Corporate Tax in Marshall Islands

The Marshall Islands offers a competitive corporate tax environment designed to attract international business while supporting local enterprise. The standard corporate income tax (CIT) rate of 22% applies to domestic companies, with a minimum tax based on gross revenue.

Corporate Income Tax Rate

The standard corporate income tax rate in the Marshall Islands is 22% of net taxable profits. A minimum tax of 3% of gross revenue applies if the calculated CIT is lower. This applies to all domestic resident companies and foreign companies with a permanent establishment in the Marshall Islands.

Taxable Income

Taxable income is calculated as gross revenue minus allowable deductions. The tax year in the Marshall Islands follows the calendar year (January 1 to December 31). Companies must maintain accounting records in accordance with generally accepted accounting principles.

Deductible Expenses

• Operating expenses directly related to business activities
• Depreciation of fixed assets (straight-line method)
• Interest expense (subject to thin capitalization rules)
• Rent and lease payments
• Employee salaries and social security contributions
• Professional fees and consulting costs
• Research and development expenses
• Marketing and advertising costs

Non-Deductible Expenses

• Fines and penalties
• Dividends distributed
• Capital expenditures (must be depreciated)
• Personal expenses of shareholders
• Donations to non-approved organizations

Tax Incentives

The Marshall Islands offers tax incentives to encourage investment:

• International Business Corporations (IBCs): Exempt from domestic CIT
• Shipping Registry: Special tax treatment for vessels registered under the Marshall Islands flag
• Investment Incentives: Priority sectors may qualify for tax holidays and reduced rates
• Accelerated Depreciation: Available for certain qualifying assets
• Carryforward of Losses: Tax losses can be carried forward for up to 5 years

Filing Requirements

• Annual Tax Return: Due by April 30 following the tax year
• Quarterly Estimated Tax Payments: Due on April 15, June 15, September 15, and December 15
• Annual Financial Statements: Must be filed with the tax return

Payment of Tax

Corporate tax is payable in two ways:

• Quarterly Installments: Based on the previous year's tax liability or estimated current year liability
• Balance Payment: Any remaining tax due is payable upon filing the annual return by April 30

Withholding Taxes

The Marshall Islands imposes 0% withholding tax on dividends, interest, and royalties paid to residents and non-residents.

International Taxation

The Marshall Islands follows a modified territorial system for corporate taxation. Income derived by IBCs from sources outside the Marshall Islands is generally exempt from domestic CIT. Double taxation treaties are limited, and the jurisdiction does not impose tax on foreign-source income for most entities.