Maldives has continued to develop in the past couple of years and has shown strong economic growth. While tourism might be the best-known niche in the island nation, Maldives has tons of scope for investors. The government is politically stable and supervises policies encouraging investments outside the nation. The one condition it keeps is that a business needs to benefit Maldivians.
The high literacy rate of 97.86% also attracts foreign investment into the country. Companies establishing their business in the Maldives can take advantage of the skilled and talented workforce. Apart from a well-educated workforce, the country also has a growing economy. Maldives’ GDP grew by 41.7% in 2021 to $5.41 billion. Interestingly, Foreign Direct Investment (FDI) accounted for approximately 8% of the total GDP.
According to the country’s laws, companies and organizations may expand their business in the Maldives and set up a sole proprietorship in the Maldives in compliance with local rules and laws. In fact, setting up a sole proprietorship in the Maldives is the way to go for most small and medium-scale businesses. Read on to understand the process of establishing a sole proprietorship in Maldives.
Who can be a Sole Proprietor in the Maldives?
A sole proprietorship refers to a single-person-owned trading entity that an individual controls. There is no distinction between the business entity and the owner, with the single owner paying personal income taxes on the profits earned by the company. Setting up a sole proprietorship in the Maldives is easy and quick regarding approvals. However, as per the Sole Proprietorship Act, specific eligibility criteria must be fulfilled:
- Foreign nationals cannot set up a sole proprietorship in the Maldives.
- Only Maldivian citizens above 18 can register for a sole proprietorship.
- A person can only have one sole proprietorship registered in their name.
Once someone meets these requirements, they can apply to register their business through the mandatory eFaas account. It should be noted that a sole proprietorship in the Maldives is not treated as a separate legal entity.
Benefits of Sole Proprietorship in Maldives
Setting up a sole proprietorship in the Maldives and registering such a company is an easy way to tap the Maldivian market. A sole proprietorship in Maldives has many benefits, such as:
- Ease of setting up: Compared to registering a company or a partnership, a sole proprietorship is much easier, with registration done in a few easy steps. If done correctly, the entire process of setting up a sole proprietorship in the Maldives will take around two days.
- Affordability: Registering your business as a sole proprietorship in the Maldives is cost-effective. The Maldivian government charges around 500 Maldivian Rufiyaa (MVR) for registering a sole proprietorship.
- Sole control: On setting up a sole proprietorship in Maldives, you get to ensure complete ownership of the company and assets. Setting up a sole proprietorship in Maldives also means no restrictions on the use of foreign exchange or for hiring purposes. There are also no legal consequences if business and personal assets are mixed.
- Validity and renewal periods: The government of Maldives has recently amended the validity of sole proprietorships to 10 years from 5 years. The time for renewing expiring registrations has been changed to 1 year from the earlier duration of 90 days.
- Incentives and backing: Setting up a business as a sole proprietor in the Maldives gives foreign investors direct access to a liberal economic environment that the government backs. The disputes and business-related conflicts are all eligible for arbitration via foreign laws.
Documents Required for Starting Your Business in the Maldives
The documents needed to start a sole proprietorship in the Maldives are as follows:
- The business owner’s national ID
- The signed and original versions of the Name Search & Reservation Application Form and the Business Name Registration Form
- Business Registration Form for setting up a sole proprietorship in Maldives
- A Sole Proprietorship Seal Registration Application to register your business seal
Other Criteria to Register a Sole Proprietorship in Maldives
When setting up a sole proprietorship in the Maldives, here are some things to keep an eye on-
- Apart from business registration, some businesses may need additional licenses to operate.
- Suppose there are responsible parties (an individual or entity that has management control) in the sole proprietorship in the Maldives. In that case, the government will also require either their passport copy or their National Identity Card.
- Once a sole proprietorship in the Maldives is successful, the single owner can change it to become a partnership or a company.
- Following the Sole Proprietorship Act, a sole proprietor can easily be a shareholder of a different company.
- You must also be careful while naming your business. If the sole proprietor cannot provide the meaning of the name chosen or the name has similarities with other companies, the government may reject the sole proprietorship application.
- If a sole proprietorship sees an annual turnover of more than MVR 500,000, corporate tax payout applies at a 5% rate.
How to Register a Sole Proprietorship Firm in Maldives?
The steps to register a sole proprietorship in Maldives are simple but must be carried out carefully. Here are the steps to setting up a sole proprietorship in the Maldives:
- Before you initiate the process to register a self-employed Maldives business, visit https://business.egov.mv/ and check if the desired name is available for registration.
- Next, you must fill out the Name Search and Reservation Application Form with the Ministry of Economic Development.
- There is an option to reserve your business name for 14 days or register it instantly.
- The name for the proprietorship must be unique and never conflict with any existing business names. You can check all registered businesses in the Maldives through the Maldivian government’s Business Registry website.
- Reserve the name and fill up the Business Name Registration Form.
Application for registration and document submissions
- Visit https://efaas.egov.mv/ and register an account.
- Use the login details you use for the eFass account to register for the sole proprietorship registration online under the Business Registrations – Sole Proprietorship tab on https://business.egov.mv/.
- You can also fill in an offline form and tick the Sole Proprietorship option under Type of business. The physical form is available at the Ministry of Economic Development Office at Boduthakurufaanu Magu in Male.
- Submission of a National ID card is mandatory for both online and offline applications.
- Finally, make a payment of 500 Maldivian Rufiyaa to complete the application.
Obtain sole proprietorship incorporation certificate-
- Once you complete the application filing, the Ministry verifies all documents and approves the registration in a few days.
- After approval, you get a registration letter, a business certificate, and a payment receipt.
Corporate banking account-
- You must open a sole proprietorship Maldives bank account using the registration certificate.
- Tax authorities deem all the financial dealings of a sole proprietorship via the sole proprietorship Maldives bank account as the proprietor’s personal income.
- Once your sole proprietorship is registered, the Maldives Inland Revenue Authority (MIRA) will automatically process the GST registration.
- The MIRA will notify the business owner via email or letter to collect the Tax Registration Certificate.
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