VAT and Sales Tax in Marshall Islands

The Marshall Islands does not impose a Value Added Tax (VAT) or General Sales Tax (GST). There is no federal or state-level indirect tax on goods and services, making it one of the few jurisdictions with no VAT/GST system.

No VAT/GST System

The Marshall Islands has not implemented a VAT or GST system. Businesses are not required to charge, collect, or remit any indirect tax on the supply of goods or services. This applies to:

• Domestic sales of goods
• Service provisions
• Imports (no import VAT)
• Digital services
• Cross-border transactions

Why No VAT?

The Marshall Islands' tax system relies primarily on income taxes (PIT and CIT) and customs duties rather than consumption taxes. This reflects the country's small population, limited administrative capacity for VAT collection, and the desire to maintain a simple, low-cost tax environment for businesses.

Other Indirect Taxes

While there is no VAT/GST, the following may apply:

• Customs Duties: Applied to imported goods at rates varying by product category
• Excise Taxes: On certain goods such as alcohol, tobacco, and fuel
• Business License Fees: Annual fees based on business type and size
• Property Registration Fees: Approximately 2% on property transfers

Comparison with VAT Jurisdictions

The absence of VAT/GST means:

• No VAT registration or filing requirements for businesses
• No input VAT recovery or output VAT accounting
• Simpler compliance and lower administrative costs
• Lower overall tax burden on consumers
• Prices displayed are the final prices (no VAT to add)

International Considerations

Businesses operating in the Marshall Islands but supplying goods or services to customers in VAT jurisdictions may need to register for VAT in those jurisdictions. The Marshall Islands does not impose any indirect tax on exports, which can be advantageous for businesses selling to international markets.

Future Developments

There are no current proposals to introduce VAT/GST in the Marshall Islands. The government continues to rely on income taxes and customs duties as the primary sources of tax revenue.