The parliament approved Wednesday a new bill imposing a tax of three percent on remittances sent abroad by the Maldives’ expatriate labour force.
The amendment to the Employment Act makes it mandatory for employers to deposit salaries of expatriate workers with local banks. A tax of three percent will be collected on any money wired abroad.
Some 41 MPs voted in favour, while 25 MPs, mainly of the main opposition Maldivian Democratic Party voted against the bill.
Human rights advocates have criticised the tax, noting it will affect the most poor and vulnerable groups here.
Lakshami, a 32-year-old maid from India, said: “It is so unfortunate that we have to pay a tax from the little we earn from hard labour, considering how poor our families are back home, and how badly we are treated here.”
The Maldives is under scrutiny for its chronic human trafficking problem. More than a 130,000 foreigners work in the Maldives, according to the government. Others have put the figure as high as 200,000. Only 80,000 are documented.
Ahmed Tholal, a former member of the human rights watchdog, branded the law “discriminatory.”
“It is not in line with the spirit of international law and the constitution that a tax is imposed on the personal incomes of foreign workers, the most marginalized group in society, when Maldivians do not even pay an income tax,” he said.
Shahindha Ismail of the Maldivian Democracy Network, said: “It is absolutely pathetic if our economic policy has deteriorated to the level that we are now levying unfair taxes on the incomes of the group of people who gets the least and are treated the worst.”
The remittance tax was among a host of new revenue raising measures proposed in the 2016 budget. The government hopes to raise MVR56 million (US$3.6 million).
Abdulla Jihad, the former finance minister, who was appointed vice president in June, claims the tax would increase revenue and open up jobs for Maldivians. Some US$408million is sent abroad as remittances, he said.
The new bill will come into effect three months after President Abdulla Yameen signs it into law. It allows the government to cut off services to or fine employers who do not comply with a penalty of MVR10,000 (US$649) to MVR50,000 (US$3242).
The World Bank advocates for low remittance fees, noting migrant worker income plays a crucial role in reducing poverty. By 2017 migrant remittances are expected to reach US$610 billion.