Marshall Islands tax system: audit, reporting and optimization of taxation of Marshall Islands companies and individuals: VAT, income tax and capital gains

Basic taxes (briefly)

Personal tax 8-12%
Corporate tax (in detail) Businesses doing business on the Marshall are subject to income tax. The revenue includes all income, the enterprise can be either a legal entity or not. In 2021, tax is levied at $ 80 on the first $ 10,000 of revenue and 3% on the excess.
Capital gains tax. Details
VAT. Details Local authorities levy sales tax at rates of 2-4%.
Other taxes
Government fee
Stamp duty No

International tax agreement

   
Australia, Denmark, Ireland, Faroe Islands, Finland, Greenland, Iceland, Korea, Netherlands, New Zealand, Norway, Sweden, USA


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Personal Taxes

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.

Corporate Income Tax

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.

CFC Rules

None.

Withholding Tax

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%.

Sales Tax

Local authorities levy sales tax at the rates of 2% to 4%.

Social Security Contributions

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%.

Double Tax Treaties

The Marshall Islands has tax information exchange agreements:

13 TIEAs: Australia, Denmark, Faroe Islands, Finland, Greenland, Iceland, Ireland, Korea, Netherlands, New Zealand, Norway, Sweden, USA.

Exchange Control

Foreign exchange transactions can generally be made without restrictions.

    Taxes of Marshall Islands

    Min. rate for corporate tax No
    Capital gains tax No
    VAT 2-4%
    Withholding tax No
    Exchange control No
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