Tourism businesses to adopt new 40% foreign currency conversion rule

President Dr Mohamed Muizzu has ratified the First Amendment to the Foreign Currency Act, introducing new requirements for foreign currency exchange and conversion by businesses.

Under the amended law, foreign currency can only be bought or sold at rates, or within exchange-rate bands, set by the Maldives Monetary Authority (MMA).

Foreign currency exchange businesses must also operate under an MMA licence.

For businesses outside the tourism sector, the annual foreign currency income threshold for mandatory conversion has increased from USD 15 million to USD 25 million.

The amendment also changes the conversion requirements for tourism establishments.

Category A establishments must convert 40 per cent of their monthly gross sales. The previous option of converting USD 500 per tourist has been removed. Category B establishments must convert either USD 25 per tourist arrival or 20 per cent of monthly gross sales.

Non-tourism businesses earning more than USD 25 million annually in foreign currency must generally convert 40 per cent of their monthly gross sales through a bank.

However, 100 per cent Maldivian-owned businesses will only be required to convert 7 per cent of their monthly gross sales.

Foreign currency subject to conversion must be deposited into a foreign currency account at an MMA-licensed bank. The required amount must then be converted through the bank by the 28th day of the following month.

The amendment also introduces stricter penalties for unauthorised foreign currency trading.

Selling, attempting to sell or advertising foreign currency above the MMA-set rate or outside its exchange-rate band will be a criminal offence. Individuals can face fines of MVR 25,000 to MVR 1 million for violations. Companies and other legal entities can face fines of MVR 100,000 to MVR 5 million. The amendment will come into force on September 1, 2026.