Tax on Investment Income in Marshall Islands

Investment income in the Marshall Islands benefits from a favorable tax regime with low rates and no withholding tax on most investment returns.

Dividend Income

Individual Taxation

Dividends received by individual residents are subject to 0% withholding tax. Dividends are included in the individual's total taxable income and taxed at progressive PIT rates (0–12%). Non-residents also benefit from 0% withholding tax on dividends from Marshall Islands sources.

Corporate Taxation

Dividends received by a resident company from another resident company are generally exempt from corporate income tax. Foreign-source dividends are taxable at the standard CIT rate of 22%.

Interest Income

Individual Taxation

Interest income earned by individuals is subject to 0% withholding tax. The interest income is included in the individual's total taxable income and taxed at progressive PIT rates.

Corporate Taxation

Interest income received by corporations is included in taxable income and taxed at the standard CIT rate of 22%. Interest expense is generally deductible.

Rental Income

Rental income from immovable property is taxed as follows:

Landlords may deduct expenses including maintenance, property management fees, insurance, interest on mortgages, and depreciation.

Capital Gains

Capital gains on investments are generally taxed as ordinary income. For individuals, gains are taxed at progressive PIT rates (0–12%). For corporations, gains are taxed at the standard CIT rate of 22%.

Foreign Investment Income

The Marshall Islands taxes residents on their worldwide income. Foreign investment income is generally taxable in the Marshall Islands, with a foreign tax credit available for taxes paid abroad.

Tax-Efficient Investment Vehicles

Reporting Requirements

Investment income is included in the annual tax return. Given the 0% withholding tax rates, there is no final withholding tax system; all income must be declared in the taxpayer's annual return.