Capital Gains Tax in Marshall Islands

The Marshall Islands does not impose a separate capital gains tax. Capital gains are generally treated as ordinary income and taxed under the standard income tax framework for both individuals and corporations.

Scope of Capital Gains Tax

Capital gains in the Marshall Islands are generally taxed as ordinary income for both individuals and corporations. There is no separate capital gains tax regime; gains are integrated into the regular income tax system.

Capital Gains for Individuals

Real Estate Gains

Gains from the sale of real estate are subject to personal income tax at progressive rates (0–12%). The gain is calculated as the difference between the sale price and the adjusted cost basis. A primary residence exemption may apply under certain conditions.

Securities Gains

Gains from the sale of securities are generally taxable as ordinary income for individual investors. However, given the limited domestic securities market, most capital gains arise from business asset disposals rather than portfolio investments.

Capital Gains for Corporations

Corporate capital gains are treated as ordinary business income and taxed at the standard corporate income tax rate of 22%. This includes gains from the sale of fixed assets, investments, and intellectual property.

Exemptions and Reliefs

Calculation of Gains

The capital gain is calculated as the difference between the sale price and the acquisition cost, adjusted for:

Filing and Payment

Individuals must declare capital gains in their annual tax return. Payment of tax due must be made by the filing deadline. For real estate transactions, a notary typically handles the documentation.

Corporations report capital gains as part of their annual corporate tax return.

Double Taxation Treaties

The Marshall Islands has limited double taxation agreements. Given its status as a jurisdiction with no income tax for IBCs and low domestic rates, most capital gains are not subject to tax in the Marshall Islands for non-residents. Foreign tax credits are not typically applicable given the territorial nature of the tax system.

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