Maldives Transfer Pricing Policy
Maldives transfer pricing policy – Key Transfer Pricing rules in the Maldives, documentation obligations, and compliance expectations under the Maldives Inland Revenue Authority (MIRA).
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Introduction to Transfer Pricing in Maldives
The Maldives applies Transfer Pricing rules aligned with international best practices to ensure that related-party transactions reflect arm’s-length pricing. As a growing financial and investment hub, the Maldives Inland Revenue Authority (MIRA) increasingly scrutinizes cross-border dealings, particularly in tourism, real estate, hospitality, and foreign-owned businesses. Transfer Pricing compliance requires taxpayers to justify pricing arrangements, maintain documentation, and ensure transparency in revenue attribution. Non-compliance may result in assessments, penalties, and heightened audit scrutiny as MIRA continues strengthening its enforcement environment and aligning with global Transfer Pricing standards.
Maldives follows OECD-aligned Transfer Pricing principles for determining arm’s-length pricing in related-party transactions.
Taxpayers must justify pricing using comparable market data and recognized Transfer Pricing methods.
Documentation requirements apply to entities engaged in significant cross-border or intra-group transactions.
Transfer Pricing rules emphasize economic substance, accurate functional analysis, and consistency of profit allocation.
MIRA may challenge transactions lacking commercial rationale or demonstrating non-arm’s-length outcomes.
Accepted Transfer Pricing methods include Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin Method (TNMM), and Profit Split.
Selection of method must follow the “most appropriate method” principle based on transaction characteristics.
MIRA may adjust taxable income where pricing deviates from the arm’s-length standard.
Foreign-owned companies operating in Maldives-based tourism and hospitality sectors face increased scrutiny due to high-risk related-party dealings.
Transfer Pricing considerations apply to management fees, service charges, royalties, financing arrangements, and intercompany cost allocations.
Maldives continues to align its Transfer Pricing framework with OECD Transfer Pricing Guidelines.
The country is enhancing documentation expectations to mirror international Master File and Local File structures.
Alignment efforts support greater tax transparency and reduce risks of base erosion and profit shifting.
Participation in global standards strengthens Maldives’ investment credibility while increasing compliance obligations for multinational groups.
Cross-border businesses operating in Maldives must proactively monitor updates to ensure consistent global TP compliance.
Documentation & Regulatory Requirements
Maldives has gradually aligned its tax framework with OECD Transfer Pricing standards to prevent profit shifting and ensure fair taxation of multinational operations.
Businesses engaging in related-party transactions must demonstrate arm’s-length pricing supported by reliable documentation.
The Maldives Inland Revenue Authority (MIRA) may request detailed Transfer Pricing files during audits, including functional analysis and benchmarking studies.
Non-compliance can trigger additional tax assessments, penalties, and heightened audit scrutiny, particularly where insufficient economic substance is identified.
CbCR obligations apply to multinational groups meeting global revenue thresholds consistent with OECD guidelines.
Maldivian entities that are part of a qualifying multinational group must notify MIRA regarding the reporting entity responsible for filing the CbC report.
The CbC report must disclose global profits, revenues, taxes paid, and allocation of employees and assets across jurisdictions.
Authorities use CbCR data to assess Transfer Pricing risks and identify potential mismatches in profit allocation.
Failure to comply with CbCR requirements may lead to strict penalties and increased regulatory oversight.
Companies must maintain Transfer Pricing documentation demonstrating that related-party transactions meet the arm’s-length standard.
Documentation typically includes economic analysis, functional and risk assessments, and justification for selected pricing methods.
MIRA may challenge transfer prices where insufficient evidence or inappropriate comparables are used.
Entities with significant cross-border dealings face greater scrutiny, especially in sectors such as tourism, logistics, and service outsourcing.
As global minimum tax rules evolve, Maldives is assessing the implications of OECD Pillar 2 for multinational groups operating in or through the jurisdiction.
The 15% global minimum tax framework may impact investment structures, particularly for entities benefiting from Maldives’ preferential tax arrangements.
Businesses should evaluate potential top-up tax exposures and ensure alignment of Transfer Pricing strategies with emerging global tax standards.
Transfer Pricing Methods
The Comparable Uncontrolled Price (CUP) Method is preferred when reliable external or internal comparables exist for identical or highly similar transactions.
CUP is often applied in sectors like tourism, logistics, and commodity-linked services where market prices are observable.
MIRA evaluates comparability based on product characteristics, contractual terms, economic conditions, and market-level adjustments.
CUP provides the strongest benchmark but may be rejected if comparables are unavailable or insufficiently similar.
The Resale Minus Method is used when a Maldivian entity purchases goods or services from a related party and resells them to third parties.
The arm’s-length price is determined by deducting an appropriate gross margin from the final resale price.
Suitable for distribution businesses with limited functions, low risk, and no significant value addition.
MIRA may challenge margins that deviate materially from industry norms or comparable market operators.
Applied when a Maldivian entity provides services or manufactures goods for related parties, adding an arm’s-length mark-up to its cost base.
Appropriate for captive service centers, support services, outsourcing hubs, and contract manufacturers.
Cost structures must be transparent, accurate, and consistent with OECD cost allocation principles.
Benchmarking studies typically determine the acceptable mark-up range for local circumstances.
The Transactional Net Margin Method (TNMM) is commonly used in Maldives due to limited availability of local comparables and market data.
TNMM evaluates profitability indicators such as operating margin, return on assets, or return on costs.
Favored for routine entities performing basic distribution, manufacturing, or service functions.
MIRA may scrutinize entity characterization, functional analysis, and margin justification when TNMM is applied.
Appropriate when transactions involve integrated operations, unique intangibles, or highly interdependent value creation across jurisdictions.
