What Is Business Profit Tax (BPT)?
Business Profit Tax is the Maldives equivalent of corporate income tax. It is administered by the Maldives Inland Revenue Authority (MIRA) under the Business Profit Tax Act. BPT applies to all businesses — sole proprietorships, partnerships, and companies — that generate taxable profit from business activities in the Maldives.
The BPT rates for 2026 are:
| Taxable Profit (MVR) | Rate | |---|---| | Up to 500,000 | 0% | | 500,001 to 1,000,000 | 5% | | 1,000,001 to 3,000,000 | 10% | | Over 3,000,000 | 15% |
This is a progressive structure — each tier only applies to the portion of profit that falls within that band.
Who Must File a BPT Return?
All businesses registered in the Maldives must file an annual BPT return with MIRA, even if:
- Their profit falls below the MVR 500,000 tax-free threshold
- They made a loss during the year
- They are a new business in their first year of operation
Filing is mandatory. Payment is only required if taxable profit exceeds MVR 500,000.
BPT Filing Deadlines
BPT operates on a calendar year basis (January to December) with the following key dates:
| Obligation | Deadline | |---|---| | First instalment (advance tax) | 31 August of the tax year | | Second instalment (advance tax) | 28 November of the tax year | | Annual BPT return | 30 June of the following year | | Final tax payment | 30 June of the following year |
Advance tax is payable by businesses whose previous year's BPT liability exceeded MVR 100,000. The two instalments are each 45% of the previous year's tax. The final return reconciles actual profit against the instalments already paid.
What Counts as Taxable Profit?
Taxable profit is your accounting profit adjusted for specific MIRA rules. Key adjustments include:
Allowed deductions (reduce taxable profit):
- All expenses incurred wholly and exclusively for the business
- Depreciation on business assets (using MIRA's prescribed rates)
- Interest on business loans
- Contributions to MPAO pension fund (for Maldivian staff)
- Rent and lease payments for business premises
Disallowed deductions (add back to profit):
- Personal expenses charged through the business
- Fines and penalties
- Entertainment expenses exceeding MIRA limits
- Depreciation on personal-use assets
Common BPT Mistakes
1. Mixing personal and business expenses Many small business owners pay personal expenses through the business and then try to claim them as deductions. MIRA auditors look for this specifically. Keep personal and business finances strictly separate.
2. Missing advance tax instalments Businesses that owe advance tax and miss the August or November deadlines are charged a 5% surcharge on the missed instalment. This is easily avoidable with a simple calendar reminder.
3. Incorrect depreciation calculations MIRA prescribes specific depreciation rates for different asset classes. Using rates that differ from MIRA's schedule is a common source of audit adjustments.
4. Not claiming all allowable deductions Just as common as claiming too much is claiming too little. Many businesses — especially those using simple cash accounting — fail to capture all their allowable expenses, particularly:
- Bank charges and interest
- Professional fees
- Subscriptions to business software
- Training and staff development costs
5. Late or missing annual returns The penalty for a late BPT return starts at MVR 1,000 per month and increases with the duration of the delay. Even if you owe no tax, file the return on time.
BPT for Foreign-Owned Businesses
Foreign companies with permanent establishments in the Maldives are subject to BPT on their Maldivian-source income. Additionally, payments made to non-residents (dividends, royalties, management fees, interest) are subject to withholding tax at 10%, which must be remitted to MIRA within 30 days of payment.
How to Reduce Your BPT Legally
Legitimate tax planning strategies for Maldivian businesses include:
- Timing large purchases before year-end to claim depreciation earlier
- Maximising pension contributions for Maldivian staff (fully deductible)
- Claiming all allowable professional fees — accounting, legal, consulting
- Carrying forward losses — losses can be carried forward for up to 5 years to offset future profits
Tax planning should always be done within MIRA's rules and in advance of the tax year, not after-the-fact. Retrospective restructuring raises red flags.
Working with MIRA
MIRA has significantly improved its digital systems in recent years. Most filings, payments, and correspondence can now be managed through the MIRA online portal. However, for businesses with complex situations — multiple income streams, foreign shareholders, related-party transactions — professional representation at MIRA is strongly advisable.
How We Help
Metamorphosis MV prepares BPT returns for businesses across all sectors in Maldives. We also conduct pre-filing reviews to identify missed deductions and ensure returns are accurate before submission. For businesses under MIRA audit, we provide representation and correspondence management.
Contact our accounting team for a free initial consultation on your BPT position.