The income tax treaty between Malaysia and the Maldives entered into force on 22 January 2026, establishing withholding tax rates of 5-10% on dividends, 10% on interest and royalties, with exemptions for government entities and central banks. 

RF Report

The Maldives Inland Revenue Authority announced that the income tax treaty between Malaysia and the Maldives has entered into force on 22 January 2026.

Signed on 24 May 2023, it is the first of its kind between the two countries and is aimed at eliminating double taxation and preventing tax evasion.

The treaty addresses Malaysian income tax and petroleum income tax, as well as income tax in the Maldives. The Malaysia-Maldives tax treaty also establishes the following withholding tax rates for cross-border payments:

  • Dividends: 5% if the beneficial owner holds at least 10% of the paying company’s capital for 365 days; otherwise, 10%.
  • Interest: 10% on the gross amount. However, interest paid to governments, central banks, and specific institutions (including Bank Negara Malaysia, Maldives Monetary Authority, and EXIM Bank) is exempt.
  • Royalties: 10% on payments for copyrights, patents, software, trademarks, and use of industrial or scientific equipment.

Earlier, Malaysia ratified the Malaysia-Maldives Income Tax Treaty (2023) through the Double Taxation Relief (The Government of the Republic of Maldives) Order 2025, on 18 June 2025.