Tax & Accounting Regulations
Below is an overview of the tax and accounting regulations in the Marshall Islands:
Marshall Islands non-resident corporations, Partnerships, Limited partnerships and Limited Liability Companies are statutorily exempt from all forms of taxation in the Marshall Islands. There is zero taxation on all income, profits, dividends, royalties, compensation or other related sources of revenue.
Annual Reporting Requirements
With an international company in the Marshall Islands, there is no requirement to:
- Prepare Accounts.
- Prepare Audited Documents.
- Employ Local Auditor.
- File Annual Accounts.
- File Annual Return.
Whilst there is no obligation to file audited financial statements with local authorities, a Marshall Islands international company is required to keep financial records to reflect its financial position.
Government Licence fee and Annual Maintenance Fees:
A government license fee must be paid by all Marshall Islands international companies in order to operate. The annual cost of company maintenance would include Service Provider’s fees and governmental licence.
Recurring Annual Maintenance Fees are due on the anniversary of incorporation and include:
- Provision of registered office and registered address.
- Provision of resident agent and Company Secretary.
- Payment of annual government fees.
Company Administration Guidelines
The Marshall Islands jurisdiction includes all the necessary characteristics of an offshore jurisdiction, such as bearer shares, facsimile filings, and execution of documents without notary affidavits. Each corporation may be organised in the U.S. style with a President, Secretary and Treasurer, or in the U.K. style with a Managing Director and Corporate Secretary. The Marshall Islands Association Law was recently republished in a new publication, which includes the Business Corporations Act, Partnership and Limited Partnership Act, Unincorporated Associations, and the Limited Liability Company Act.
Share Capital for Corporations
There is no specific minimum capital requirement for international corporations. The standard authorised share capital is 500 shares without par value or a capital with a stated par value up to USD $50,000. The authorised share capital may be expressed in any currency. The minimum issued share capital is either one share of no par value or one share of par value.
The following shares are permitted:
- Bearer shares.
- Preference shares.
- Redeemable shares.
- Shares with or without par value.
- Shares with or without voting rights.
A minimum of one shareholder is required which may be an individual or a body corporate. The details of company Beneficial Owners and Shareholders are not part of the public records.
A Marshall Island corporation requires a minimum of one Director, who can be a physical person or a body corporate. Details of Company Directors do not have to appear on public file and there is no requirement to have resident Directors. A Local Registered Agent is required and is provided upon incorporation at no additional cost.
Restrictions on name and activity
Marshall Islands corporations’ names must end in one of the following words, or their relevant abbreviations:
Corporation, Incorporated, Limited, Public Limited Company, Aktiengesellschaft, Société Anonyme, Sociedad Anónima, Société Anonyme à Responsabilité Limitée, Berhad, Proprietary, Naamloze Vennootschap, Besloten Vennootshcap, Aktiengesellschaft.
Names may be in any language as long as Roman characters are used and any standard corporate suffix is acceptable.
The following words cannot be used in the name of a Marshall Islands corporation: bank, chartered, establishment, foundation, insurance, partnership or trust. Names denoting any connection to local, state or national governments are generally prohibited and the Registrar may require an English translation if a foreign language is used to ensure that the proposed name is not one that is restricted.
Every company, registered in the Marshall Islands is required to have a registered office and address, which should be notified to the Registrar. A Registered Agent is required to ensure that the corporation has an assigned representative at a known address to receive all service of process (legal notices) on its behalf.
A Marshall Islands Corporation must appoint a Company Secretary who may be a natural person or a body corporate. The Company Secretary can be of any nationality and need not be resident in the Marshall Islands.
The Directors and Shareholders meetings need not be held in Marshall Islands; and there is no requirement for an Annual General Meeting. All meetings may be held outside Marshall Islands, by telephone or other electronic means. Alternatively, directors and shareholders may vote by proxy.
The most popular company form used by international investors in the Marshall Islands is a Non-Resident Corporation.
Non-Resident Corporations have certain restrictions:
- Cannot trade within the Marshall Islands.
- Cannot undertake the business of banking, trust services, insurance, assurance or reinsurance and gaming.
As there is no Public Registrar of Companies, there is an extremely high level of privacy for a corporation in the Marshall Islands. Nominee Directors and Shareholders are also accepted to maintain this level of confidentiality. Shadow Directors are permitted within all Companies as Directors are not required to be registered.
The approximate timescale for incorporation is one business day upon submission of all the required documentation to the Registrar. Corporate documents also can be legalised via Apostle within one business day.
CJEU: Defines Key Definitions for Tax & Beneficial Ownership Purposes
Last month, the Court of Justice of the European Union (CJEU) issued a series of important judgments dealing with tax avoidance and beneficial ownership in the context of the EU Parent-Subsidiary Directive (PSD) and the Interest and Royalties Directive (IRD).