Maldives WT/TPR/S/221/Rev.1 
 Page 17 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) OVERVIEW  
1. Since its previous Trade Policy Review, the gene ral thrust of the Maldives' trade policy has 
remained unaltered.  The Government has continue d to take measures to make trade policy more 
transparent and less distorting.  Despite relativel y high import tariffs, the Maldives remains an open 
economy with trade in goods and services representing approximately 150% of GDP in 2009. 
2. The tariff continues to be the Maldives' prin cipal source of tax revenue, accounting for around 
two thirds of tax receipts, as well as its main tr ade policy instrument.  During the period under review, 
the average applied MFN rate (21.4% in 2008) chan ged marginally, due to a change in nomenclature 
rather than a change in rates.  Considering it is principally a source of tax revenue, the tariff remains 
unnecessarily complex, involving 11 different rates (ten ad valorem  and one specific) and many 
exemptions.  Despite the elimination of a large numb er of exemptions in 2006, these continue to be 
prevalent, making the tariff structure relatively op aque.  Approximately one quarter of the tariff 
revenue was forgone in 2006 due to exemptions and concessions.  The level and structure of the tariff 
renders it a major potential distortion to the allocat ion of resources and thus domestic efficiency, and 
therefore an impediment to the competitiveness of the economy.  Lower and more uniform tariffs 
would contribute to a more efficient allocation of do mestic resources.  Insofar as tariffs are levied on 
inputs used in the production of exports, they also c onstitute a tax on exports.  However, to the extent 
that alternative internal taxes are not viable, the scope for substantial tariff cuts may be limited by the 
tariff's importance as a source of tax revenue. 
3. While nearly all (96.3%) tariff lines are bound,  the 15.7 percentage point gap between bound 
and applied MFN rates imparts a large degree of unpr edictability to the tariff, thereby providing the 
authorities with considerable scope to raise applied rates within bindings (although this has not been 
done during the review period).  Furthermore, a pplied tariff rates on 218 tariff lines exceed bound 
rates. 
4. Customs has still not implemented WTO commitments (including use of transaction value), 
and continues to rely on minimum prices for the pur pose of levying tariffs.  A fixed tax of US$8 per 
bed night is levied on foreign tourists.  The Ma ldives does not have legislation on anti-dumping or 
countervailing duties or subsidies and has not used any contingency measures.  
5. A small number of items (alcoholic beverages, pork, used cars and motorcycles, and arms and 
ammunition) are prohibited or restricted for religio us, environmental, safety, and security reasons.  
There has been no change to the export regime, wh ich remains relatively open, although exports of 
certain marine species are prohibited, exports of timber are controlled, and ambergris exports are 
taxed.  Other export regulati ons appear to be minimal. 
6. The State-Trading Organization (STO) e ngages actively in trading activities to, inter alia,  
ensure domestic supplies.  The STO imports, inter alia , around 70% of staple foods (rice, sugar, and 
wheat flour), which are subject to price-control measures.  The government procurement regime has 
become seemingly more transparent. 
7. State involvement is prevalent in the economy,  state-owned enterprises (SOEs) are engaged 
in, inter alia, finance, transport, fishing, utilities, and tourism.  Many of these SOEs are not run 
efficiently and are incurring losses.  Insofar as they charge above market rates for their products and 
services, they increase the cost of doing business.  The Government has embarked on a privatization 
project, which involves making SOEs earmarked for privatization more efficient. WT/TPR/S/221/Rev.1 Trade Policy Review 
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8. Presently, the Maldives does not have intellectua l property legislation;  however, laws on 
copyright, trade marks, patents and geographical indi cations are either being drafted or have been 
drafted and await enactment by Parliament.   
(2) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Registration, documentation, and customs clearance 
9. Goods can be imported by any person or en tity (including non-nationals) for commercial or 
business purposes, provided they hold a general import  licence issued by the Ministry of Economic 
Development. 
10. Customs clearance for imports is a four-step pr ocedure.  The importer needs to submit:  the 
original as well as three copies of the commercial invoi ce;  the bill of lading or the airway bill;  a 
packing list  (for verification purposes);  and bank docum ents for customs valuation.  Valuation 
officers check all invoices against the valuation database.  The Maldives Customs Service (MCS) has 
a Price Analysis Program, which collects the da ta on invoices, for reference and analysis.  
Approximately 20% of the invoice prices on verified  invoices are "uplifted", and adjusted according 
to the database price.  Once the goods have been approved and valued, Customs issues the importer 
with a MCS-endorsed commercial invoice, which sti pulates the dutiable value (according to the MCS) 
of the goods on which the import duties are levied.   
11. The importer must submit a set of Customs Declaration Forms based on the MCS-endorsed 
commercial invoice to the MCS documentation section,  which verifies them, classifies the goods, and 
assesses the duty.  After classification, assessment, and payment of duty, the imported goods are 
examined.  All single-item consignment goods and direct-delivery cargo, such as cement and river 
sand, are released on a risk-assessed basis.  Approxi mately 25% to 30% of consignments, which are 
judged on the importer's past history, are physically inspected.  All inspections take place in the presence of a customs officer and a Port Security Police officer.  After inspection, the goods are 
released. 
12. An internal Customs committee comprising sen ior customs managers and government and 
private representatives, considers importers appeals against valuation decisions.  If importers do not 
agree with the internal committee's ruling, they ha ve recourse to the courts, which can authorize a 
refund, without interest.  However, importers f ound to be fraudulently undervaluing their invoices are 
liable to be fined an amount not exceeding twice th e value of the imported goods.  Repeat offenders 
may be barred from importing goods for up to two years.   
13. The MCS allows for submission of import documents through EDI (electronic data 
interchange) or DTI (direct trader input).  This f acility extends only to authorized users.  It would 
appear that the use of EDI/DTI has reduced pr ocessing times significantly and has enhanced data 
analysis.  Nearly all declarations from substa ntial importers are submitted electronically using 
EDI/DTI (only available at the airport) or USB dr ive.  There are no pre-shipment inspection (PSI) 
requirements.  The Maldives uses UNCTAD's Automa ted System for Customs Data (ASYCUDA++);  
problems with the automated system include underu tilization, duplication of forms, and software 
issues.  Cooperation between Customs and coast guard is good;  however, both lack resources to effectively tackle smuggling.   Maldives WT/TPR/S/221/Rev.1 
 Page 19 
 
