Limited Liability Company
The Marshall Islands’ Limited Liability Companies Act was enacted in 1996 adopting the model of Delaware LLC. A Marshall Islands LLC is a flexible entity that allows to form its structure according to its operating agreement, rather than dictated by rigid legal statutory mandates.
The LLC is a hybrid of both partnership and corporate structures, protecting LLC members from the debts incurred by the entity and separating the rights of its members and that of the LLC.
An LLC requires minimal corporate formation requirements and a fast registration procedure. There may be incorporated as a single-member LLCs, and there are no company structure requirements for its management, nor are there provisions for company meetings, directors, secretary, or capital. Its operating agreement may be arranged by its members according to their needs.
Members pay personal income taxes in their country of residence on LLC profits proportionally to their share of participation in the LLC company, whether distributed or not.
It is important to note that certain countries do not recognize the pass-through status of an LLC, if the LLC is deemed to be tax resident in one of such countries, it may be subject to corporate income tax.
Besides the aforementioned structuring flexibility, Marshall Islands’ LLCs benefits from confidentiality, no reporting requirements, and local tax-exemption if the business is conducted outside the jurisdiction.
The Republic of the Marshall Islands passed in late 2018 the Associations Law (Amendment) Act, 2018 which amends and introduces certain provisions to the Business Corporation Act, the Revised Partnership Act, the Limited Partnership Act, and the Limited Liability Company Act.
The Associations Law (Amendment) has introduced a requirement to non-resident domestic entities (offshore companies) that provide financial services which would be regulated under the Banking Act (financial services providers) if the activities were carried out within the Marshall Islands – to be regulated by the relevant authority and fulfill licensing requirements of the jurisdiction in which the Marshall Islands company is carrying out activities.
In addition, it grants the power to the Registrar of Corporations to implement economic substance requirements and certain reporting requirements for offshore companies. We can expect further economic substance regulations to be enacted shortly, in line with those of other offshore jurisdictions.
The Marshall Islands has implemented the OECD’s automatic exchange of information for tax purposes (AEoI) through the Common Reporting Standard (CRS).
The Marshall Islands LLC is an excellent entity for movable and immovable assets holding and asset protection.
Country code - MH
Legal basis – Common law
Company law - Limited Liability Company Act 1996
Company form – Limited Liability Company (LLC).
Liability - The liability of the members of the company is limited to the amount of their capital contributions.
Capital – Marshall Islands LLCs do not have any minimum capitalization requirements.
Members – At least one member, who may be an individual or a legal entity of any nationality. The names of members are not disclosed in the LLC Certificate of Formation, thereby preserving confidentiality.
Manager – At least one manager, who may be a natural or juristic person of any nationality. An LLC may be managed either by its owners or by third parties.
Registered Address – A Marshall Islands LLC must have a Registered Agent and Registered Office in the Marshall Islands, provided by a licensed service provider.
Electronic Signature – Permitted.
Re-domiciliation – A foreign entity can be re-domiciled as a Marshall Islands LLC.
Compliance – LLCs are required to prepare and maintain accounting records, to reflect the financial position of the company.
Companies are not required to file accounts, annual returns or to divulge information relating to ownership. Marshall Islands LLC’s are subject to an annual government license fee.
- Members not disclosed
- Managers not disclosed
- Corporate members permitted
- Corporate manager permitted
- Local manager required
- Registered office or agent required
- Annual meeting required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum members
- USD 1 Minimum registered capital
- - Minimum paid up capital
- USDAny Capital currency
- 100% Foreign-ownership allowed
- 2018 AEOI
Corporate income tax – A Marshall Islands LLC is a tax transparent entity, which means that any profits are passed through to the members to be reported as personal income. There are no taxes, exchange controls or fees on assets or income originating outside of Marshall Islands, provided that LLC’s members are not Marshall Islands’ residents.
Other taxes – Resident companies are required to withhold and pay to the National Government a tax imposed on the Marshall Islands resident employee's wages and salaries.
The wages and salaries tax is 8% per annum on the first US$10,400 of taxable income earned by the employee, and 12% thereafter.
Employees whose gross annual wages and salaries are US$5,200 or less are allowed an exemption of US$1,040 per year (or US$20 per week).
There are no property, wealth and inheritance taxes in the Marshall Islands.
- Tax transparent entity
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 0% Offshore Income Tax Rate
- 0% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 7% Social Security Employee
- 7% Social Security Employer
- 12% Personal Income Tax Rate
- 4% VAT Rate
- 14 Tax Treaties
The Republic of the Marshall Islands is an island state located in the Pacific Ocean, in the Micronesia region. The country spreads over 29 atolls of coral, comprising 1,156 islands and islets.
The islands share maritime borders with the Federated States of Micronesia to the west, Wake Island to the north, Kiribati to the southeast and Nauru to the south. The population of the country is about 50,000 people. The capital and the most populated city is Majuro, with about 28,000 inhabitants.
After being under the mandate of the Spanish, the German, the English, the Japanese and being part of the UN’s Trust Territory of the Pacific Islands and under the administration of the United States, the nation gained its independence in 1990 and is one of the youngest states in Oceania.
Its official languages are English and Marshallese. Its official currency is the United States Dollar (USD).
The Marshall Islands government operates under a mixed parliamentary-presidential. Elections are convened every four years under universal suffrage (for all citizens over the age of 18).
Natural resources on the mainland include phosphate deposits as well as copra harvesting. Agricultural production is concentrated in small farms and the most important commercial crops are coconuts, tomatoes, melons, and the bread tree. There is small but intensive agriculture of copra, coconut, sweet potato and banana.
Livestock is restricted (due to the small extent) to the breeding of pigs, poultry, to a lesser extent cattle and goats. Obviously, fishing is very important although the seas are warm and not very prolific.
The industry is mainly that of copra, coconut oil, frozen fish for export, handicrafts. The aid of the United States government is the main pillar of the economy. The small-scale industry is limited to handicrafts, the processing of fish and copra.
Tourism has been emerging in recent years as a major source of income for the islands. The islands have few natural resources and imports far outnumber exports. Despite the relative scarcity of natural resources in their lands, the Marshall Islands have jurisdictional waters that are not well exploited due to the scarcity of capital.
The issue of postage stamps, mainly for philatelic collecting, is also an important source of income for its economy.
In recent years the country has developed a prolific wholesale and retail trade sector in the major urban areas, as well as a growing financial sector including banking and insurance services.
Tax treaties Map
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