Payroll Services in the Maldives

The Maldives Retirement Pension Scheme is the only employer contribution in Maldivian payroll. Under section 14 of the Pension Act, the employer pays at least 7% and the employee 7% of pensionable wage, 14% in total, for every Maldivian employee aged 16 to 65. The employer may pay more than 7%, or the full 14%, but no more than 7% may be deducted from the employee’s salary. Nothing is due for employees over 65. Foreign employees may join voluntarily unless the employer objects, and can withdraw their balance when they leave the Maldives for good.

Pensionable wage is the basic salary stated in the employment contract, under the Regulation on Determining the Pensionable Wage in force since February 2021. Only three deductions reduce it: lateness penalties, unauthorised absence, and days not owed in a joining or leaving month. The rule that matters most is the fallback. Where the contract does not use the term basic salary, or says nothing about pension, the pensionable wage becomes the whole month’s pay plus allowances. A resort contract that describes a single consolidated salary therefore pays pension on all of it. There is no floor or ceiling in rufiyaa, and contributions are calculated in MVR even where salaries are paid in US dollars.

Contributions are paid before the 15th of the month after the month worked, with a monthly Statement of Pension Contributions filed through the Pension Office’s Koshaaru portal. Late contributions attract a surcharge of 0.5% a month, paid into the employee’s own retirement account rather than to the state, and an unfiled statement costs MVR 100 a month. Since April 2024 the Pension Office takes arrears of MVR 5,000 or more, or older than twelve months, to court. Both the employer and the employee contributions are exempt from income tax, and the employee contribution is deducted before withholding tax is calculated.

For a Maldivian employee the statutory cost is short enough to list in full: 7% of basic salary to the pension scheme and a MVR 3,000 Ramadan allowance paid before Ramadan begins. On a monthly basic salary of MVR 8,000 that is MVR 9,720 a year, or 10.13%. At MVR 60,000 a month it is MVR 53,400, or 7.42%. Because the Ramadan allowance is a flat amount, the effective rate falls as salary rises, but only slowly, since the pension has no ceiling.

What is missing matters as much as what is there. There is no employer social security contribution, no unemployment insurance and no payroll tax paid to MIRA. Aasandha covers every Maldivian citizen and is funded by the government, with nothing collected through payroll. And the Employment Act contains no statutory severance or end-of-service gratuity: on termination the employer owes notice or pay in lieu, unused annual leave and all other dues within seven days.

The minimum wage is set by the Minimum Wage Order of November 2021, in force since 1 January 2022, and it depends on the size of the employer rather than the sector. Micro enterprises are exempt. Small private enterprises pay at least MVR 21.63 an hour, about MVR 4,500 a month; medium enterprises MVR 33.65, about MVR 7,000; and larger private employers MVR 38.46, about MVR 8,000. There is no separate tourism rate: a resort pays the rate for its size. Basic salary and fixed allowances count towards it; overtime, service charge, the Ramadan allowance, bonuses and benefits in kind do not. The Order does not apply to expatriate employees, and the review due in November 2023 has not yet produced a new Order.

Two costs sit outside the annual percentages. Maternity leave is 60 days at full pay, paid by the employer on the normal pay day with no state reimbursement, plus up to 28 further days, which may be unpaid, where a doctor certifies ill health. And in tourism, service charge is collected from guests but distributed through payroll, so it adds administration, reporting and tax withholding rather than cost.

Income tax on salaries has been withheld at source since April 2020 under the Income Tax Act. The monthly bands are 0% up to MVR 60,000 of taxable pay, 5.5% from MVR 60,000 to 100,000, 8% to 150,000, 12% to 200,000 and 15% above that, with each rate applying only to the income inside its band. The annual equivalents are twelve times those figures, so a salary up to MVR 720,000 a year carries no tax at all. Expatriates are withheld on the same bands as Maldivians; the 10% non-resident withholding tax covers payments such as fees and royalties, not salaries.

Taxable pay is the month’s total remuneration, cash and non-cash, less the employee’s own pension contribution. Benefits in kind are valued at cost or market value, with specific exemptions: staff accommodation in premises set up only for employees, transport to a workplace on an uninhabited island, work uniforms, awards up to MVR 5,000 a year, other non-cash benefits up to MVR 1,000 a month, and the medical insurance the Immigration Act requires. Two changes took effect on 20 August 2026. Accommodation on an uninhabited island, or on a vessel for someone who works on it, is no longer remuneration at all. And a room with a private bathroom used by a single employee no longer qualifies for the staff accommodation exemption, however modest it is.