 
(ii) Tariffs  
14. The tariff is the Maldives' main trade policy inst rument.  However, it is mainly a source of tax 
revenue rather than a protective instrument for domestic industry.  The tariff accounts for 
approximately 70% of tax receipts a nd 30% of total government revenue. 
(a) Structure 
15. Given that it is mainly a source of tax revenue, the structure of the tariff in the Maldives is 
unduly complex.  The applied MFN tariff consists of  ten bands:  duty free, 5%, 10%, 15%, 20%, 25%, 
35%, 50%, 100%, and 200%, while cigarette imports are subject to a specific duty of 30 laari per 
cigarette.  All bound tariffs are applied on an ad valorem  basis.  The 2008 tariff comprises 8,987 lines 
at the HS 10-digit level and is based on the HS 07 nomenclature.  The 2002 tariff was based on 
5,321 lines and HS02 nomenclature.   
(b) Tariff bindings 
16. The Maldives bound its entire tariff in the Uruguay Round, mainly (97%) at a rate of 30%;  
the remainder (mainly meat, alcoholic beverages,  tobacco products, plastic bags, passenger motor 
vehicles, buses, motorcycles and their components)  was bound at 300%.  In 2008, 96.3% of lines were 
bound, leaving 334 lines unbound;  the unbound lines relate mainly to fisheries (fish, crustaceans, and 
seaweed) and motor vehicle parts.  In addition, the applied MFN tariff rates exceeded the bound rate 
on 218 lines.  The authorities justify these ra tes on religious and environmental grounds.1  In 2008, the 
average bound MFN tariff was 37.1%. 
(c) Applied tariffs 
17. The average applied MFN tariff in 2008 was 21.4% slightly higher than in 2002 (20.8%) 
(Chart III.1).  The increase was not on account of cha nges in rates, but due to increased coverage and 
a change in nomenclature.  The 15.7 percentage  point difference between average bound and applied 
MFN rates gives the authorities considerable scope to raise tariffs, thereby imparting a degree of 
unpredictability to the tariff (Table III.1).  However,  the Maldives has not raised any tariffs during the 
period under review.  Over 95% of the applied MFN tariffs range from 5% to 25%;  while the modal 
or most common duty is 25% (Chart III.2). 
18. According to the WTO sectoral definitions, aver age tariffs for agricultural products were on 
average lower than those for non-agricultural products.2  The respective rates in 2008 were 17.2% and 
22%.  Furthermore, the average tariff on agricult ural goods has declined from the level in 2002 
(17.8%), while the average applied tariff for non-agricultu ral products has increased (21.1%).  Staple 
food imports (rice, wheat, and sugar) are duty free.  However, duty on plastic packaging material, 
which is considered detrimental to the environment, is 200%;  the applied duty on imports of 
passenger vehicles and their parts is 100%, while that  on tobacco products (except cigarettes) is 50%.  
Pork, alcoholic beverages, food preparations contai ning pork or alcohol, film projectors, and firearms 
and ammunition are subject to a 35% import duty.   
 
                                                      
1 Polyethylene sacks/bags/tube rolls are being produced domestically;  thus, the high tariff on these 
could be perceived as protective measure, although this is not necessarily the case.  Also the rationale for the 
high import duty on safety glass is not clear to the Secretariat. 
2 Agricultural goods comprise HS codes 1-24. WT/TPR/S/221/Rev.1 Trade Policy Review 
Page 20 
 
 
0.05.010.015.020.025.030.035.040.045.050.0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21Per centChart III.1
Average applied MFN rates, by HS section, 2002 and 2008
Averages for 2002 are based on HS02 nomenclature, consisting of 5,321 tariff lines and for 2008 on HS07, consisting of 8,987 ta riff 
lines.  
WTO Secretariat calculations, based on da ta provided by the Maldivian authorities.Note:
Source :01   Live animals & products        
02   Vegetable products03   Fats & oils      04   Prepared food, etc.05   Mineral products06   Chemicals & products07   Plastic & rubber
08   Hides & skins09   Wood & articles10   Pulp, paper, etc.11   Textiles & articles12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.15   Base metals and products16   Machinery17   Transport equipment18   Precision instrument19   Arms & ammunition
20   Miscellaneous manuf.21   Works of art, etc.MFN 2002
MFN 2008
Average applied rate 
2002 (20.8%)Average applied rate 
2008 (21.4%)
 
Table III.1 
Tariff structure, 2002 and 2008 
(Per cent)  
    MFN 2002 MFN 2008 Final bounda 
1. Bound tariff lines (% of all tariff lines) 96.6 96.3 96.3 
2. Simple average applied rate 20.8 21.4 37.1 
 Agricultural products (HS01-24) 17.8 16.7 45.8 
 Industrial products (HS25-97) 21.2 22.2 35.8 
 WTO agricultural products 18.5 17.2 44.9 
 WTO non-agricultural products 21.1 22.0 35.9 
 Textiles and clot hing 21.2 22.8 30.0 
3. Tariff quotas (% of all tariff lines) 0.0 0.0 0.0 
4. Domestic tariff "peaks" (% of all tariff lines)b 1.4 1.5 2.6 
5. International tariff "peaks" (% of all tariff lines)c 59.9 64.0 100.0 
6. Overall standard deviati on of tariff rates 12.5 13.4 43.1 
7. Coefficient of variation of tariff rates 0.6 0.6 1.2 
8. Duty-free lines (% of all tariff lines) 0.1 0.2 0.0 
Table III.1 (cont'd) Maldives WT/TPR/S/221/Rev.1 
 Page 21 
 
