Penalties

Non-filing of the CbC report may attract a penalty of 0.5% of the amount of tax payable for the taxable period and a fine not exceeding MVR 50 for each day of delay and the defaulter may also be subject to house arrest for a period ranging from 1 to 6 months.

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