Profit Split allocates combined profits between related parties based on their relative contributions and functional profiles.
Useful for high-value tourism groups, digital service models, or joint-development activities.
Accurate allocation requires strong documentation, contribution analysis, and supportable weighting methodologies.
Analytical & Compliance Support
Comparability assessments in Maldives follow OECD guidelines, requiring analysis of functions, risks, assets, and market conditions.
Limited domestic comparable data often necessitates the use of regional or global comparables with appropriate geographic and economic adjustments.
Key comparability factors include contractual terms, economic circumstances, business strategies, and the nature of property or services transferred.
MIRA emphasizes transparent justification for the selection of comparables and the exclusion of unreliable or non-aligned data points.
A comprehensive FAR (Functions, Assets, Risks) analysis is essential to characterize the Maldivian entity accurately within the value chain.
Typical FAR profiles include routine service providers, distributors, or operators in the tourism and hospitality sector.
The analysis evaluates operational contributions such as service activities, use of tangible or intangible assets, and risk-bearing responsibilities.
FAR conclusions guide method selection, margin expectations, and compliance with OECD-aligned Transfer Pricing requirements in the Maldives.
Trends, Challenges & Real-World Impacts
The Maldives’ limited availability of local comparable data creates difficulties in establishing reliable arm’s-length benchmarks.
Tourism-driven business models involve complex service arrangements and intangible assets, increasing pressure on accurate Transfer Pricing characterization.
Many multinational entities operate through management agreements, franchising, and service-fee structures that require detailed functional and economic analysis.
Compliance expectations are rising as MIRA improves its audit capabilities and aligns more closely with OECD Transfer Pricing standards.
Increasing reliance on regional comparables and global benchmarking databases due to the Maldives’ narrow domestic economic profile.
Growing focus on the pricing of management fees, technical services, royalties, and brand-related intangibles common in hospitality and resort operations.
Entities are adopting more robust documentation practices in anticipation of greater Transfer Pricing scrutiny.
Technology and data-analytics tools are increasingly used to support comparability and strengthen audit-ready documentation.
Recent administrative practices indicate heightened MIRA reviews of related-party service fees and cost allocations.
Regulatory communication emphasizes transparency around value creation, economic substance, and accurate risk allocation within multinational groups.
Industry sectors such as hospitality, logistics, and professional services have received increased attention during Transfer Pricing reviews.
No major legislative changes have been announced, but ongoing alignment with OECD guidance continues to shape compliance expectations.
Global economic shifts affecting tourism—such as travel demand cycles and geopolitical fluctuations—directly influence profitability benchmarks.
Currency volatility and import-dependent cost structures affect comparability adjustments for Maldivian entities.
Increasing international tax cooperation places multinational groups under greater pressure to maintain consistent and defensible pricing across jurisdictions.
Post-pandemic operational restructuring has intensified Transfer Pricing reviews on cost-sharing, management support, and intercompany financing.
Use Cases by Business Size & Industry
Startups in the Maldives—especially in tech, hospitality services, and tourism-support sectors—often rely on group support services such as management support, software licensing, and back-office functions that must be priced at arm’s length.
Limited local market comparables require startups to use regional or global benchmarks to justify service fees and cost allocations.
Early-stage companies may lack profitability, making it essential to document economic substance, functional roles, and future value creation expectations.
Startups working with foreign investors must justify intercompany funding arrangements, ensuring interest rates and financing terms follow Transfer Pricing principles.
Proper documentation from the beginning helps avoid future disputes as the business grows and undergoes increased regulatory scrutiny.
SMEs in hospitality, logistics, retail, and professional services often engage in cross-border related-party transactions involving procurement, service fees, or the use of brand intangibles.
Transfer Pricing analysis supports fair pricing of imported goods or shared services, which directly impacts profit margins in the Maldives’ high-cost operating environment.
SMEs benefit from simplified benchmarking approaches but must still maintain defensible documentation to meet MIRA expectations.
Cost allocation and shared-service arrangements must reflect real economic activity, especially when SMEs rely on offshore group entities for expertise or administrative support.
Strengthened Transfer Pricing compliance improves audit readiness, reduces tax-adjustment risk, and enhances transparency for lenders, investors, and business partners.
Dispute Resolution & Advance Agreements
The Maldives Inland Revenue Authority (MIRA) allows businesses to seek guidance on acceptable Transfer Pricing approaches, helping reduce uncertainty before transactions occur.
APAs can be especially valuable for tourism groups, resort operators, logistics companies, and service subsidiaries engaged in high-value or complex cross-border transactions.
An APA provides upfront agreement on pricing methodologies for services, financing, management fees, or intellectual property use, reducing the risk of future disputes.
Companies entering APAs must maintain transparent documentation, demonstrate economic substance in the Maldives, and provide reliable forecasts supporting the proposed pricing model.
Securing an APA enhances predictability, supports long-term investment planning, and lowers the likelihood of tax reassessments during audits.
Maintaining robust Transfer Pricing documentation is the most effective way to avoid disputes, especially given MIRA’s increasing scrutiny of cross-border service fees, financing arrangements, and import pricing.
Businesses should ensure functional analysis clearly captures the value contributed by Maldivian and foreign entities to justify profit allocation.
Consistent benchmarking studies help support arm’s-length outcomes and minimize challenges during tax audits.
Transparent explanations for intra-group charges—particularly management fees, technical support, and brand-related payments—significantly reduce the risk of adjustments.
Proactive compliance, early engagement with MIRA, and timely responses to information requests help businesses avoid penalties and sustain positive regulatory relationships.
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This is general information only and not professional advice. Consult a professional before acting.