 
    MFN 2002 MFN 2008 Final bounda 
9. Non- ad valorem  tariffs (% of all tariff lines)d 0.0 0.0 0.0 
10. Non- ad valorem  tariffs with no AVEs (% of all tariff lines) 0.0 0.0 0.0 
11. Nuisance applied rates (% of all tariff lines)e 0.0 0.0 0.0 
a Implementation of the U.R. was achieved in 1995. Calculati ons for final bound rates are ba sed on the 2008 tariff schedule. 
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied rate. 
c International tariff peaks are defined as those exceeding 15%. 
d Only one tariff lines contains a specifi c duty (i.e. HS code 240220, cigarettes). 
e Nuisance rates are those greater than zero, but less than or equal to 2%. 
Note: The 2002 tariff schedule is based on HS02 nomenclature, c onsisting of 5,321 tariff lines;  2008 tariff schedule is based on HS07 
nomenclature, consisting of 8,987 tariff lines. 
Source : WTO calculations, based on data provided by the Maldives' authorities. 
 (1.4%) (0.2%)(2.8%)(4.2%)
(0.2%)(11.6%)(20.1%)
(12.4%)(47.1%)
 (0.1%) 
05001,0001,5002,0002,5003,0003,5004,0004,500
D u t y  f r e e 5 1 01 52 02 53 55 0 1 0 0 2 0 0
Source :   WTO Secretariat calculations, based on data provided by the Maldives' authorities.Number of tariff linesChart III.2                   
Distribution of MFN tariff rates, 2008
Tariff rates  (%)
Note:        Percentages in parenthesis denote the share of total lines.
 
(d) Customs valuation 
19. The Maldives has not implemented the provision of the WTO Customs Valuation Agreement.  
Nonetheless, it seems that significant progress has been made towards full implementation.3  
According to the authorities, the Maldives will be in  compliance with the provisions of the agreement 
once the draft customs law has entered into force;  th e law was to have been enacted by Parliament in 
2002.  The new Government considers the customs bill to be a priority and expects to submit it to 
Parliament during 2009.  Currently, Customs relie s on prices of identical or similar goods based on 
c.i.f. (cost, insurance, and freight) values for the purpose of levying tariffs. 
                                                      
3 WTO document G/VAL/N/4/MDV/1, 20 March 2002 and WTO (2003). WT/TPR/S/221/Rev.1 Trade Policy Review 
Page 22 
 
 
(e) Tariff dispersion 
20. Apart from the overall level of the tariff, as refl ected in the average applied MFN tariff rate, 
there are potential efficiency losses depending on th e dispersion of these tariff rates across product 
lines.  The greater the differentials in tariff rate s, especially within groups of similar and thus 
substitutable products, the higher the chance that c onsumer and producer decisions are distorted by 
the tariff structure.  The implication is that very similar goods are often taxed at significantly different 
rates, thereby increasing the complexity of the ta riff structure and thus creating the incentive for 
misclassification and tax evasion.  It would appear that the dispersion of tariff rates has increased during the period under review;  the proportion of tariff lines involving domestic and international 
peaks has rised and the overall standard deviation of  the tariff rates increased from 12.5% in 2002 to 
13.4% in 2008 (Table III.1), thereby making the tariff more complex.  The coefficient of variation remained unchanged at 0.6, a moderate degree of di spersion;  however, the dispersion within certain 
chapters of the HS nomenclature, such as plastics and motor vehicles, remains large. 
21. The Maldives' tariff contains only one specific ra te.  However, as the Maldives faces resource 
constraints and does not have a significant manufacturing sector, specific rates might be useful on 
other tobacco and alcohol products, as they are easie r to administer and provide a stable revenue 
stream.
4 
(f) Tariff escalation 
22. The current tariff structure in the Maldives h as a level of built-in escalation.  The average 
applied MFN tariff in 2008, was 17.3% for semi-p rocessed products and 23. 1% for fully processed 
products.  At the two-digit ISIC level, the tariff shows positive escalation mainly on:  textile, wearing 
apparel and leather industries (with average a pplied MFN tariff rates ranging from 17.9% on semi-
processed products to 25.6% on fully processed goods);   chemicals, petroleum, coal, rubber, and 
plastics;  paper, paper products, printing and publishing products;  and other manufacturing products 
(Table III.2).  
23. However, there is some degree of de-escal ation between unprocessed and semi-processed 
products, the average applied MFN tariff on the former was 19% in 2008.  This has economic 
implications as it effectively provides negative protection to, and thus discourages, downstream 
processing. 
(g) Tariff exemptions and concessions 
24. Goods that benefit from duty exemptions are mainly capital goods and intermediate goods.  
Revenue forgone through duty ex emptions increased from Rf 248 million (US$19.4 million) in 2001 
to Rf 556 million (US$43.2 million) in 2006.  This represented about 24% of duty collections in 2006. 
25. Under the customs legislation, the President ma y grant duty-free importation of items used for 
any "economically productive activity" commencing in the Maldives, for a period of up to ten years, 
and may allow items to be imported duty free in "s pecial circumstances" where it would benefit the 
total population.  However, a large number of exemptions were eliminated in March 2006.  
                                                      
