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The economy of Maldives thrives mainly on tourism. Almost seventy five percent of the total revenue is garnered from taxes imposed on tourism, state owned enterprises, resort lease rents and import duties. The main source of Maldives taxes is thus the tourism tax and import duties. There are some other taxes as well like the land rents, administrative fees and charges, bank profits tax, royalties and work permits and interest receipts.
There is only one direct tax in Maldives. It is known as the bank profit tax. The state charges all commercial banks a bank profit tax of 25 % on its taxable income. The amount generated accounts for 2% of the total government revenue.
The two major indirect taxes in Maldives include the tourism tax and import duty. Since tourism is the foundation of the Maldivian economy the prosperity of this sector ensures the development of other sectors. The industry has witnessed an exceptional growth since it begun three decades back. The average annual growth has risen in leaps and bounds, almost at a rate of 8%. It accounts for 13% of the total revenue earned by the government. This tax is implemented by levying a tourist bed tax worth a flat rate of US$6 per tourist bed night. This amount is exacted by the tourist establishments from each and every tourist.
Import Duty is implemented on commodities that are imported. It is an amount charged on the cost, insurance, freight or CIF of imported goods. Import duty contributes about a quarter of the total governmental revenue and can vary from anything between 5% and 200 %. Apart from these two indirect taxes, there are a few other indirect taxes as well like vessel fee, stamp duty and vehicle fee. All these hardly contribute to the economy.
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