The employer files the MIRA 601 Employee Withholding Tax Return and pays through MIRAconnect by the 15th of the month after the salary was paid or became payable. Employees must be registered on form MIRA 118 once any of them averages more than MVR 60,000 a month, and at that point every employee averaging MVR 30,000 or more must be registered too. An employee with two employers chooses one to apply the tax-free band, on form MIRA 916; every other employer withholds a flat 8%. Where tax is not withheld, the amount paid is treated as net and the employer must gross it up and pay the tax itself.

Employers whose functional currency is not the rufiyaa – which in practice means most resorts – have filed and paid withholding tax in US dollars since October 2024. And the penalties changed on 31 August 2026, when the fourth amendment to the Tax Administration Act doubled the daily surcharge on late payment from 0.05% to 0.1% and replaced house arrest with imprisonment for failure to file.

Every expatriate needs a quota slot, employment approval and a work permit, all managed through the Xpat system run by the Ministry of Homeland Security. The quota fee is MVR 2,000 a year for each slot and the work permit fee is MVR 350 a month for each worker, which the employer pays. The separate work visa fee was discontinued in November 2020. A refundable deposit is charged per worker and depends on nationality, from about MVR 3,500 for an Indian national to MVR 18,750 for a US national on the published table, and refunds are paid to the employer’s Xpat wallet. Since the ninth amendment the Cabinet can exempt micro, small and medium enterprises from the quota fee, and qualifying businesses already receive up to 20 commercial quota slots free.

The employer must also arrange work permit medical insurance from a registered provider – cover of at least MVR 100,000 for twelve months, with the premium capped at MVR 800 – and a medical report from an approved facility within 15 days of arrival, renewed every year. The work visa is now issued only as an e-Visa, applied for within 15 days of arrival. From late September 2026 an expatriate’s salary must be paid into a bank account in the employee’s own name at a bank licensed by the Maldives Monetary Authority; in a wage dispute, salary paid any other way does not count as paid.

The regulation on expatriate employment that took effect in December 2025 adds three constraints worth planning around. It reserves a list of occupations for Maldivians over the following two to five years, cancelling existing quotas as each period ends – accountants and electricians after two years, nurses and divers after three, HR and front office managers after five. It counts three years of GST and income tax filing history when quotas are reviewed. And fines run from MVR 50,000 for a first violation to MVR 100,000 for a third. Separately, in workplaces with more than 50 employees the head of HR and 60% of senior management must be Maldivian.

Normal working time is up to 48 hours a week, with no more than six consecutive days without 24 hours off. The Act sets no daily limit, and it does not shorten private-sector hours during Ramadan; the reduced hours announced each year apply to government employees. Overtime requires agreement and is paid at 1.25 times the hourly salary on ordinary days and 1.5 times on Fridays and public holidays, and since March 2026 it is due for work beyond daily normal hours even below 48 hours in the week. At resorts and on tourist vessels, weekly rest days can be accumulated and taken later.

Paid leave is generous and entirely employer-funded. Annual leave is 30 days after a year of service and cannot be paid in lieu except on termination. Sick leave is 30 days a year, up to 15 of them without a certificate if each absence is no longer than two days. Maternity leave is 60 days at full pay; paternity leave three days; family responsibility leave ten days a year; and circumcision leave five days. Since March 2026 mothers are entitled to two paid 30-minute nursing breaks a day until the child is two. There is no statutory Hajj leave in the Employment Act. Every Maldivian employee is owed a MVR 3,000 Ramadan allowance, paid before Ramadan starts.

Wages are paid at least monthly, with a payslip showing total pay, each deduction and net pay, and overtime shown separately. They must be paid in rufiyaa unless the employer earns income in foreign currency, in which case salaries may be paid in that currency. On termination, notice on an indefinite contract is two weeks for under a year of service, one month from one to five years and two months beyond that, or pay in lieu. Redundancy carries its own notice of one, two or three months. Probation lasts up to three months, during which either side may end the contract without notice. There is no statutory severance, all final dues are payable within seven days, and an unfair dismissal claim must reach the Employment Tribunal within three months.