4 However, specific rates are more opaque than ad valorem  rates and may conceal high ad valorem  
equivalents and distort domestic productions patterns more than ad valorem  rates, as they may provide disparate 
levels of assistance for similar tariff-line goods by ta xing the imports of cheaper goods more heavily, thereby 
encouraging domestic firms to produce less expensive goods for which the level of protection against imports is proportionally greater. Maldives WT/TPR/S/221/Rev.1 
 Page 23 
 
 
Furthermore, the Government may provide duty exem ptions under other legislation;  for example, 
goods that are re-exported are exempted from import tariffs.5 
Table III.2 
MFN tariff escalation by ISIC 2-digit heading, 2008 
(Per cent) 
ISIC 
code Description Number of 
lines Simple average Range Standard 
deviation 
 Total 8,987 21.4 0 - 200 13.4 
11 Agriculture and hunting 319 17.5 5 - 50 5.5 
12 Forestry and logging 31 21.1 15 - 25 5.0 
13 Fishing 78 19.5 15 - 25 5.0 
21 Coal mining 4 25.0 25 - 25 0.0 
22 Crude petroleum and natural gas production 5 16.0 10 - 25 8.7 
23 Metal ore mining 23 25.0 25 - 25 0.0 
29 Other mining 84 23.9 10 - 25 3.6 
31 Manufacture of food, beverage s and tobacco 949 16.2 0 - 50 6.5 
 - First stage of processing 153 15.6 0 - 25 3.6 
 - Semi processed 154 14.7 0 - 25 2.5 
 - Fully processed 642 16.8 0 - 50 7.6 
32 Textile, wearing apparel and leat her industries 1, 339 22.9 5 - 200 11.9 
 - First stage of processing 34 18.2 15 - 25 4.7 
 - Semi processed 439 17.9 15 - 25 4.5 
 - Fully processed 866 25.6 5 - 200 13.7 
33 Wood and wood products, including furniture 304 18.6 15 - 100 5.9 
 - First stage of processing 4 15.0 15 - 15 0.0 
  - Semi processed 44 15.0 15 - 15 0.0 
 - Fully processed 256 19.3 15 - 100 6.2 
34 Paper, paper products, printing and publishing 235 16.7 0 - 50 8.4 
 - First stage of processing 20 25.0 25 - 25 0.0 
 - Semi processed 88 11.0 10 - 25 3.0 
 - Fully processed 127 19.3 0 - 50 9.1 
35 Chemicals, petroleum, coal, r ubber, plastics 1,702 19.7 5 - 200 16.1 
 - First stage of processing 62 20.8 10 - 25 5.4 
 - Semi processed 928 16.3 10 - 200 12.7 
 - Fully processed 712 24.0 5 - 200 19.3 
36 Non-metallic mineral products except of petrol. & coal 434 21.6 5 - 100 10.8 
 - First stage of processing 4 25.0 25 - 25 0.0 
 - Semi processed 34 19.7 10 - 25 7.3 
 - Fully processed 396 21.7 5 - 100 11.0 
37 Basic metal industries 419 21.5 15 - 25 4.8 
 - First stage of processing 11 25.0 25 - 25 0.0 
 - Semi processed 408 21.4 15 - 25 4.8 
38 Fabricated metal products, machiner y and equipment 2,697 24.4 5 - 100 16.6 
 - Semi processed 4 25.0 25 - 25 0.0 
 - Fully processed 2,693 24.4 5 - 100 16.6 
39 Other manufacturing industries 363 22.4 5 - 50 6.7 
 - First stage of processing 17 25.0 25 - 25 0.0 
 - Semi processed 2 10.0 10 - 10 0.0 
 - Fully processed 344 22.4 5 - 50 6.8 
41 - Electrical energy 1 25.0 25 - 25 0 
Source:  WTO Secretariat estimates, based on data provided by the Maldives' authorities.  
                                                      
5 Re-export is defined in the customs legislation as the export of an imported item in its original 
condition. WT/TPR/S/221/Rev.1 Trade Policy Review 
Page 24 
 
 
(h) Tariff preferences 
26. South Asian Association for Regional Coopera tion (SAARC) countries are granted tariff 
preferences on imports under the South Asian Free Tr ade Area (SAFTA), which entered into force in 
2006.6  These apply to 7,271 tariff lines.  Margins of preference are 10% of the MFN tariff rate.  Of 
the 1,716 lines on which preferential rates are not app licable, 15 lines are at zero rate of duty, and the 
rest includes:  agricultural products, plastics, a nd motor vehicles.  The average applied rate under 
SAFTA is 19.02%.  Most products covered by SAFTA tariff preferences would otherwise be subject 
to applied MFN rates of 25%. 
27. To be eligible for such preferences, imports must  comply with the rules of origin specified in 
the agreement.  
(i) Rules of origin 
28. The Maldives does not use any non-preferential ru les of origin for the purpose of levying 
import duties.7 
29. Preferential rules of origin affect imports eligible for tariff preferences under SAFTA.  A 
certificate of origin, issued by th e designated authority in the ex porting country in accordance with 
specified certification procedures, must accompany th e imports.  Otherwise, they are dutiable at the 
applied MFN tariff rate. 
30. Tariff and tax reforms are intertwined.  Broade ning the Maldives' internal tax base to reduce 
the Government's heavy reliance on border taxes would facilitate further tariff reductions.  As 
revenues are determined by applied rates, any ch anges to the bound rates would have no impact on 
revenues collected unless they also affect the former.  In addition , a broad-based consumption tax 
could achieve the Government's revenue collecti on objective, while it would be non-discriminatory, 
taxing both imports and domestic goods  equally (tariffs are only applicable to imports).  Other 
reforms might usefully include replacing tariffs on "excisable" goods (such as alcohol, tobacco, motor 
vehicles, and petroleum products) with excise taxes.  (For details of the tariff reform see Box III.1.) 
(iii) Other duties and taxes 
31. The Maldives levies no other duties or surcharges on imports.  Furthermore, there are no 
indirect taxes applicable to domestically produced goods or services, except for the fixed-rate tax of 
US$8 per bed night levied on foreign tourists;  this fl at rate levy is borne disproportionately by tourist 
resorts that charge lower room rates.   
(iv) Import prohibitions, restrictions, and licensing 
32. Import restrictions and prohibitions are maintain ed for religious, health, safety, security, and 
environmental reasons.  The Maldives prohibits impo rts of religious materials offensive to Islam, 
idols for worship, pornographic material, live pi gs, and narcotics and psychotropic substances.  
Imports of used motor vehicles and cycles over five -years old and three-years old, respectively, are 
also prohibited for environmental reasons.  Imports ar e restricted for:  arms and ammunition;  alcohol 
and spirits;  pork and its by-products;  dogs;  and dangerous animals.8  Imports of radio and wireless 
                                                      
