Foreign Purchasers of Strata Villas in the Maldives: Holding Structure, Residence and Tax Treaties

Introduction

Foreign nationals may acquire a long-term strata lease of a resort villa under the Regulation on Long-Term Leasing of Villas or Rooms under Strata Model (Regulation No: 2023/R-154). The interest is a leasehold interest. Section 26 of the regulation makes clear that it does not include ownership of the land or the building.

This article deals with three matters that a foreign purchaser will usually raise: how the interest may be held, whether the investment supports a long-term residence visa, and whether the tax treaties of the Maldives are relevant to the holding structure.

Who may hold a strata lease

Section 18 of the regulation sets out who may be a lessee under a strata lease. An individual may hold the lease. A "company or partnership registered in the Maldives" may also hold it. A foreign purchaser may therefore acquire the interest directly in his or her own name, or through a company registered in the Maldives.

The second route is supported by the government's Foreign Investment Policy. Under Section 26.5 of the policy (as at September 2026), a foreign investor who invests a minimum of USD 250,000 in the purchase of a strata villa is entitled to register a company in the Maldives for the purpose of acquiring the lease of that villa. The company then holds the leasehold interest as the registered lessee for the purposes of Section 18.

In either case the purchaser's interest must be registered with the Ministry of Tourism under Section 19 of the regulation. The signed lease agreement and management agreement are submitted with the identity documents of the purchaser. For a company this is the company registry extract. For an individual it is a passport or national identity card.

Corporate Resident Visa

The Regulation on Issuing Corporate Resident Visa (Regulation No: 2021/R-115) was made under Section 9(f) of the Maldives Immigration Act (Law No: 1/2007). It provides for a residence visa that is valid for five years and may be renewed.

Under the qualifying criteria published under that regulation, a foreign individual who invests a minimum of USD 250,000 in a government-approved business or project is eligible to apply. An investment of that amount in the acquisition of a registered strata villa is an investment of this kind.

The visa is not issued automatically with the strata lease. It is a separate application under the immigration regulations, and the purchaser must meet the requirements of that regulation at the time of the application.

Double taxation avoidance agreements

A foreign purchaser who holds the villa through a Maldivian company may be concerned with the tax charged when profits are distributed and when the investment is sold. Under the Income Tax Act (Law No: 25/2019), non-resident withholding tax may apply to distributions made to a non-resident shareholder, and capital gains withholding tax may apply on a later disposal of the shares.

A double taxation avoidance agreement may reduce these charges, depending on its terms. A purchaser may therefore consider holding the shares of the Maldivian company through an entity established in a treaty jurisdiction.

The treaty network of the Maldives is small, and the status of each agreement should be checked. According to the Maldives Inland Revenue Authority:(1)

• the agreements with the United Arab Emirates and Bangladesh are in force;
• the agreement with Malaysia was signed in May 2023 and is listed as taking effect from 1 January 2027;
• the agreement with Hong Kong was signed in May 2025 and is not yet in force; and
• the agreement with India covers income from international air transport only and is not a comprehensive agreement.

The Maldives is also a party to the SAARC multilateral agreement on the avoidance of double taxation, which is limited in scope.

Treaty relief is not automatic. It depends on the holding entity qualifying as a resident of the treaty jurisdiction, and on the conditions and any anti-abuse provisions of the particular agreement. Whether a treaty structure produces a benefit will depend on the circumstances of each purchaser.

Comment

The regulation and the Foreign Investment Policy together give a foreign purchaser a clear route to hold a strata villa, either personally or through a Maldivian company. The choice between the two should be made before the lease agreement is signed, since the lessee named in the agreement is the party registered under Section 19. In our view a later change would be a transfer, which must follow the procedure in Section 22.

Tax structuring should be approached with care. Only a small number of comprehensive agreements are in force. Purchasers should obtain specific tax advice before a holding structure is put in place.

Endnotes

(1) Maldives Inland Revenue Authority, Tax Treaties, available at www.mira.gov.mv (status as at September 2026).

For more information, please contact:

Mr. Ahmed Murad, Senior Partner

Email: [email protected]