Personal income tax is levied at the rate of 8% on employment income of up to USD 10,400 and at the rate of 12% on the excess.
For individuals whose income does not exceed USD 5,200 per year, an annual income of USD 1,040 is exempt from tax.
Payroll tax is withheld by the employer and is paid every four weeks.
Entities doing business in the Marshall Islands pay tax on their revenue. The revenue includes all income; entities can be legal entities or not.
For 2021, the tax rate is USD 80 on the first USD 10,000 of the revenue and 3% on the excess.
The tax is paid quarterly.
Companies registered in one of the Marshall Islands international registries qualify as non-residents if they do not conduct any business in the Marshall Islands.
It should be noted that the Marshall Islands introduced economic substance requirements which are meant to ensure that companies are taxed in the jurisdiction where they do business.
The economic substance requirements need not be complied with if the company has proved it is tax resident abroad.
No withholding tax is levied on dividends, interest, or royalties.
The income of non-residents from services provided to clients within the Marshall Islands is subject to withholding tax at the rate of 10%.
Local authorities levy sales tax at the rates of 2% to 4%.
Businesses make quarterly social security and health insurance contributions on earnings of up to USD 5,000 per quarter.
The contribution rates are 8% for the employee (withheld by the employer) and 8% for the employer.
Quarterly health insurance contributions are paid by businesses at the rate of 3.5%.
The Marshall Islands have 13 Tax Information Exchange Agreements (TIEA) with the following jurisdictions:
13 TIEAs: Australia, Denmark, Faroe Islands, Finland, Greenland, Iceland, Ireland, Korea, Netherlands, New Zealand, Norway, Sweden, USA.
Foreign exchange transactions can generally be made without restrictions.