6 SAARC countries are:  Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. 
7 WTO document G/RO/N/22, 16 September 1998. 
8 To import restricted products, such as pork and alcohol, importers require a special licence from the 
MED, which also details the permissible quantity.  For arms and ammunition and dangerous animals, a special licence must be obtained from the Ministry of Defence and National Security. Maldives WT/TPR/S/221/Rev.1 
 Page 25 
 
 
communication equipment, pre-recorded video ta pes, DVDs, VCDs and LDs, and the Holy Quran 
require approval.  Imports of live plants and animal s require a valid phytosanitary/sanitary certificate, 
and medicines require a doctor's medical prescription.   
Box III.1:  Tariff and tax reform 
The Maldives' tariff is in need of reform for several reasons.  First, given that the tariff is principally a 
source of tax revenue, the large number of tariff rates imparts an unnecessary degree of complexity (and therefore opacity) to the tariff stru cture.  Thus administration of the tariff is complicated, and it is 
susceptible to misclassification and abuse, as well as  to socially wasteful rent-seeking by businesses 
lobbying the Government for protection.  Second, the present tariff structure is potentially distortionary.  
The extent to which a country's resource allocation is adversely affected by its tariff structure is dependant 
upon both the tariff level and the degree of dispersion .  For any given average tariff rate, the greater the 
dispersion (especially between close substitutes), the more distorting is the tariff structure.  The dispersion 
of tariff rates, as measured by the overall standard devi ation, has increased in the Maldives.  In addition, the 
proportion of tariff lines involving domestic and international peaks has risen, and dispersion within certain chapters of the HS nomenclature, such as plastics and motor vehicles, remains large.  Hence, a more 
uniform, even if not lower, tariff would be expected in general to improve resource allocation and increase 
economic welfare.
a  The argument in favour of a non-uniform  escalating tariff is that it can encourage 
downstream processing.  Third, the tariff is inequitable,  as some luxury items, such as cameras, watches, 
and televisions, are taxed at a relatively low rates, wh ich can impart significant regressivity (greater relative 
taxation on lower incomes). 
As the tariff is a major source of revenue for the Government, any changes would have far reaching fiscal 
repercussions.  According to the IMF, the implemen tation of the provisions of SAFTA, for example, will 
result in a revenue loss of between 1.4%-3.3% of GDP in 2016, while each average weighted point 
reduction in the tariff is simulated to result in a revenue loss of 0.75% of GDP.  Thus, given the need to 
recover revenue lost from reducing the tariff, the Government would need to build up the internal tax 
system.  It has been estimated that a VAT levied at a uniform rate of 10% would allow the tariff to be 
halved with no loss of revenue.b  Although it is usually more difficult to administer than a single-stage sales 
tax, a uniform, broad-based VAT on final consumption would be more trade facilitating because, with full 
rebates, it would not impede exports.  The VAT could be supplemented by other internal taxes, such as 
corporate tax and a personal income tax based on "ability to pay".  In this regard, the new Government 
expects to implement a 15% business profits tax in 2010, and has proposed to introduce a retail sales tax.  
As the name suggests, VAT is levied on value added at each stage of productio n through the use of tax 
credits for intermediate inputs used, while a single-stage retail sales tax is levied on total value without 
providing credit for taxes already paid on inputs, thereby leading to the problem of "cascading".  Thus, the 
VAT is more neutral.c  In addition, because of the use of tax credits, the VAT is le ss susceptible to tax 
evasion as producers would need to file tax returns to cl aim such credits.  In contrast to the tariff, which is 
only levied on imports, the VAT is broad-based as it is applicable on all goods and services consumed in the 
economy.  Furthermore, whereas the tariffs levied on intermediate inputs for manufactured exports can feed 
through as export taxes in the absence of tariff exem ptions (or drawbacks), the VAT credits for inputs and 
rebates for exports allow products to be exported without being taxed. 
In the absence of a redistributive personal income tax based on "ability to pay," tax revenue could be 
supplemented by excises on goods that are "excisable", such as tobacco products, motor vehicles, petroleum 
products, perfumes and cosmetics, and alcohol.  These goods could have their tari ff converted to excises 
levied at the same rates, thus helping to offset the loss in tax revenues due to tariff rationalization and liberalization. 
a Strictly speaking, a uniform nomin al tariff minimizes the net welfare cost of such protection only if 
import demand elasticities are uniform across commod ities and cross-price effects are negligible. 
b The extent which tariff revenue would increase due to higher import volumes on account of the 
lower tariff levels would depend on the price elasticities of the imported goods. 
c The VAT avoids the problem of cascading as it is ultimately levied on consumption.  The tax paid 
at each stage of production is incorporated into  the cost of productio n for the next stage. 
Source: WTO Secretariat. WT/TPR/S/221/Rev.1 Trade Policy Review 
Page 26 
 
