Alignment with OECD Transfer Pricing Guidelines
The Maldives’ transfer pricing policy is in line with the OECD Transfer Pricing Guidelines (TPG). To support this, the Transfer Pricing Arm’s Length Guide and transfer pricing paperwork have been introduced.
Laws & Regulations
Nature of Transfer Pricing Documentation
The transfer pricing documentation in the Maldives adheres to OECD standards, and it consists of three main components: a Master File, a Local File, and a Country-by-Country Report (CbCR).
Advance Pricing Agreement (APA)
An APA regulation was introduced in the Maldives, effective March 16, 2021. This regulatory change is designed to facilitate Mutual Agreement Procedures (MAP) and dispute resolution procedures.
In the Maldives, the tax system operates based on self-assessment and voluntary compliance. The Maldives Inland Revenue Authority (MIRA) aims to provide taxpayer education and promote voluntary compliance. Tax audits are conducted to enhance tax compliance but do not necessarily imply wrongdoing by the taxpayer.
Transfer Pricing Documentation
Choice of Transfer Pricing Method
The Maldives accepts all OECD transfer pricing methods, including Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin Method (TNMM), and Profit Split. The choice of method depends on transaction-specific facts and conditions.
Economic Analysis – Benchmark Study
Local comparables are preferred for benchmark studies, and international comparables may be considered if local data is insufficient.
Inter-company (IC) Legal Agreement
Legal agreements formalizing relationships between group entities are less emphasized, with more focus on the “conduct of parties” as outlined in the OECD 2017 Guidelines.
The Maldives Company Act requires registered companies to submit annual financial statements, director’s reports, and auditor’s reports.
Production Process for TP Relevant Returns, Documents, Forms, and Financials Detailed information about filing requirements, formats, deadlines, notification requirements, thresholds, and language preferences is provided for various tax-related documents and forms.
The statute of limitations mandates that records must be kept for a period of five years.
Penalties and Interest Charges
Specific penalties related to transfer pricing are not specified; instead, penalties are derived from other tax-associated violations. Penalties under Sections 64 and 65 of the Tax Administration Act apply if transfer price documentation requirements are not met.