Following the Sixth Amendment to the Employment Act, Labour Relations Authority has published the Regulation on Service Charge today (16th March 2021) in the Gazette of the Government of Maldives.
This regulation stipulates the methods in which businesses must collect the Service Charge, how the Service Charge must be distributed among the employees and how the Employers must maintain all the relevant information and records to related to Service Charge.
Consequently, tourist resorts, tourist hotels, tourist guesthouses, training resorts, transit hotels, city hotels, tourist vessels, yacht harbors, integrated tourist resorts and private islands must levy a service charge of no less than 10%. However, any businesses operated within such establishments, for the sole purpose of selling goods, are exempted from this obligation.
In addition to this, the regulation also includes the manner in which any other business, who are not obligated to charge Service Charge, must act if they are levying a Service Charge on the services provided by them.
Employers must submit the required information related to Service Charge, to the Labour Relations Authority and Maldives Inland Revenue Authority by April 1st and October 1st of every year, through a mechanism established for it by LRA.