 
33. Under Law 31/79, all imports are subject to licen sing, which is used mainly for import control 
and monitoring purposes.  Licences for a specific value and time period are issued free of charge upon application to the Ministry of Trade and Industri es.  For renewal of licences, importers need to 
re-apply and the application is us ually approved.  Licences are also required for importing restricted 
items.  
34. Until recently, the Maldives maintained quotas on im ports of staple foods, mainly rice, sugar, 
and wheat flour (70% of the quota is reserved for the State Trading Organization).  However, the quota regime has been "operationally" eliminated, a nd now both public and private parties (Maldivian 
nationals only) are allowed to import staple foods. 
(v) Anti-dumping, countervailing, and safeguard measures 
35. There are no specific laws or regulations dealing with anti-dumping, countervailing or 
safeguard issues in the Maldives.  However, th ere are provisions under the Export and Import Law 
that allow the Ministry of Trade and Industries to take anti-dumping action against imports from any country on an ad hoc basis.  Concerned parties ha ve recourse to the courts to appeal against the 
Ministry's decision.  The Maldives has not been involved in any disputes either directly or as a 
third party. 
(vi) State trading 
36. The State Trading Organisation (STO) is the ma in government-controlled entity involved in 
importation.  The STO also operates ten retail outlets  throughout the islands.  Its main function is to 
ensure sufficient domestic supplies of staple food pr oducts, such as rice, flour, and sugar;  it accounts 
for 70-80% of total imports of these three products.  Furthermore, the STO imports a large range of 
other products, including oil, construction materi als, and essential drugs, on a commercial basis, 
where it competes with private-sector importers.  As a consequence, the STO remains dominant in the 
market place, accounting for approximately 25%  of all imports into the Maldives.   
(3) M
EASURES DIRECTLY AFFECTING EXPORTS  
(i) Registration and documentation 
37. Exporting goods from the Maldives is a four-step procedure.  Exporters require an export 
licence, issued by the MED, which must be regi stered in the customs licence database.  After 
registration, the exporter lodges the goods declar ation and the supporting documents with Customs.9  
Customs registers the licence and the supporting do cuments and forwards an export permit to the 
specified customs checkpoint.  Customs examines and verifies that the goods to be exported match 
those on the registered declaration;  the goods are then cleared for export.  If required, Customs may 
issue a certificate of origin, or if a payment is to be made, the goods declaration form is sent to the exporter. 
38. Documentation for the exported good is completed within 24 hours of export;  it includes 
goods declaration, invoice (with f.o.b. value), expor ter copy of the examination form, copy of the 
airway bill or bill of lading, packing list, and trad e permit.  In addition, for live fish, a pro-forma 
aquarium fish export form is issued by the Marine Research Centre.   
                                                     
 
9 Supporting documents include;  invoice with f.o.b. value, packing list, health certificate (if required), 
and pro-forma aquarium fish export form fo r checking and registration (if required). Maldives WT/TPR/S/221/Rev.1 
 Page 27 
 
 
(ii) Export taxes, charges, and levies 
39. Only ambergris is subject to an export tax, wh ich is levied at 50%;  however, this tax is 
obsolete as there are no ambergris exports from the Maldives.  Garment exports were subject to 
royalties;  these were paid by foreign investors under their investment agreements, and constituted 
export taxes as they were applicable only to e xports.  These royalties are no longer applicable, 
however, as the garment industry in the Maldives colla psed following expiry of the MFA.  Fisheries 
exports are subject to a 5% royalty, based on weight, which is effectively an export tax.  
40. To mitigate fraud, if the export value is not known, the Government may determine "revalued 
export prices".  In case of a valuation dispute, th e exporter has recourse to the courts;  however, the 
assessed duty must be paid;  the court may authorize a refund, if deemed necessary. 
(iii) Export prohibitions, controls, and licensing 
41. Exports of live fish are subject to licensing, a nd trade in timber is controlled.  Exports of 
certain marine species are prohib ited for environmental reasons.10  A general list of exportable 
products from the Maldives is detailed in the Expor t/Import regulations 1995.  Products not on the list 
are approved or rejected by the Ministry of Economic Development on submission of a written 
request. 
(iv) Export assistance 
42. The Maldives does not have any specific trade finance facilities in operation.  However, 
commercial banks are obliged to lend to exporters  (and importers) according to MMA guidelines.   
(v) Export-processing zones 
43. There are no export processing zones in the Maldives. 
(vi) State trading 
44. Maldives Industrial Fisheries Company Limite d (MIFCO) is the main SOE involved in 
exporting.  It accounts for between 50% and 60% of total merchandise exports.  MIFCO also benefits 
from market-entry restrictions imposed on other operators. 
(4) INTERNAL MEASURES  
(i) Internal taxes 
45. There are no direct taxes in the Maldives excep t for a 25% profit tax on banks.  The only 
indirect tax is a US$8 bed tax levied on foreign t ourists (section (iii) above).  The new Government 
has proposed a 15% business profits tax on all enterprises;   the bill is currently in Parliament and is 
expected to be passed during 2009 and implemented in 2010.  There are also proposals for introducing 
a personal income tax, a general sales tax, and converting the tourism bed tax into an ad valorem  tax.  
However, it is not clear when these might be passed or implemented. 
                                                      
10 These include black coral and bi-p roducts, trochus shells, triton shells, lobster or lobster meat, stony 
corals except organ pipe coral, bait fish used in pole and line tuna fisheries, puffer fish, eels, turtles and their 
products of any nature, pearl oysters, skates and rays, dolphins, whales, parrot fish, and bigeye scad. WT/TPR/S/221/Rev.1 Trade Policy Review 
Page 28 
 
 
(ii) Competition policy 
46. There is no all-encompassing competition policy in  the Maldives, although there are plans to 
formulate one in light of the expected privatiza tions.  Sector-specific legislation is in place for 
telecommunications.  Additionally, consumer-p rotection legislation was enacted in 1996.11  
(iii) Government procurement 
47. Government procurement may be used as an in strument of trade policy insofar as domestic 
goods and services are given preference, in which case  the margin of preference is, in effect, 
equivalent to a tariff.  According to the aut horities, government procurement of goods and services 
between Rf 5,000 and Rf 25,000 must be throug h a public announcement;  procurement contracts 
between Rf 25,000 and Rf 1.5 million must be  awarded through an ope n competitive tendering 
process and in accordance with regulations set by th e presidents office;  while contracts in excess of 
Rf 1.5 million must be brought to the tender boar d.  Procedures for the evaluation of bids are 
published, and the tenders are evaluated by the tender board, which comprises representatives from 
the relevant agencies.   
48. Although the introduction of competitive tendering has improved transparency, certain issues 
remain unresolved.  Tenders are ge nerally not widely circulated and are at times published in the local 
language, making it difficult for foreigners to submit bids.  The reasons and basis for tender decisions 
are not always readily available or clearly explained.   
49. The Maldives is neither a member of, nor ob server to, the WTO plurilateral Agreement on 
Government Procurement. 
(iv) Local-content requirements 
50. The Maldives Government encourages foreign investors to use domestically produced raw 
materials and to employ locals, subject to availability and commercial viability. 
(v) State-owned enterprises 
51. State involvement in the economy is widespr ead, with some 37 state-owned enterprises 
operating in various sectors of the economy, including tr ade, finance, transport, fishing, utilities, and 
tourism (Table III.3).  SOEs account for 36% of GDP.   
52. Certain SOEs operate as statutory or de facto monopolies, while others are subsidized, giving 
them an advantage over the private sector.  These advantages include preferential rates and fees for 
state land, and government guarantees for domestic and external loans.  It would appear that most of SOEs are not run efficiently and are incurring losses;  therefore, they are a significant drain on the 
resources of the Government.  The new Governme nt has initiated a privatization process and has 
sought expressions of interest for the sale of state shares in certain enterprises (Chapter I).  In other 
cases the Government has decided to award contract s based on public/private partnerships.  In both 
cases, the efficiency of SOEs will need to be impr oved and prospects for profits realized.  However, 
some of the SOEs have been mandated to prov ide commercially non-viable services in line with 
government objectives. 
                                                     
 
11 Consumer Protection Law No. 1/96. Maldives WT/TPR/S/221/Rev.1 
 Page 29 
 
 
Table III.3  
Public enterprises of the Republic of Maldives 
 
Name GoM direct 
shareholding 
(%) GoM 
indirect 
shareholding Private Notes 
1 Addu Investments Pvt Ltd 30  70% Sha ngri-La In the development phase  
2 Air Maldives Ltd 51  49% Naluri Bhd The company is in the 
process of winding up 
3 Bank of Maldives Plc 51 4.2% STO, 
4.1% 
MTCC,7.3% Provident 
Fund 29.3% Public, 
4.1% 
Rayyithunge Account Listed on the stock 
exchange 
4 Dhivehi Raajjeyge Gulhun Pvt Ltd 55  45% C&W   
5 Housing Development Finance Corporation 
Plc 49  ADB 18%, IFC 
18%, HDFC 
India 15%   
6 Housing Development Corporati on Ltd 100   Formerly known as 
Hulhumale Development 
Corporation Ltd 
7 Island Aviation Services Ltd 100     
8 Madivaru Holdings Private Limited 25 17.60% 57.4% Pvt 
individuals   
9 Maldives Airports Company Ltd 100   In the process of sale of 
49% shares to a private 
party 
10 Maldives Industrial Fisheries Company Ltd 90 10% STO    
11 Maldives National Shipping Ltd 100     
12 Maldives Ports Limited 100     
13 Maldives Post Ltd 100     
14 Maldives Tourism Development 
Corporation PLc 57  43% Listed on the stock 
exchange.  Proposes to 
reduce government share 
holding to 45% after the next issue 
15 Maldives Transport and Contracting 
Company Plc 52.50 7.5% MNSL 40% Public Listed on the stock 
exchange 
16 Male' Water and Sewerage Company Pvt 
Ltd 100     
17 State Electric Company Ltd 100   Expression of Interest 
notice announced seeking a 
JV partner 
18 State Trading Organization Plc 92.29  7.71% Public Listed on the stock 
exchange 
19 Vilingili Investments Pvt Ltd 30  70% Energy 
Tours Company is in the process 
of winding up 
20 Maldives National Broadcasting 
Corporation Limited 100   Corporatization of TVM 
and VOM, subsequently to 
be privatized 
21 Central Utilities Limited 100   SPV to form JV companies 
22 Maldives Entertainment Company Limited 100   SPV to form JV companies 
23 North Central Utilities Limited 100   SPV to form JV companies 
24 Northern Utilities Limited 100   SPV to form JV companies 
25 South Central Utilities Limited 100   SPV to form JV companies 
26 Southern Utilities Limited 100   SPV to form JV companies 
27 Thilafushi Corporation Limited 100   SPV to form JV companies 
28 Upper North Utilities Limited 100   SPV to form JV companies 
Table III.3 (cont'd)  WT/TPR/S/221/Rev.1 Trade Policy Review 
Page 30 
 
 
 
Name GoM direct 
shareholding 
(%) GoM 
indirect 
shareholding Private Notes 
29 Upper South Utilities Limited 100   SPV to form JV companies 
30 Waste Management Corporation Limited 100   SPV to form JV companies 
31 Hulhumale' Integrated Economic Zone Ltd 100   SPV to form JV companies 
32 Gulhifalhu Industrial Zone Ltd 100   SPV to form JV companies 
33 Works Corporation Limited 100   To execute GoM projects 
34 Hithadhoo Port Limited 100   SPV to form JV companies 
35 Gan Airport Company Limited 100   SPV to form JV companies 
36 Kulhudhuffushi Port Limited 100   SPV to form JV companies 
37 Hanimaadhoo Airport Company Limited 100   SPV to form JV companies 
Note: GoM = Government of the Maldives;  SPV = special purpose ve hicle;  TVM = Television Maldives ;  VOM = Voice of Maldives;  
MTCC = Maldives Transport and Contracting Company Plc;  IFC = International Finance Corporation;  and MNSL = Maldives 
National Shipping Ltd. 
Source: Information provided by the Maldives' authorities.  
(vi) Price controls and monitoring  
53. Utilities such as telecommunications, water, and electricity are largely state-owned, with 
charges  subject to monitoring and control by th eir respective regulators.  The State Electricity 
Company (STELCO) and the Maldives Water and Se werage Company rates for consumers are well 
below market prices, which increases the use of electricity and water to the detriment of the 
environment.  Retail prices of staple foods (ri ce, sugar, and wheat flour) are also capped. 
(vii) Intellectual property rights 
54. At present there are no laws or regulations to protect intellectual property rights (IPR) in the 
Maldives.  However, copyright legislation has been dr afted and is expected to enter into force in 2010, 
while trade mark, patent and geographical indication le gislation is expected to be in force in 2013.  
Intellectual property (IP) protection is under the purview  of various ministries and departments;  trade 
mark registration takes place in the Ministry of  Economic Development (MED);  between 2002 and 
2008, 424 local trade marks were registered.12  Currently, international trade marks are not registered 
or protected in the Maldives;  however, foreign adver tisements are printed in th e local news papers as 
cautionary notices on protection of their trade ma rks through local agents .  The absence of any 
intellectual property legislation also constitutes a po ssible deterrent to inward foreign investment.  
The National Bureau of Classification is responsible fo r copyright registration.  Before registering, a 
committee within the Bureau verifies the originality of the work.  There is no legislation or ministry 
responsible for patent protection or  for geographical indications.   
55. Government initiatives to enhance IP protection include the establishment of an Intellectual 
Property Unit in MED in December 200713, several awareness programmes focused on copyright 
infringements, and capacity-buildi ng programmes for IP staff.  Fo reign donors have expressed an 
interest in helping to strengthen IP protection in  the Maldives by providi ng technical assistance.  
These include WIPO, India, the United States, and Singapore.  The police, Customs, and the judiciary 
are involved in IPR enforcement but in the absence of  any legislation to back them up, they have 
limited powers. 
                                                      
12 Data provided by the authorities. 
13 The Unit is currently working with WIPO to esta blish an independent modern intellectual property 
office. Maldives WT/TPR/S/221/Rev.1 
 Page 31 
 
 
(viii) Standards and other technical requirements 
(a) Standards, testing, and certification 
56. There are no Maldivian standards.  Fish exports  adhere to the standa rds required in export 
markets (Australia, European Communities, United States, Malaysia, Singapore, and New Zealand).  
Singaporean standards are required for electrica l goods, while British Standards are applied to 
medical and construction goods.  The Maldives Sta ndards Act and the Standard for Weights and 
Measures Act are in the process of being drafted and will need to be approved by Parliament before 
entering into force.  The Act will provide for the standardization of commodities and codes of 
practice.  The Maldives, along with other SAARC me mbers, has agreed to a Regional Action Plan on 
Standards, Quality Control and Measurement, which will identify products w hose trade is adversely 
affected by variations in national standards, and wo rk towards their harmonization.  The plan will also 
consider developing regional sta ndards, while members' national standards are to be based on 
international norms or their own assessment of requi rements.  Mutual accepta bility and recognition of 
certification schemes and accredited testing will also  be promoted under the plan.  However, the 
Action Plan, which was to enter into for ce in 2006, has still not been implemented. 
57. The Maldives Standard and Metrology Unit (MSMU) was established in the MED in 
June 2006.  Its functions include:  assisting the Gove rnment in the adoption of standards and technical 
regulations to protect consumer interests;  inte racting and liaising with international standards 
organization and standards bodies of trading partner countries, including those from the SAARC region;  maintaining a data base on standards and t echnical regulations of the Maldives and its trading 
partners, and operating a national enquiry point  as stipulated under the WTO TBT Agreement
14;  
maintaining reference standards for weights and measures, and arrange their periodic calibration15;  
enforcing the weights and measures law of the Ma ldives;  and serving as the secretariat for the 
National Standard Council, which has yet to be set up.  
58. The MSMU, with assistance from UNIDO, has drafted 20 standards for standardization and 
metrology, but is yet to issue them;  18 relate to  fish and fish products, and the other two to 
management systems. 
(b) Sanitary and phytosanitary (SPS) requirements 
59. Imports of live animals, birds, and plants require a phytosanitary or sanitary certificate.16  The 
Maldives became a member of the Food and Agri culture Organisation's Codex Alimentarius in 
March 2008 and the World Organisation for Animal Health (OIE) in November 2007.  Under the 
current legislation, an SPS enquiry point has now been set up. 
(c) Marking, labelling, and packaging 
60. The Maldives has no special marking, labelling, or packaging requirements.  There are some 
requirements for imported products, but these are not properly enforced.  Consequently, the authorities note that there is a prevalence  of sub-standard products on the market. 
                                                     
 
14 The TBT Enquiry Point is being developed in the MSMU but has not yet started functioning.  No 
enquiries about the standards, technical regulations, and conformity assessment system of other countries have been received from within Maldives, since awareness le vels are relatively low. 
15 UNIDO has provided basic equipment for the legal metrology laboratory. 
16 A special quarantine unit has been set up by the Ministry of Fisheries and Agriculture to issue 
certificates and monitor imports.